Obama plans new team to get tough on China trade

WASHINGTON Wed Jan 25, 2012 8:41am EST

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WASHINGTON (Reuters) - President Barack Obama on Tuesday said he was creating an enforcement unit to crack down on unfair trade practices in China and other countries and would beef up border inspections to block imports of counterfeit goods.

"I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don't play by the rules," Obama said in his annual State of the Union speech.

The White House said the new enforcement team would bring together resources and investigators from across the federal government to go after unfair foreign trade practices.

Obama said his administration had already brought trade cases against China "at nearly twice the rate as the last administration ... But we need to do more. It's not right when another country lets our movies, music, and software be pirated. It's not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidized."

Republicans vying to take on Obama in this year's presidential race have slammed his handling of China. Former Massachusetts Governor Mitt Romney has promised a tougher approach, begin with labeling China a currency manipulator.

The U.S. trade deficit with China is expected to hit a new record high of about $300 billion in 2011 when figures are released next month.

The U.S. Trade Representative's office has filed five World Trade Organization cases against China since Obama took office in January 2009, compared to seven during the two terms of former President George W. Bush. China joined the WTO in December 2001.

In addition, the Commerce Department is currently investigating U.S. industry charges of unfair pricing practices by Chinese wind and solar energy equipment manufacturers.

Obama did not mention those cases, but urged Congress to pass tax credits to create more U.S. clean energy jobs.

"I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here," he said.

A business group representing U.S. companies that do business in China said it welcomed Obama's push to open China's markets to more U.S. exports.

"Direct negotiation with China is the best first approach to dealing with commercial problems American companies have with China. But we also can use other sound legal tools - such as anti-dumping investigations and WTO cases," said John Frisbie, president of the U.S.-China Business Council.

Another group that represents both labor and domestic manufacturers that compete with China also welcomed the initiative, but urged lawmakers to go further.

Congress should pass "a bipartisan bill to stop China's currency manipulation," said Scott Paul, president of the Alliance for American Manufacturing.

Last month, a top U.S. trade official said China continued to fall short on many of its WTO promises including barriers to its agricultural markets, weak intellectual property rights protection, discriminatory industrial policies and barriers in services.

Obama, in his speech to Congress, promised to increase border inspections to stop counterfeit name-brand goods and other pirated or unsafe products from getting into the United States.

The U.S. Chamber of Commerce complains the worldwide trade in fake goods, many of which come from China, costs the United States hundreds of thousands of good-paying jobs.

Obama said the United States cannot afford to stand by when competitors like China offer cheap government financing to help their businesses win sales overseas.

He also appeared to make a subtle pitch for lawmakers to approve "permanent normal trade relations" with Russia in order to ensure that U.S. companies benefit from the market-opening benefits of Moscow's expected accession to the WTO.

"This Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you - America will always win," Obama said.

(Reporting By Doug Palmer; Editing by Eric Walsh)