Imported tire fight with China escalates

Imported tire fight with China escalates    A war of words raged on Monday over the Obama administration's decision to impose duties on all tires imported from China, with trade groups and Chinese government officials denouncing the decision.
   On Friday, the United States said it would begin levying duties on imports of passenger vehicle and light truck tires of 35 percent in the first year, 30 percent in the second and 25 percent in the third. The duties, which are set to start Sept. 26, would help stem losses in the domestic tire-manufacturing sector, the administration said. Existing tariffs are less than 4 percent.
   The United Steelworkers brought a petition seeking remedies on Chinese-made imports, which it said reached 46 million tires valued at $1.7 billion last year. The union, which represents thousands of tire workers, said imports of low-cost Chinese tires tripled between 2004 and 2008 while domestic tire production fell by a quarter. It said Chinese imports spiked 57 percent in August from the first four months of the year after it filed its petition in April.
   The U.S. International Trade Commission determined in June that the Chinese tires disrupted the U.S. market and voted to impose tariffs of 55 percent in the first year, 45 percent in the second and 35 percent in the third. The union had sought quotas as the preferred remedy. Obama on Friday approved the ITC's recommendation and modified the tariff amount.
   But China reacted angrily to the duties, vowing to fight back with retaliatory duties on auto parts and chicken imports from the United States.
   The tariffs are “a serious case of trade protectionism, which China resolutely opposes,' Chinese deputy commerce minister, Zhong Shan, was quoted by the state-owned Xinhua news agency.
   China also launched a World Trade Organization case over the filings, a week before the two countries meet at a global economic summit in Pittsburgh. The complaint, according to an Associated Press report, triggers a 60-day WTO dispute resolution process. If that fails, China can ask a WTO panel to investigate the matter.
   Meanwhile, the Retail Industry Leaders Association said Monday it was disappointed with the decision by the Obama administration, noting that no U.S. tire producers supported the petition and that some opposed the steelworker union's effort.

Kirk

   'RILA is disappointed in the president's decision to bow to political pressure to erect tariffs against Chinese tires,' said Stephanie Lester, RILA vice president of international trade. 'This precipitous decision could lead to more such cases and have serious implications on the trade relationships that the U.S. has forged around the world.'
   In August, RILA spelled out the potential negative consequences of tariffs on Chinese tires to U.S. Trade Representative Ron Kirk. Specifically, the comments highlighted the public safety implications of forcing a sudden increase to tire prices at a time when consumers are already forced to make difficult personal budget decisions.
   “Trade liberalization that removes barriers that disrupt the natural flow of commerce and stifle economic opportunity are good for workers, consumers businesses in the U.S. and abroad,' Lester said.
   The American Apparel and Footwear Association said the trade sanctions on tires could spill over into other areas by encouraging other groups to seek import barriers on textile and apparel products.
   'We are concerned that the affirmative decision on tires raises political expectations that additional protectionist measures on these and other products could be easily granted which could result in an international trade war and jeopardize our economic recovery,' said Kevin Burke, the trade association's president.
   The United States is within its rights under the WTO rules to impose safeguards on goods from China for a period of 12 years since its accession in 2001 to the international body, the United Steelworkers noted. China agreed to the safeguard measures in U.S. law to gain U.S. support for permanent normalized trade relations the year before.
   'Enforcing trade agreements is part and parcel of maintaining an open and free trading system,' United Steelworkers President Leo Gerard said in a statement.
   The administration's decision sends a message to U.S. manufacturers that there still are legal protections that make it worthwhile to maintain domestic production rather than move factories overseas, Washington Post columnist Harold Meyerson wrote Sept. 2.