China cheats – it openly flouts trade laws – and routinely denies it. It restricts access to its markets, forces companies that want to sell in China to transfer technology and manufacture there, and then often steals the technology. It purposefully underprices its currency to keep the down the price of its exports. When it targets an industry as strategic, it employs a range of subsidies, directed procurement, and trade maneuvers to capture market share.
China cheats and everyone knows it. Pressures are building on the administration to start enforcing our trade laws. Republican presidential aspirant Mitt Romney says he’ll cite China as a currency violator on day one of his presidency. In his State of the Union address, President Obama announced he would set up a special unit to enforce trade laws, calling out China by name.
Now a coalition of unions led by the United Steelworkers and the United Auto Workers, along with allied organizations are joining with Senators Sherrod Brown and Debbie Stabenow to call the question.
Today, they announce that they will file a series of enforcement actions – and call for legislation – to challenge Chinese violations in the area of auto parts. There has been a 900% increase in auto parts imports from China over the last decade, to nearly $12 billion a year. Over 400,000 jobs have been lost in this industry in the last decade, according to a study by the Economic Policy Institute that will be released today. Michigan, Ohio and Pennsylvania — three key swing states in the upcoming presidential election – - have been hit particularly hard.
On February 14, China’s vice president, Xi Jinping, expected to become president next year, will visit the White House. Traditionally, both countries make friendly gestures preceding these visits. The Chinese are expected to go on a U.S. shopping spree over the next couple of weeks for example.
But this time, the niceties will not suffice. China cheats. The President has called for tougher enforcement of our trade rules. Push may well be coming to shove.