Steelworkers Blast China on Subsidies

The United Steelworkers filed a complaint with U.S. trade officials Thursday charging that China is unfairly subsidizing its clean-energy technology sector, presenting the White House with a potential political headache ahead of congressional elections in November.

The union's 5,800-page brief asks U.S. Trade Representative Ron Kirk to take action against China's efforts to build its green-technology manufacturing, from compact fluorescent light bulbs to wind turbines. China has used "hundreds of billions of dollars in subsidies, performance requirements, preferential practices and other trade-illegal activities to advance its domination of the sector," the USW said in a statement.

In a conference call with reporters Thursday, USW President Leo Gerard said the union's concerns go beyond the issue of government subsidies and assistance laid out in the complaint.

"We ought to get our head out of our butt and start doing something on China's currency manipulation," Mr. Gerard said, calling on the White House to take action on the issue.

The union alleges that the Chinese government violated World Trade Organization rules by providing billions of dollars in subsidies to Chinese companies and discriminating against U.S. firms operating in China, in part by restricting their access to needed raw materials.

A Chinese government representative said that both countries benefit from China's expansion into green technology.

Wang Baodong, spokesman for the Chinese Embassy in Washington, said the U.S. should adopt a "rational attitude toward the issue in question and not create obstacles to expanding bilateral cooperation."

The Steelworkers action comes at a delicate moment for the Obama administration. National Economic Council Director Lawrence H. Summers and Deputy National Security Adviser Thomas E. Donilon earlier this week wrapped up a four-day series of meetings with top Chinese officials, including President Hu Jintao and Premier Wen Jiabao. The White House said after the meeting that U.S. and Chinese officials had "candid exchanges" on economic issues.

But at the same time that Mr. Obama is trying to improve relations with Beijing, he is under growing pressure at home to take a tougher line with China on its currency and trade policies. Union support will be critical to Democratic candidates facing tough campaigns this fall, and Mr. Obama's stance on trade issues is a litmus test for many union leaders.

Some Democratic leaders in Congress have joined union and business leaders to put pressure on the White House to confront Beijing over the yuan.

"Without strong action on currency, we are only dealing with 30% of the trade distortions by China," said Dan DiMicco, chief executive of steelmaker Nucor Corp., who advises the White House on manufacturing policy.

White House officials declined to comment on the petition, and didn't respond to requests for comment on the currency issue. "USTR will review the petition in accordance with established procedures," a U.S. Trade Representative spokeswoman said in a statement.

China had sought to blunt some international pressure over the value of the yuan in June, announcing it would begin moving toward a floating yuan again. But the currency has only appreciated a fraction of a percent over the past several months, frustrating lawmakers who say the currency is undervalued between 20% to 40% and a major contributor to the U.S.'s trade deficit.

In July, the U.S. Treasury declined to cite China for currency manipulation in a report to Congress, angering some Democratic leaders.

Lawmakers might vote in coming weeks on measures to sanction China. Treasury Secretary Timothy Geithner is slated to appear next week before the House Ways and Means Committee, where he likely will face tough questions on trade issues.