Any recovery currently underway in the US auto industry could be completely undermined by China's illegal trading practices, according to the Alliance for American Manufacturing (AAM), a non-profit, non-partisan partnership of leading manufacturers and the United Steelworkers.
In a press release issued last week, the AAM says that more than 400,000 jobs in the US auto supply chain have been lost since 2000 and another 1.6 million US jobs are at risk unless China's illegal trading practices are curtailed. These forecasts are derived from data in three separate reports:
1. In Growing Threats to the U.S. Auto-Parts Industry from Heavily Subsidized Chinese Tires and Parts, researchers Robert E. Scott and Hilary Wething of the Economic Policy Institute (EPI) point out that a substantial portion of jobs in the US auto industry are in the auto-parts sector, with direct and indirect auto parts jobs in virtually every state. Research by AAM has found that the auto parts sector comprises 75 percent of employment in the US auto industry. The report concludes that "every one of these auto-parts jobs is individually at-risk from this unfair trade competition."
2. Putting the Pedal to the Metal: Subsidies to China's Auto-Parts Industry from 2001 to 2011, conducted for EPI by Usha C.V. Haley, cites $27.5 billion in government subsidies to the Chinese auto-parts industry and notes that China's central government has committed to disbursing an additional $10.9 billion in subsidies for industrial restructuring and technological development of the industry. As the AAM says in its press release, the Chinese government's extensive subsidies, many of which are in violation of WTO trade rules, have dramatically increased the US trade deficit with China.
3. The report China's Support Program for Automobiles and Auto Parts Under the 12th Five Year Plan, from the law firm Stewart and Stewart, offers compelling evidence that the massive government subsidies being given to Chinese producers will continue for years to come unless challenged by Congress and the President.
The AAM is calling for federal action to address these trade violations and other concerns.
"In addition to massive, illegal government subsidies, China also employs currency manipulation to artificially lower the cost of its exports," said Scott Paul, AAM Executive Director. "This deliberate mercantilism has the potential to cripple the US auto-parts industry. What's urgently needed is federal action to address these predatory trade practices before thousands more US jobs are lost."