In Indiana, the auto-parts industry directly employs 52,600. And the auto industry – after taking into account the impact from associated industries like steel, aluminum, plastics, and electronics and the impact on communities around the state – supports over 510,000 total jobs or 13.9 percent of the state’s total employment.
THE WHITE HOUSE
Office of the Press Secretary
__FOR IMMEDIATE RELEASE
September 17, 2012
On Monday, the Obama Administration is launching an enforcement action against China at the World Trade Organization (WTO) for illegally subsidizing exports in their autos and auto-parts sectors, a practice that is putting U.S. auto parts manufacturers at a competitive disadvantage and that is encouraging the outsourcing of auto-parts production to China.
· The auto manufacturing industry directly employs over 770,000 people in the United States, with roughly 475,000 of these jobs in auto parts manufacturing: And these numbers do not include all of the jobs supported in associated industries such as steel, aluminum, plastics, and electronics. According to the Center for Automotive Research, the auto sector in total supports 8 million American jobs.
o In Indiana, the auto-parts industry directly employs 52,600. And the auto industry – after taking into account the impact from associated industries like steel, aluminum, plastics, and electronics and the impact on communities around the state – supports over 510,000 total jobs or 13.9 percent of the state’s total employment.
· This case highlights the impact that the Interagency Trade Enforcement Center (ITEC): The President announced the creation of the ITEC in this year’s State of the Union address and it is already having an impact in the Administration’s ability to challenge unfair trade practices around the world.
· The Administration is also on Monday taking the next formal step in a WTO case launched in July against China’s unfair imposition of duties on more than $3 billion in exports of U.S.-made automobiles: The Chinese duties cover more than 80 percent U.S. auto exports to China and disproportionately fall on General Motors and Chrysler products because of the actions that President Obama took to support the U.S. auto industry during the financial crisis.
· The key principle at stake is that China must play by the rules of the global trading system: When it does not, the Obama Administration will take action to ensure that American businesses and workers are competing on a level playing field.
· Today’s action builds on the Obama Administration’s record of strong trade enforcement to date: We have more than doubled the rate of trade cases against China compared to the prior Administration and took the first-ever safeguard action against a surge of Chinese tire imports.
Background on Monday’s WTO Enforcement Action against
China’s “Export Bases” Program
The United States will announce on Monday that it has initiated a WTO enforcement action against China for providing impermissible export subsidies to auto and auto-parts manufacturers located in at least twelve designated “export bases.”
· China is violating WTO prohibitions on export-contingent subsidies: By providing a range of subsidies to auto and auto-parts producers directly linked to the firms’ exports, China is not only violating WTO prohibitions on export-contingent subsidies, but also its own agreement to eliminate export subsidies when it joined the WTO in 2001.
· All told, China’s illegal subsidies to auto and auto-parts exporters amounted to at least $1 billion between 2009 and 2011: These subsides and may benefit up to 60 percent of Chinese auto-parts exports.
· China’s export subsidy program is hurting the U.S. auto-parts industry and, specifically, U.S. auto workers by:
o Contributing to the outsourcing of auto auto-parts production to China – not for sale into the Chinese market, but rather for export into the United States and third markets.
o Putting U.S. auto-parts manufacturers at a competitive disadvantage precisely because we are playing by global trade rules.
· Monday’s case highlights the impact that the ITEC, the Administration’s new trade enforcement unit, is already having in our ability to challenge unfair trade practices around the world: The ITEC, which the President announced in this year’s State of the Union address, is bringing to bear greater resources and enhanced cross-government coordination to investigate and challenge practices that tilt the playing field against U.S. businesses and workers.
The production of original equipment and aftermarket parts for passenger vehicles has been a central element of U.S. manufacturing for over a century. The auto parts sector has provided well-paying and secure employment that has helped support middle-class families and communities across our country.
· The auto manufacturing industry directly employs over 770,000 people in the United States, with roughly 475,000 of these jobs in auto parts manufacturing: And these numbers do not include all of the jobs supported in associated industries such as steel, aluminum, plastics, and electronics. According to the Center for Automotive Research, the auto sector in total supports 8 million American jobs.
· In Indiana, the auto-parts industry directly employs 52,600: And the auto industry – after taking into account the impact from associated industries like steel, aluminum, plastics, and electronics and the impact on communities around the state – supports over 510,000 total jobs or 13.9 percent of the state’s total employment.
· However, government statistics show that the U.S. auto-parts sector has suffered a sharp drop in jobs since 2000: Domestic employment in this sector fell by roughly half from 2001 to 2010.
· That trend has coincided with a nearly seven-fold increase in imports of auto parts from China: This has resulted in a five-fold increase in China’s share of U.S. auto-parts imports from two percent of all U.S. imports to over ten percent.
Monday’s action aims to compel China to unwind its prohibited export subsidy program and to help level the international playing field for U.S. businesses and workers in the auto and auto parts industries.
Background on Next Step on WTO Enforcement Action
Against China’s Unfair Duties on U.S. Auto Exports
The United States will also announce on Monday that it is taking the next step in a WTO enforcement action launched in July over China’s unfair imposition of antidumping and countervailing duties on approximately $3.3 billion in U.S. automobile exports to China.
· Specifically, the Administration is now positioned to formally request that the WTO form a dispute settlement panel to consider our case: Sixty days have now elapsed since we initiated consultations with the Chinese on this issue in early July.
· China unfairly imposed antidumping and countervailing duties on approximately $3.3 billion in U.S. automobile exports to China:
o In December 2011, China imposed anti-dumping (AD) and countervailing duties (CVD) on the roughly 92,000 large-engine automobiles and SUVs, worth approximately $3.3 billion, exported each year from the United States.
o The Chinese AD duties range from 2.0 percent to 8.9 percent, and the CVDs range from 6.2 percent to 12.9 percent.
· The Chinese duties impact more than 80 percent of our total 2011 auto exports to China: Higher duties affect imports of cars produced by GM and Chrysler expressly because of the support they received from the U.S. government during the financial crisis.
Background on President Obama’s Trade Enforcement Record
Since day one of his Administration, the President has fought to ensure that American businesses and workers are competing on a level playing field with their international competitors – and he has taken action to stop unfair trade practices abroad, including in China.
· We have doubled rate of (WTO) trade cases against China compared to the prior administration:
o For example, last March the Administration launched a rare earths WTO case against China: Rare earths elements are key inputs in advanced manufacturing products like wind turbines and lithium ion batteries. Right now China restricts their export, which keeps prices down for their manufacturers and increases prices for ours. That's not fair, and that's why we've taken action.
· In September 2009, President Obama ordered first-ever safeguard action applied to a surge of tire imports from China: U.S. tire production has increased more than 10 percent since that time, adding over 1,000 workers in the process.
· We have now stood up a new trade enforcement unit, which the President announced in this year’s State of the Union address: This new unit helped to drive Monday’s enforcement action and is substantially enhancing our ability to investigate and challenge unfair trade practices around the world.
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