Manufacturing Savvy

Reports Show China's Trading Practices Endanger U.S. Auto Supply Chain

By Alliance for American Manufacturing

More than 400,000 jobs in the U.S. auto supply chain have been lost since 2000. One major problem is China's persistent violations of World Trade Organization (WTO) rules, and another 1.6 million U.S. jobs are at risk unless China's illegal trading practices are curtailed, according to three separate reports released in January of 2012.

Taken together, these three reports show beyond a shadow of a doubt that China's blatant use of illegal government subsidies and a web of predatory trade practices on a massive scale are undercutting companies in the U.S. auto supply chain.

As a result of this web of subsidies and illegal practices, China's exports of auto parts have surged over the past decade. A large portion of these exports are bound for the U.S. market. China is the fastest-growing source of U.S. auto parts imports. In fact, since 2001, an Alliance for American Manufacturing (AAM) investigation has found that $62 billion worth of Chinese auto parts have been imported into the U.S., causing the auto parts trade deficit between the U.S. and China to increase by more than 850%.

Reports:

Growing Threats to the U.S. Auto-Parts Industry from Heavily Subsidized Chinese Tires and Parts, conducted by Robert E. Scott and Hilary Wething of the Economic Policy Institute (EPI), notes that a substantial portion of jobs in the U.S. auto industry are in the auto-parts sector, with direct and indirect auto parts jobs in virtually every state. The report concludes that "every one of these auto-parts jobs is individually at-risk from this unfair trade competition." Research by AAM has found that the auto parts sector comprises 75% of employment in the U.S. auto industry.

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.

>China's Support Program for Automobiles and Auto Parts Under the 12th Five Year Plan, by Stewart and Stewart, a prominent law firm that has won cases challenging China's unfair trading practices, offers evidence that the massive government subsidies being given to Chinese producers, which are in violation of China's WTO commitments, will continue for years to come unless challenged by Congress and the President.

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