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Tire lobby in US to stymie anti-dumping proposal

By Ding Qingfen (China Daily)
Updated: 2009-08-04 09:59

Chinese tire industry players are gearing up to challenge a special remedy proposal against tire exports to the United States, the fate of which rests with US President Barack Obama who is expected to take a stand on the proposed measure soon.

A nine-member team, including representatives from Chinese tire associations and companies, yesterday headed to the US for a week-long lobbying effort against the punitive measures that American authorities are persuading President Obama to slap on Chinese tire exports.

Although the delegation has no idea whether Obama would eventually object to the proposal made by the International Trade Commission (ITC), due on Sept 17, they said they would continue all efforts to produce evidence that Chinese exports do not hurt the American tire industry. They are also expected to try and persuade the US to stop using trade protectionist policies that unreasonably affect the Chinese industry.

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Responding to the appeal by United Steelworkers on behalf of some tire workers claiming Chinese makers dumped tires into the US, the ITC proposed a remedy of 35 to 55 percent special import duties on Chinese-made tires in June, even though there was not a shred of evidence in support of the US claims.

The case is the first special remedy measure ever against China since 2007, and also the largest such by volume, involving $2.2 billion.

It is also a difficult question for Obama to answer. The proposal, if approved, will encourage more nations to follow suit in both the tire and other sectors against China and also cast a shadow over strengthening bilateral economic relations.

But, on the other hand, if Obama says no to it, he will provoke a backlash from the American Union Organizations, which had supported his presidential bid.

"We will not give up on our efforts until they give up the measure," Ge Guorong, deputy manager of Hangzhou Zhongce Rubber, told China Daily.

Zhongce Rubber is one of the top three tire exporters to the US. US exports made up for 22 percent of the company's annual exports, valued at around $600 million. The company has sent two representatives to the US.

Giti Tire, a joint venture and a leading tire exporter, has also sent two representatives. "The US proposal cannot hold any water. The plan, if Obama eventually agrees, will surely jeopardize our business, but cannot benefit theirs either. It's absolutely meaningless," said Shen Weijia, executive director of Giti Tire China.

Giti Tire exports tires worth $200 million, a majority of which goes to the US. "We will incur a huge loss if the measure is introduced," Shen said.

"We hope our efforts can take off. If not, we will resort to the Chinese government, appealing to the World Trade Organization. It's nothing but a trade protectionist policy."

Besides Zhongce Rubber and Giti Tire, China Rubber Industry Association (CRIA) and China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters are also part of the lobby list.

The team will visit high-level officials from key American organizations, including the US Trade Representative (USTR), US Department of Commerce and US Treasury. The lobby team will explain how the proposed measures are unfair for Chinese tire makers.

The representatives will also attend a hearing held by the USTR, which will on Sept 2 report to Obama on its final suggestion regarding the tire case. By Aug 24, the consultation with the US is scheduled to end.

Actually, there are enough evidences for Obama to turn down the proposal.

On July 27, the CRIA and the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters sent a letter to Obama spelling out the reasons why Chinese exports do not threaten the American industry. "They do not compete in the US. Rather, they serve a different market," the letter stated.

It also mentioned the restrictions would force automakers to "purchase from elsewhere, at a higher price, which will reduce their profits".

Also, the Tire Industry Association, Automaker Policy Council representing Ford, GM and Chrysler, and American Retailer Leader Association recently expressed their objections, arguing that the policy would destroy benefits to automakers and consumers.

A source from the Ministry of Commerce on condition of anonymity told China Daily that it was still hard to predict the result considering the complicated political factors that Obama has to balance.

"But if the measure is agreed upon, then we will immediately approach the WTO," he said.

China has been the target of trade protectionism since late 2008, and the US has led the wave. Zhou Xiaoyan, deputy director of the China Bureau of Fair Trade for Imports & Exports, said recently that China would more actively respond to such measures.

Until now, China has appealed to the WTO four times against the US.