Campaigns Exchange Barbs on China Trade

COLUMBUS, Ohio—President Barack Obama used a campaign trip to the industrial Midwest—where he and Republican challenger Mitt Romney are battling for working-class votes—to showcase the U.S. escalation of the trade fight with China, accusing Beijing of unfairly subsidizing its auto-sector exports.

Mr. Obama announced in Ohio on Monday that the administration had lodged a new complaint against China at the World Trade Organization, the international arbiter of trade disputes. China launched its own challenge Monday of a U.S. tariff law.

"These are subsidies that directly harm working men and women on the assembly lines in Ohio and Michigan and across the Midwest." Mr. Obama said. "It is not right. It is against the rules. And we will not let it stand."

Mr. Romney, who recently sharpened his criticism of Mr. Obama as weak on China, described the president's move as "too little, too late."

The latest trade disputes between the world's two largest economies came almost seven weeks before the presidential election. Both candidates have made China's trade practices an issue as they compete for votes in the industrial Midwest, a region deeply affected by Beijing's economic rise.

China's handling of its auto sector is a leading concern of U.S. labor unions, an important constituency for Mr. Obama and other Democrats. But the allegation of unfair Chinese trade practices also has resonance in several states with manufacturing hubs, including Michigan, Pennsylvania, Wisconsin and Ohio

Ohio is a critical state for Mr. Romney, whose path to victory would be significantly more difficult without it. A Wall Street Journal/NBC News poll of likely voters released last week showed Mr. Obama with 50% of the vote in Ohio to Mr. Romney's 43%. The margin of error was three percentage points. The state's voters can begin casting early ballots in two weeks.

Mr. Romney has been running ads for several weeks in Ohio criticizing Mr. Obama on China. Campaigning in the state last Friday, he accused Beijing of "cheating" and has vowed to be tougher on its trade and currency practices.

Mr. Obama on Monday cited Mr. Romney's experience at the private-equity firm Bain Capital, which he argued cut deals that outsourced jobs to China, as evidence his opponent wouldn't be tough on Beijing as president.

"We don't need folks who during election time are suddenly worrying about trade practices, but before the election are taking advantage of unfair trade practices," Mr. Obama told a crowd of several thousand supporters in Cincinnati.

Mr. Romney cast the administration's WTO complaint as a last-minute political attempt to act on an issue that has long hurt the American economy.

"The president may think that announcing new trade lawsuits less than two months before the election will distract from his record, but American businesses and workers struggling on an uneven playing field know better," Mr. Romney said in a speech to the Hispanic Chamber of Commerce in Los Angeles.

The latest U.S. move intensifies the standoff between Beijing and Washington over trade. On Monday, China lodged a complaint with the WTO against a new U.S. tariff law, which allows the U.S. to levy some import tariffs on Chinese goods. A senior Obama administration official indicated China's claim was expected and added that China has a right to pursue its own cases at the WTO.

The U.S. moved on two fronts Monday against China. One complaint accused China of putting U.S. manufacturers at a disadvantage by illegally subsidizing exports of automobiles and automobile parts. China provides subsidies to producers in regions known as export bases. The U.S. said the subsidies amounted to at least $1 billion from 2009 through 2011, threatening the $350 billion U.S. auto-manufacturing sector. The U.S. alsoadvanced a separate dispute that the administration filed in July with the WTO that challenged Chinese duties imposed on more than $3 billion of U.S. auto exports.

The newest WTO complaint is the eighth the Obama administration has filed against China and the third this year, following its pattern of launching a new action every few months. A single case can take more than a year to advance through the WTO's legal system for resolving disputes.

Officials at China's Ministry of Commerce didn't respond to requests for comment on Monday's action, but Beijing has disputed U.S. complaints in the past.

The administration said its action will support a U.S. auto-manufacturing industry that employs more than 770,000 workers, including roughly 475,000 who work in auto-parts manufacturing.

Some of the largest auto parts makers in the U.S. have extensive operations in China, which is now the world's largest auto market. At Olymco, Inc., a small metal-plating company in Canton, Ohio, Chinese competition is a big factor behind the company's reduction to 11 workers from a peak of 100, says operations manager William Sklavenitis. The company's workers are represented by the United Steelworkers, which pushed the Obama administration to challenge China over auto parts trade. "All these plating shops are closing left and right," Mr. Sklavenitis said.

Mr. Sklavenitis said he supported action against Chinese auto parts. "My only problem is, is it too late," he said. "For us, unless something changes in the next month, I don't know if I will be here."

Mr. Obama has also used campaign trips to the upper Midwest, including Monday in Ohio, to highlight the administration's bailout of the auto industry. Mr. Romney opposed the bailout, which is credited, in part, with helping boost Ohio's economy.

China doesn't export vehicles to the U.S., but sales of Chinese cars have been rising in Central and South America, Africa and Asia—regions where General Motors Co., Ford Motor Co. and Chrysler Group LLC also compete. GM and Ford also have extensive operations in South America, including plants in Brazil.

Honda Motor Co. has started exporting Fit subcompacts made in China to Canada, and has exported the car from China to Europe for five years.

Buoyed by cheap labor and vast scale economies Chinese auto makers price their vehicles well below $15,000, with some selling for as low as $6,000.