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Obama steps up trade battle with China

Barack Obama has escalated the US’s trade battle with China, launching a formal complaint against Beijing as both of his potential successors push the domestic political debate in an protectionist direction on the campaign trail

The new case brought by the US president with the World Trade Organisation challenges Beijing’s export restrictions on key commodities needed by US manufacturers and was accompanied by sharp rhetoric from the White House.

“It all comes down to fair competition - a notion that is fundamental to who we are as Americans,” said vice- president Joe Biden.

The complaint is the latest sign that sentiment in Washington, which last year appeared ready to embrace trade deals with the EU and Asia, has become more volatile towards free trade amid rising anger in the electorate. It also comes as Brussels is moving to ease its own tensions with Beijing. During an EU-China summit in Beijing yesterday, the two sides announced a new working group to monitor pricing and public subsidies to steel mills in China.

Jean-Claude Juncker, European Commission president, said that the new group would be allowed to test Chinese pledges to trim the excess capacity that is swamping world steel markets.

The move is aimed at EU leaders who have linked a resolution of the steel dispute to China’s claim for market economy status at the WTO.

 If Beijing is able to win the status, major economies would be limited in punitive tariffs they could impose for trade violations.

The US filing complains that Chinese duties on nine key commodities - including copper, cobalt, tantalum and tin - are unfair export restrictions that enable Beijing to make important raw materials available to its own manufacturers at artificially low prices.

Mr Obama had hoped that trade would be one of his key economic legacies, particularly a 12-nation Asian trade deal, the Trans-Pacific Partnership, that has languished on Capitol Hill.

The TPP, which covers about 40 per cent of the global economy, is the largest regional trade deal ever negotiated by the US and is seen by its backers as an important component of US strategic efforts to counter what Washington sees as China’s increasingly aggressive bid for dominance in the Asia-Pacific.

But it has been opposed by presidential candidates, Democrat Hillary Clinton and Republican Donald Trump, threatening what the administration still hopes will be its approval by Congress later this year.

Partly to counter that and the accusation by Mr Trump and other Republicans that it has been weak on China the Obama administration has been stepping up its trade actions against Beijing.

The new case is the 13th brought to the WTO by the Obama administration, which Mr Biden said had moved “more aggressively than any previous administration in history” to take on China and enforce US trade laws.