U.S. unions await Obama decision on China auto parts

WASHINGTON (Reuters) - U.S. union groups early this year began a campaign to persuade President Barack Obama to clamp down on imports of auto parts from China, which they said are unfairly subsidized and threatened 1.6 million jobs in all 50 states.

Now, with the November 6 presidential election fast approaching and votes on the line in the U.S. industrial heartland, the groups are looking for Obama to announce a decision soon.

"It's been basically seven full months. That's plenty of time to evaluate the merits of the case, and I do think the time to make a decision is now, absolutely," said Scott Paul, executive director of the Alliance for American Manufacturing, which works with the United Steelworkers union.

"This is an issue that's critical to Ohio, and to Michigan and to Pennsylvania and even to states like Virginia and Wisconsin, which have a lot of auto parts jobs," Paul said.

Ohio, a battleground state that Obama won in 2008, is seen as particularly important to Obama's effort to defeat Republican challenger Mitt Romney in the Nov 6 election.

Romney has wooed union workers by promising to crack down on China's trade and currency practices beginning on day one, but the latest polls show him running behind Obama.

New trade data on Tuesday showed the U.S. trade deficit with China soared in July to a record $29.4 billion, helping to underscore Romney's charge Obama has not been tough enough.

HOUSE DEMOCRATS URGE ACTION

After nearly all 190 Democrats in the U.S. House of Representatives sent Obama a letter in March calling for action on Chinese-made auto parts, White House adviser Gene Sperling told Reuters the administration took the issue "very seriously and we are very carefully reviewing it.

Nkenge Harmon, spokeswoman for the U.S. Trade Representative's office, declined recently to say whether a decision was imminent. Harmon also would not say if administration had decided not to act.

Paul said he believed the issue was still being discussed at senior levels within the White House.

The Economic Policy Institute, a think tank supported by labor groups, estimates the Chinese auto parts industry has received about $27.5 billion in subsidies since 2001.

Those generous handouts are the second leading cause of job losses in the U.S. auto parts sector, behind outsourcing to Mexico, United Auto Workers President Bob King has said.

The steelworkers successfully lobbied Obama in 2009 to curb tire imports from China, an action the union says helped create hundreds of new jobs. However, Romney called this move protectionist despite his promise to get tough on Beijing.

China reacted angrily to the move and imposed tit-for-tat retaliation against U.S. poultry exports. It also challenged the move at the World Trade Organization, but international trade judges said Obama acted within trade rules.

Labor groups have urged the Obama administration to file a case against Chinese auto part subsidies at the WTO or take the even more unusual step of "self-initiating" U.S. anti-dumping and countervailing duty proceedings against Beijing.

The second course could be more difficult since the U.S. imports many auto parts from China and the administration would have to file a series of cases to cover them all.`

In addition, Obama would have to persuade the U.S. International Trade Commission, an independent government agency, to approve the investigations, a role usually played by industry attorneys, not the federal government.

Unlike the tires case, union groups never filed a formal petition to set a deadline for Obama to make a decision on Chinese auto parts imports. But they hope the approaching election will prompt him to take action.

Tim Reif, general counsel in the U.S. Trade Representative's office, who is in China this week for talks, told reporters in June that any action against China on the automotive front would be based on a "careful examination of the facts".

(Editing by Neil Sempleman)