U.S. Takes China Import Complaints to the WTO

The Bush administration took action against China today by filing a complaint with the World Trade Organization. The United States is targeting six export subsidy programs and three other programs that the it says discriminate against imports.

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MELISSA BLOCK, host:

The Bush administration is stepping up pressure on China, filing a complaint against the country today at the World Trade Organization. The U.S. trade representative says China's government unfairly helps its own companies with a variety of subsidies, while at the same time putting up barriers to American products. That, they say, costs the U.S. jobs.

NPR's Adam Davidson is following the story and joins us. And Adam, tell us please what exactly the U.S. is alleging here.

ADAM DAVIDSON: Well, the U.S. government is saying that the Chinese government is using tax breaks and direct cash subsidies to give Chinese-based factories an edge, an unfair, illegal edge in the global economy. Whenever a country joins the World Trade Organization - the WTO - as China did in 2001, they promise not to grant these kinds of subsidies. And the U.S. is saying China broke that promise. This case is really ambitious. It's probably the biggest trade case, I guess, ever.

The - usually, these WTO complaints cover a particular product, like Canadian softwood lumber or French red wine. The last big case against that the U.S. filed against China covered a one particular kind of cardboard liner paper. But this case, it covers basically everything, all industries in China.

BLOCK: And what are the numbers that the U.S. is alleging here? How much money and how many jobs is the U.S. claiming is being lost?

DAVIDSON: They're not giving specific numbers, but they're saying this is affecting many billions of dollars in trade, which if you do the math implies tens or hundreds of thousands of jobs lost in the U.S. due to unfair trade. You know, global trade is so ridiculously complex. Any product has, you know, a cell phone, or an iPod, or a telephone, has bits and pieces made in dozens of countries.

So it's really hard to track how any particular government program affects jobs in other countries. But it's also worth remembering that these Chinese subsidies help a lot of Americans, just as they may hurt a lot of Americans. We all get cheaper products in stores because the Chinese government subsidizes those products. And also, a lot of the companies that the Chinese are subsidizing are American companies that happen to have factories in China.

BLOCK: Well, how strong is the U.S. case before the WTO?

DAVIDSON: It does seem clear that China does offer financial incentives to help out its own domestic manufacturers and that that probably violates WTO rules. But it's also pretty clear that the U.S. has a bunch of subsidies that we use for agriculture and other industries that also violate WTO rules. So China could counter attack with their own WTO complaint.

BLOCK: You know, Adam, why now? We've certainly been hearing about the U.S./China trade deficit for many, many years.

DAVIDSON: I'd say its two words, the Democrats and the renminbi. The renminbi is China's currency. And the U.S. has - this has been a big bee in the bonnet for the U.S. for a long time. They say China is artificially, unfairly, keeping its currency cheap to help its exporters. The Bush administration has, until today, been taking largely a gentle coaxing approach.

This clearly shows the U.S. has lost patience and wants to take a tough approach. And that was helped along because the Democrats are now in control of Congress. And the Democrats have been much stronger, much angrier at China. So it seems the Bush administration has conceded this issue to the Democratic leadership.

BLOCK: Okay. NPR's Adam Davidson in New York. Adam, thanks a lot.

DAVIDSON: Thank you.

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