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Obama to file trade complaint against China over cars

BUSINESS
By -BBC | September 17th 2012

US President Barack Obama is expected to file a new trade complaint against China, accusing it of illegally subsidising exports of cars and car parts.

A White House official said China's actions were forcing US manufacturers to shift production overseas.

"The key principal at stake is that China must play by the rules of the global trading system," said a White House official.

Mr Obama's move is seen as political.

President Obama will announce the World Trade Organization (WTO) action against China when he visits the US state of Ohio, which has more than 50,000 workers employed in the car industry.

Ohio is a critical state in the upcoming presidential elections on 6 November, with success there seen as a crucial pre-requisite to becoming President.

In the latest wrangle, the Obama administration clams that China's "illegal subsidies" in the car sector totalled $1bn (£600m) between 2009 and 2011.

The US President believes that the subsidies encourage the US to outsource car and car parts production to China, with these products then exported into the US or other nations.

China pledged to wipe out export subsidies when it joined the WTO in 2001.

Last week, President Obama's main Republican rival Mitt Romney accused Mr Obama of being too soft on China.

The Obama administration has already filed two other WTO complaints against China this year. The first accused China of restricting exports of so-called rare earth metals, used to make high-tech devices.

The US argued this has distorted the world economy by making it more expensive to make such goods outside China.

The second case accused China of imposing anti-dumping duties on US cars exported to China, making them more expensive to buy, in a bid to protect local manufacturers. Anti-dumping duties are used if a country thinks an item is priced lower than it costs to produce.

-BBC

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