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Auto Exports Stall U.S.-China Trade Talks
By Elaine Kurtenbach, AP Business Writer
Manufacturing.Net - October 29, 2009

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HANGZHOU, China (AP) -- Doggedly cordial trade talks between top Chinese and U.S. officials were overshadowed Thursday by Beijing's surprise probe into American auto exports, underlining tensions ahead of President Barack Obama's first visit to China.

The start of the formal talks ran two hours late as discussions over nuts and bolts issues dragged on, and officials addressing the opening session referred constantly to the need to speak with "candor" -- in diplomat-speak a word often signaling differences of opinion.

But officials on both sides claimed deals were made on a number of rankling issues.

"We've made solid progress on a series of important trade issues that can help our countries achieve balanced and sustainable growth," U.S. Trade Representative Ron Kirk told reporters.

Kirk said the U.S. side was "intrigued" by the timing of an announcement that China plans to investigate dumping allegations against the minuscule auto exports to China by the three big Detroit automakers.

He asserted the move did not spoil "very productive and necessary talks" between the two sides.

The Chinese side confirmed that such a preliminary review was underway.

"China must protect its industries and companies based on China's laws and World Trade Organization rules," said Commerce Minister Chen Deming, while pledging the probe would be transparent and fair.

If China concludes the car makers are getting government subsidies or are selling their products in China at below-market prices, China could raise tariffs on U.S. auto imports. But punitive measures against Ford Motor Co., General Motors Corp. and Chrysler would be unlikely to cause much harm since most of the vehicles they sell to the Chinese are made in China.

Despite the last-minute surprise, Commerce Secretary Gary Locke said he believed the meeting in Hangzhou had "laid the foundation" for Obama's Nov. 15-18 visit to China.

The talks wrapped up with the signing of 11 technical agreements on cooperation in energy, high technology, tourism and other commercial issues.

China agreed to end a ban on imports of U.S. pork that was imposed last spring due to swine flu fears, and to crack down on rampant piracy of music and other copyrighted materials.

The U.S. side applauded China's commitments to draft rules to treat products made by U.S.-invested foreign enterprises in China as Chinese domestic products, rather than foreign ones, in government purchases.

Trade spats between the two countries worsened after the Obama administration last month announced up to 35 percent duties on Chinese-made tires, to be imposed for the next three years.

Still, U.S. officials have said they do not expect any of the various simmering disputes to undo progress in other areas, or to sour overall ties.

U.S. business needs China more than ever. China's economic recovery has surged ahead with growth in the last quarter a stunning 8.9 percent, leading other major economies by a large margin.

Earlier this month, the Obama administration refrained from designating China as a currency manipulator even though American manufacturers contend that China's management of its currency is a primary reason for the huge bilateral trade deficit.

Currency issues, which are handled by the Department of the Treasury, were not on the agenda for Thursday's talks, the 20th since the Joint Commission on Commerce and Trade began meeting in 1983.

Trade has soared since then, to over $400 billion in total last year by U.S. figures, and China has gone from having virtually no private cars or major auto industry to being the world's largest auto market, as the U.S. market languished in recent months.

Ford Motor, General Motors and Chrysler export only about 9,000 cars to China a year, though they manufacture millions more inside China in the joint ventures they are required to operate with local partners if they want to manufacture for the fast-growing market.

GM so far this year has sold 1.3 million cars and trucks in China, most of them built there in a joint venture with Chinese automaker SAIC.

Mercedes-Benz, BMW and Nissan also export cars to China from plants in the United States, but those won't be included in the investigation, according to Steve Collins, president of the industry trade group the American Automotive Policy Council.

GM and Chrysler have received billions of dollars in aid from the government's $700 billion bailout fund, though Ford has not.

But the move would certainly rankle, given the prosperity being enjoyed by Chinese-based automakers at a time when their global rivals are struggling for survival.

Through September, 9.66 million vehicles were sold in China, up 34 percent from the same period last year. During the same time, U.S. sales plunged 27 percent to 7.8 million units, according to Autodata Corp., a research firm.

AP Economics Writer Christopher S. Rugaber contributed to this report from Washington, D.C.


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Manufacturing.net is pleased to provide you an opportunity to share your opinions on any of the news stories or articles on our site. We reserve the right to edit/remove comments.
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fuel for all those cars  10/29/2009 12:32:00 PM
As china becomes the top market for vehicles they will also demand the fuel to run them. The rest of the world better learn how to make do with a lot less fuel at a much higher price.
The irony  10/29/2009 12:55:00 PM
China is complaining that US is selling auto's under market price? Has anyone tried to buy anything in the US lately that is not made in China. The irony just amazes me.
fuel for all those cars  10/29/2009 1:20:00 PM
Would not impact our costs if we would get our heads out of our ___es and drill domestically. The "shortage" is entirely caused for our own government. I'd try to explain why, but if you don't know by now, there's no telling you.
joint ventures  10/29/2009 2:04:00 PM
Why doesn't the US require foreign interests to have joint ventures with US companies in order to manufacture in the US? Seems to me that it is just another way to restrict who sells what in China....why isn't the US doing the same?
Fuel shortage  10/30/2009 6:47:00 AM
We have 5% of the world oil reserves and use 5 times as much as we could possible produce domesticly. Pulling a domestic resource out of the ground, burning it as fast as you can and leaving nothing for future generations seems stupid to me. There's a lot of stuff made out of oil besides fuel. EV's will be the commuter car's in the near future.


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