The Bush administration said Thursday that it is filing a trade case against China before the World Trade Organization in a dispute involving American auto parts.
The 25-nation European Union joined in the complaint, which alleges that China is imposing high taxes on auto parts imported from the U.S. and other countries in violation of pledges it made when China joined the WTO in late 2001.
"As a mature trading partner, China should be held accountable for its actions and be required to live up to its responsibilities," U.S. Trade Representative Rob Portman said.
Filing a complaint with the WTO triggers a 90-day consultation period in which both sides try to work out their differences.
If these negotiations do not succeed, then the United States and the EU will have the right to pursue a trade case that could result in penalty tariffs being levied against Chinese products.
Before the new case joined by the EU, the United States was the only country ever to file a trade case against China before the WTO. That earlier case, involving a Chinese tax rebate for semiconductor chips, was resolved during the consultation phase.
The filing comes at a time of rising trade tensions with China. The administration is being pressured by Congress to get tough with what critics sees as numerous unfair trade practices that have contributed to America's soaring trade deficit with China.
The trade deficit with China soared to $202 billion last year, America's highest record ever with a single country.
"We expect that country to treat us fairly," President Bush said Wednesday while taking questions from reporters. Bush is scheduled to meet in mid-April with Chinese President Hu Jintao in Washington.
The U.S. also is looking at filing another trade case with the WTO against China over what the trade representative's office says is rampant piracy of intellectual property rights such as movies, music and computer programs.
The United States also has made clear it wants China to act faster to overhaul its currency regime.
U.S. Manufacturers claim that China is deliberately undervaluing its currency, the yuan, to gain an unfair trade advantage against the United States. This undervaluing makes Chinese goods cheaper in the United States and American-made goods more expensive in China. Manufacturers say that has hurt U.S. exports, contributed to the ballooning trade deficit and has been a factor in the loss of U.S. factory jobs.
China last July took a small step toward a more flexible currency system, but the Bush administration has made clear it wants to see more progress right away.