At a January 31, 2012 press conference, members of Congress representing the Midwest and representatives from the United Auto Workers (UAW) and the American Alliance for Manufacturing pushed President Obama to restrict imports of auto parts from China. Citing studies released that day listing government subsidies and practices benefiting China's auto parts industry, speakers such as Sen. Sherrod Brown of Ohio and Sen. Debbie Stabenow of Michigan pressed the U.S. government to bring a case at the World Trade Organization or launch a U.S. government trade remedy investigation challenging these subsidies and practices. According to one of the studies, prepared by the Economic Policy Institute, China's auto parts industry has received $27.5 billion in government subsidies since 2001 while the U.S. auto parts industry has lost more than 400,000 jobs during that same period. Bob King, UAW president, said that China's large government subsidies were the second major cause of these job losses, behind competition from Mexico.
Highlighted at the press conference was the most recent five-year economic plan issued by China's government, which designates "new-energy" automobiles and their components as one of the seven "strategic and emerging industries" targeted for increased government investment. Specific auto parts identified in the plan include batteries, electric motors, electronic control systems and fuel cells.
The call for action against imports of auto parts from China followed President Obama's State of the Union announcement that a Trade Enforcement Unit would be formed to combat China's unfair trade practices and recently initiated trade remedy investigations involving solar panels and wind towers from China. These moves, along with China's imposition of punitive duties on its import of U.S. cars and SUVs in December, have heightened tensions in advance of President Obama's February 14 meeting with China's Vice President Xi Jinping in Washington, D.C.
Companies that produce, purchase or import these auto parts would be affected significantly by the potential trade restrictions. Depending on the action implemented, the restrictions could involve additional import duties and/or quotas. Affected parties can and should protect and promote their interests by participating in the processes that may trigger these restrictions.