Commentary: U.S. trade dispute with China a mistake

U.S. complaints over Chinese automotive subsidies will not only fail to benefit the U.S. auto industry, but will demonstrate the country's duplicity.

The U.S. is making two mistakes with the move. First, it is engaging in China-bashing for the sake of its domestic election. Second, it is going against WTO rules by failing to provide a stable legal environment for trade.

The Obama administration has filed a World Trade Organization (WTO) case against China, alleging that the country has used illegal subsidies to harm U.S. profits and jobs. It is the United States' 10th trade remedy probe against Chinese imports in two years.

Countervailing and anti-dumping investigations have become a frequent problem for Chinese exporters. Nonetheless, the latest case stirs indignation, as it is likely the result of political maneuvering between President Barack Obama and his Republican foe Mitt Romney during their respective presidential election campaigns.

Both candidates are competing to find new scapegoats for their inability to handle domestic economic woes, as well as avoid being seen as too soft when dealing with China. Bashing China's auto industry may prove to be useful for Obama in swing states like Ohio, where many people work in the industry.

The U.S. government does face a trickier picture: limping growth accompanied with stubbornly high unemployment, as well as debt woes that have spread from commercial mortgages to sovereign bills.

However, the government's problems are not justification for taxing Chinese goods.

In the past three years, similar trade remedy probes covering wind turbines and solar panels have shown how a "get tough" policy on Chinese exports has not only failed to get the U.S. economy moving, but actually raised prices for consumers and ignited a trade war between the world's top two economies.

China has always advocated using consultations to sort out sensitive trade disputes, but could run out of patience if its goodwill receives no rational response. It will not run out of ammunition to counter unfriendly moves.

China's decision to complain to the WTO is a natural and reasonable defense tactic in the face of crafty legal tactics used by the U.S.

According to WTO rules, anti-dumping and countervailing duties can be applied to market economies, while "non-market economies" can be exempted from probes.

The United States has refused to recognize China's market economy status and ignored China's concrete steps to liberalize its economy.

The U.S. government has subjected Chinese manufacturers to a range of probes and enacted punitive duties without legal support. Recognizing the procedural loopholes, U.S. lawmakers broke routine earlier this year and passed the GPX bill to authorize the U.S. government to apply countervailing duties to "non-market economy" countries, making the bill retroactive to Nov. 20, 2006.

This unconventional move puts Chinese businesses in an uncertain legal environment and violates WTO rules on transparency and procedural justice.

It also underscores the country's utilitarianism and craftiness in dealing with trade disputes and is consistent with its image as a self-righteous and discretionary judge.

While the U.S. government spares no effort to swiftly adapt laws to its own needs, China must safeguard its interests within the framework of the WTO.