Helping Fact Check the POTUS’s SOTU: WTO Complaints Against China

A lot of people have been fact checking last night’s SOTU address by the President. I was reading through ABC’s version, and found myself a little unhappy with this bit:

President Obama said tonight that he’s “brought trade cases against China at nearly twice the rate as the last administration.”President Bush filed seven complaints with the World Trade Organization against China, over eight years. Obama has filed five in three years.

Obama’s team must have done some math: If Obama keeps that rate the same, he’ll have filed about 13 by the time his (presumptive) second term ends. That’s just one short of 14, which would be, as Obama said, twice as much as Bush’s seven.

Here’s a list of US actions against China since 2001, with Obama’s in blue and Bush’s in maroon:

• Anti-Dumping and Countervailing Duty Measures on Broiler Products from the United States (9/20/2011)
• Measures concerning wind power equipment (12/22/2010)
• Countervailing and Anti-Dumping Duties on Grain Oriented Flat-rolled Electrical Steel from the United States (9/15/2010)
• Certain Measures Affecting Electronic Payment Services (9/15/2010)
• Measures Related to the Exportation of Various Raw Materials (6/23/2009)
• Grants, Loans and Other Incentives (12/19/2008)
• Measures Affecting Financial Information Services and Foreign Financial Information Suppliers (3/3/2008)
• Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (4/10/2007)
• Measures Affecting the Protection and Enforcement of Intellectual Property Rights (4/10/2007)
• Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and Other Payments (2/2/2007)
• Measures Affecting Imports of Automobile Parts (3/30/2006)
• Value-Added Tax on Integrated Circuits (3/18/2004)

Hmmmm – at first blush ABC appears to be correct – Bush had 7 complaints while Obama had 5. So what’s my beef?

The Lie. Well, first of all, China didn’t even join the World Trade Organization until the end of 2001, so the Bush administration couldn’t have submitted a complaint during Bush’s first year. Second, China was given a 5-year grace period to come into compliance with WTO policies. This is usually accompanied by an informal grace period during which no complaints are filed. The Bush administration filed a complaint in 2004 as a warning shot, but in 2006 China’s grace period was cut short:

The West at first was tolerant, sending only small warnings to Beijing. The first was in March 2004 when Washington filed a WTO complaint against China’s preferential refund of value added tax for domestically produced or designed integrated circuits. Beijing had no leg to stand on and quickly repealed the offending tax break. Nevertheless, the Chinese did not take the hint. In February 2006, America warned China that its informal grace period was over, and, after more Chinese foot dragging, Washington and Brussels took the unprecedented step of jointly filing a complaint at the end of March.

Obama managed to make his claim by ignoring the facts that China basically had no complaints filed against it during its first 4 years, and that the Bush administration was very proactive in submitting complaints even before China was required to come into full compliance with WTO standards. Let’s redo the math:

Bush administration filed 6 complaints in 2006-2008. Obama administration filed 5 complaints in 2009-2011. This was a stupid contest from the start, but it looks like a tie to me.

And a tie means that President Obama lied.

*You may have noticed a few paragraphs ago where I said “First” and then “Second.” There is a Third: when the Bush administration began, Chinese imports were around $100 billion and our trade deficit was about $83 billion. When the Obama administration took over, Chinese imports were $337 billion, and the trade deficit was $268 billion. Kind of a different scale of problem.