As expected, the Obama Administration has filed a new trade case against China at the World Trade Organization (WTO), accusing China of illegally subsidizing its auto exports, including auto parts and entire cars. Citing publicly available documents, the case accuses China of providing "extensive subsidies" to Chinese auto manufacturers located in 12 designated "export bases" throughout the country, to the tune of $1 billion from 2009 through 2011.
The U.S. is asking for "consultations" with China, which must be held for at least two months. If no resolution can be found, the U.S. may ask the WTO to rule if the subsidies are illegal and what penalties China may face, Bloomberg notes, also pointing out that the case is the 15th of its kind that the U.S. has filed against China since China joined the WTO in 2001.
“Export subsidies are prohibited under WTO rules because they are unfair and severely distort international trade," said U.S. Trade Representitive Ron Kirk in a statement. "China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001. China benefits from international trade rules and must in turn live up to its international obligations."