YOUNGSTOWN, Ohio – Three reports released Tuesday by the Alliance for American Manufacturing claim that more than 1.6 million jobs in the domestic auto-supply industry are at risk because of unfair trade practices by China.
"The auto industry is helping turn our economy around by reviving manufacturing facilities across the nation," says U.S. Sen. Sherrod Brown, D-Ohio. "But, we're at risk of this progress being undercut if we allow China to continue cheating trade laws."
Brown, along with Democratic U.S. Sens. Robert Casey of Pennsylvania and Debbie Stabenow of Michigan, joined members of the trade group and representatives of organized labor in Washington to unveil the reports' findings.
"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," says Scott Paul, executive director of the Alliance for American Manufacturing.
The reports, two written by the Economic Policy Institute and another by Stewart and Stewart, a law firm with experience in international trade cases, found that China is the fastest-growing source of auto parts imports to the United States. Since 2001, China has imported $62 billion worth of auto parts to this country, causing the domestic industry's trade deficit with China to soar 850%.
In that same period, the United States lost more than 400,000 jobs in the automotive supply industry.
One EPI report concludes that the industry's domestic work force of "1.6 million is individually at risk from this unfair trade competition." About 75% of the jobs in the U.S. auto industry are in the auto-supply sector.
Much of this risk would fall on states that are reliant on the auto-parts industry such as Michigan and Ohio, the report said. In Ohio, more than 189,000 jobs are tied to the industry, and in Michigan, the number is 250,000.
Chinese imports, a second EPI report found, are shipped to the United States at lower prices because manufacturers and industry there are heavily subsidized by the Chinese government. Tires, electronic equipment and engine parts are among those products shipped to the United States at prices that undercut domestic suppliers, the report notes.
The Chinese government has subsidized its auto-parts industry to the tune of $27.5 billion and is committed to providing another $10.9 billion in subsidies for industrial restructuring and technological development, the report found.
A third report, issued by Stewart and Stewart, found that these subsidies are likely to continue for many years, unless challenged by Congress or the Obama administration. In all, the report concludes that over the next five years, it's projected that the Chinese government will invest $1.5 trillion in seven industries. Specific automotive parts companies that are targeted manufacture batteries, fuel cells, electronic control systems and electric motors.
Brown says that he was encouraged to hear President Obama announce the creation of a new trade enforcement panel during his State of the Union address, but emphasized the need for swift trade action against Chinese trade practices.
"We need an all hands-on-deck approach – between the U.S. Trade Representative, the State Department and the Commerce Department," Brown said. "We need to be aggressive, and we need to fight back to save our critical manufacturing jobs."
U.S. Rep. Tim Ryan, D-17, Ohio, says that the administration has already seen some success in tariffs exacted on steel tubing and tires, and taking on the auto-parts industry in China is a logical next step.
"You've got to fight these guys on all fronts," Ryan says. "They're relentless in their pursuit to subsidize products coming into the United States."
The reports released Tuesday also fall in line with what Ryan says is China's continued manipulation of its currency, a policy that the congressman has worked to sanction since his early days in the House. The congressman and others have accused China for intentionally undervaluing its base currency, the yuan, making it cheaper to ship goods to other markets, namely the United States.
"We've got to be as vigorous as they are in pushing back," Ryan says. "That means tariffs on their products coming in, that means going after things like these subsidies, and letting the American people realize what an unbelievable effect this could have on small-and medium-sized businesses."
While the tough rhetoric might lead to additional sparring between the two countries, a trade war is a fight the Chinese simply can't afford, Ryan adds. In December, the Chinese government slapped significant tariffs on American-made sport-utility vehicles and large passenger cars.
"The bottom line is we are their customer," Ryan says. "So, any kind of trade war would benefit us rather than hurt us, because if the current trade imbalance."
Ryan says the best course of action is to adopt the aggressive type of trade enforcement that Brown and others are calling for.
"Taking on China is one of the things we need to do to balance our economy," Ryan says. "We're bleeding in the industrial Midwest."