Ruling Requires Manufacturers to Prove Harm from Imports

A federal trade panel ruling in the US has provided a glimmer of hope for Chinese tyre manufacturers facing the prospect of tariffs imposed upon their products. On November 20 the United States International Trade Commission ruled against the American glossy paper industry’s request for tariffs on paper imported from China, discarding duties that the US government had authorised earlier in the year. The ruling stated that US makers of glossy or coated paper had not been “materially injured” or “threatened with material injury” by the subsidised Chinese products entering the market.

However the ruling did not dispute that the Chinese government’s programme of subsidising of products destined for export may be improper or illegal, therefore the door remains open for US tyre manufacturers, amongst others, to seek relief through the imposition of tariffs. Government policy introduced in March, allowing for potentially crippling tariffs on Chinese manufactured goods on the premise that China illegally subsidises some of its exports, also remains in operation.

Despite the continuation of such policy, the Chinese government views this latest ruling as a minor victory in its fight to gain greater US market access. “Our clients are ecstatic,” said Daniel L. Porter, a partner at the law firm representing the Chinese government and several Chinese paper manufacturers, Vinson & Elkins. “The ruling sends a message to industries clamouring for tariffs to make sure they can show they are injured from imports. Otherwise, they’ll be fighting their cases for nothing.”

The Bush administration’s decision to sting Chinese manufacturers deemed to be selling illegally subsidised goods onto the US market by attaching potentially high tariffs to the products is a u-turn on more than 20 years of US policy, and China has condemned the decision as illegal under World Trade Organization rules. The global body has yet to determine whether or not its rules have been violated by the US government’s actions. In the meantime, the US Commerce Department, which works with the International Trade Commission, continues to look at the viability of imposing duties on a range of imported products, including tyres.