14 September 2009
United States Imposes Special Tariffs on Chinese-Made Tires
Washington — President Obama imposed special duties on imports of Chinese-made automotive tires for three years to correct market disruptions caused by a surge in imported tires, the White House said.
“As part of its accession to the World Trade Organization (WTO), China agreed to a special safeguard mechanism that would allow its trading partners to implement remedies in response to import surges,” the White House said in a September 11 statement. “The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case.”
The additional import duty on Chinese-made passenger vehicle and light truck tires, which have a regular 4 percent duty, will be set at 35 percent of their value in the first year, then decline to 30 percent in the second year and finally 25 percent of its value in the third and final year of the specially imposed duty. The new duty is set to take effect September 26.
This trade dispute arises a week before the United States hosts a summit in Pittsburgh of the Group of 20 advanced and emerging industrialized economies to discuss actions that may be needed to avoid future economic crises similar to the current crisis that has affected nearly every national economy. A number of European nations are seeking to impose stricter regulation on the financial sector, and efforts to prevent trade protectionism will also be discussed during the two-day summit.
Obama rejected a U.S. International Trade Commission (USITC) request to impose duties of 55 percent in the first year, 45 percent in the second year and 35 percent in the third year.
“When China came in to the WTO, the U.S. negotiated the ability to impose remedies in situations just like this one,” U.S. Trade Representative Ron Kirk said September 11. “This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system.”
The USITC’s finding of disruption in the U.S. tire market was accompanied by a recommendation of an additional tariff, or special duty, for three years. The amount of the three-year tariff announced September 11 was set through the use of an economic model developed on an interagency basis, incorporating key characteristics of the global tire industry to arrive at tariff levels that could provide the desired and necessary relief.
“These remedies are a necessary response to the harm done to U.S. workers and businesses, designed to achieve the objective of curbing what the USITC determined was a harmful surge of Chinese tires into the U.S. market,” Kirk said. “China is America’s second largest trading partner, and the health and strength of our relationship are very important to both countries. We consulted with China as allowed for under the WTO. This decision has been based carefully on America’s rights under WTO rules, namely China’s accession agreement, and on sound economic calculations.”
Obama reviewed recommendations from the U.S. Trade Representative’s office before signing a determination to apply the increased duties on tire imports, the White House said in its statement.
On July 9, the USITC sent the White House a report on its investigation under sections of the 1974 U.S. Trade Act of tire imports from China with a determination that the imports “are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers,” a presidential proclamation, issued September 11, said.
The complaint against the tire imports was originally filed by the United Steelworkers union, which argued that from 2004 to 2008 the tripling of Chinese-made tire imports had cost U.S. manufacturers more than 5,000 factory jobs.
Arguing that the new duties violate free-trade principles, China asked on September 14 for WTO-sanctioned trade consultations with the United States. China was also considering imposing tariffs on U.S. exports of automotive products and chicken meat, according to news reports.
Under WTO dispute-settlement procedures, involved parties normally consult within 30 days of the request being filed with the WTO. If no agreement is reached within 60 days of the request, China can ask the WTO to establish a dispute-settlement panel to examine the matter.
On September 9, the U.S. Commerce Department announced a preliminary determination to impose duties on imports of Chinese-made steel pipes used to transport oil. The $2.6 billion steel pipe case is pending further investigation and determination. In July, the United States imported 77 metric tons of the steel pipe, down dramatically from a peak of 376,000 metric tons in November 2008, according to the Commerce Department.
China automotive tire exports amount to approximately $2 billion annually. In the first seven months of this year, China exported $1.3 billion in tires to the United States, and the United States shipped about $800 million in automotive products and $376 million in chicken meat to China.
The U.S. trade deficit with China totaled $103 billion in the first six months of this year, down about 13 percent from a year ago. For all of 2008, the U.S. trade deficit with China was a record $268 billion, according to the Commerce Department.
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