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Probe 'not revenge' for hefty tire tariff

By Si Tingting (China Daily)
Updated: 2009-09-14 06:41

Chinese officials and their US counterparts have been unable to reach an agreement after five months of talks. However, the new tariff is lower than the 55 percent proposed by the US International Trade Commission (ITC) based on a petition led by the United Steelworkers union (USW) that said tire imports had tripled since 2004, causing plant closures and job losses.

MOFCOM spokesman Yao said the move would push the cost onto the consumers, cause US wholesalers and retailers to scramble to find other suppliers, and fail to create new jobs in the US.

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"Chinese tire producers pose no direct competition to those in the US," he said before adding that China's tire exports to the US had not witnessed a remarkable increase as claimed by the USW.

Last year, the country's tire exports to the US grew by just 2.2 percent compared to 2007 and, in the first half of this year, fell 16 percent compared to 2008, explained Yao.

"Four US companies have tire production operations in China and account for two-thirds of exports to the US. The tariffs will have a direct impact on them," he said.

Cooper Tire and Rubber Co, a US-based tire maker, warned that higher tariff could disrupt markets.

The company said in a statement it believes in free and fair trade, and that the ITC's proposed remedy "is not appropriate or acceptable and could have significant negative impacts causing considerable market disruption".

The industry insider told China Daily the closure of many US tire factories "is, to some extent, a result of the strategic adjustment of the tire industry", with many tire firms moving production of low-end tires off-shore to make use of cheap labor.

"President Obama's decision is not in the interest of companies seeking higher profit margins," the insider said.

Analysts claim the actions of the Obama administration are at odds with its public statements about how protectionism could deepen the ongoing crisis.

The US and China, the world's two major economic engines, vowed to cooperate in the fight against the world recession but this dispute has caused friction before its top officials meet at a G20 summit in Pittsburgh on Sept 24-25. Obama is also expected to visit China in November.

The tariff change has also sparked debate in the US.

USW's International President Leo Gerard hailed the tariff hike by saying it "sent the message that we expect others to live by the rules, just as we do".

However, Marguerite Trossevin, legal counsel to the American Coalition for Free Trade in Tires, a pro-business group, said: "We are certainly disheartened the president bowed to the USW and disregarded the interests of thousands of other US workers and consumers."

Agencies contributed to the story

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