U.S. and Chinese trade officials met on Thursday for talks on perennial trade issues such as piracy and tariffs, as fresh frictions surfaced over American auto exports.
The start of the formal talks ran two hours late as discussions over specific issues dragged on, and officials addressing the opening session referred constantly to the need to speak with “candor” - in diplomat—speak a word often signalling differences of opinion.
“It is critical to make concrete, demonstrable progress today to demonstrate to the people of the U.S. and China that we can work together,” Commerce Secretary Gary Locke said in his opening remarks.
Mr. Locke’s comments followed an announcement that China plans to investigate dumping allegations against auto exports by the three big Detroit automakers.
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.
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.
But the issue has the potential to sour the doggedly cordial atmosphere officials have sought to cultivate ahead of President Barack Obama’s Nov. 15-18 visit to China.
Mr. Locke did not refer specifically to the auto issue, though he said he hoped for progress on other perennial trade issues: restrictions on U.S. farm exports, cooperation on clean energy, improved protection of copyrights and other intellectual property, and trade and business restrictions on various products and services, such as medical devices, pharmaceuticals and insurance.
Later, the two sides were to sign an agreement to set up a U.S.-China Energy Cooperation Program, a public-private partnership that will use U.S. expertise to help develop clean energy in China.
U.S. Trade Representative Ron Kirk also did not mention autos, though he proposed that the annual meetings of the U.S.-China Joint Commission on Commerce and Trade be supplemented by mid-term reviews to help ease consultations over increasingly thorny issues.
The two sides are already at odds over steel pipes, chicken products, and pirated movies and music. The trade spats 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.
Repeating what has become a mantra for the Obama administration, Mr. Kirk said the two sides would not “allow any single issue to detract from our broader overall relationship.”
Despite the trade rows, 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 forum was created 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.
Sales in China are expected to continue climbing to 12.6 million units in 2009, while analysts say U.S. light vehicle sales for the year will wind up around the 10.5 million level.