American Auto Parts Sector is Being Destroyed
The American auto industry is seeing a small resurgence, but the auto parts sector that has always supported it is in a much weaker state. A flood of cheap, subsidized Chinese parts have put many American manufacturers out of business. There are a few in government who have recognized this threat, but no action has been taken to curb this damaging influx.
The bailout of the American auto industry has been one of the few economic successes the United States has seen in recent years. The government received its money back ahead of schedule and GM is now the world’s largest automaker once again. Unfortunately the auto parts sector has not seen the same success. Domestic auto parts manufacturers have only regained 60,000 jobs since the lowest point in the recession in 2009. Meanwhile, the United States lost over 400,000 jobs in auto parts manufacturing between 2001 (the year China joined the WTO) and 2011. Since the year 2000, Chinese auto part exports increased by over 900 percent, putting immense pressure on American competitors. Over that same time period China provided $27.5 billion in subsidies to its auto part manufacturers, even though a large portion of these subsidies was illegal under WTO rules.
Last month, a group of 188 Congressmen and Senators sent a letter to President Obama urging him to use whatever means necessary to protect the auto parts industry.
“We are writing to express serious concern about China’s unfair practices in the auto parts sector, and to encourage your Administration to use all existing authority under the law to preserve and protect U.S. production and jobs…. Given its importance, the Administration’s vigilance in addressing China’s harmful policies now, while we can still change this one-way street in trade, is essential. American companies and workers can compete anywhere when the playing field is level,” the letter stated.
American workers have all too often lost their jobs because other countries like China don’t play by the rules. Not only is China subsidizing its manufacturers directly, the country is also artificially devaluing its currency to make its exports cheaper for American markets. There is legislation that has stalled in Congress that could address China’s currency manipulation, but House leadership has purposefully let it fall by the wayside. We have seen no action from the president’s trade enforcement unit either. It appears that a few elected officials recognize the seriousness of this situation, but they may not be enough.