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A heated dispute is brewing at the World Trade organisation between China and the United States.The New York Times reported on Sunday that the Obama administration plans to file a complaint at the WTO, alleging that China violated trade laws by handing out $1 billion worth of subsidies from 2009 to 2011 for the export of autos and auto parts.
And on Monday, the Wall Street Journal reported that China is also taking its complaints to the WTO. The Chinese government alleges that a U.S. tariff law, which would “restore U.S. authority to levy certain kinds of import tariffs against Chinese goods.”
The Chinese Ministry of Commerce spokesman Shen Danyang said the law, “violates World Trade organisation rules on transparency and proper procedures.”
The timing of the respective announcements each come at a peculiar time for each country.
The Chinese complaint that was filed came, “hours after people familiar with the matter said the Obama administration plans to announce new WTO complaints against China involving autos and auto parts.”
But why was China inclined to react so quickly?
They have much larger priorities on their plate right now. The PRC remains in a heated sovereignty dispute with Japan, and has sent 1,000 ships to the disputed islands. U.S. Secretary of defence Leon Panetta has acknowledged that the conflict could spark a war.
Not to mention, one of the men tasked to help resolve the dispute — Japan’s next ambassador to China — died over the weekend. The Chinese Communist Party is also dealing with the PR ramifications of the mysterious disappearance — and reappearance — of its next leader.
For the United States, the timing makes much more sense. The Times noted that the move has, “clear political implications” in the upcoming U.S. presidential elections.
The Obama campaign continues to highlight the bailout and subsequent saving of the auto industry in its bid for reelection. Attacking reportedly unfair trade policies relating to the auto industry could help boost President Obama’s credentials in battleground states in which auto manufacturing is a key economic driver.
Mitt Romney, the Republican presidential nominee, has continually attacked the Obama administration’s international policies for not taking a hard-line stance on many issues, from redacting State Department tweets following the recent unrest in the Middle East, to drawing a “red-line” in regards to Iran’s nuclear program, and also in regard to challenging China’s trade policies.
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