ITC Pushing Duty Increase, Not Quotas, in China Case

In a somewhat unexpected change in direction the US International Trade Commission will recommend a series of duty increases on Chinese-produced passenger and light truck/SUV tyres exported to the US. Monday’s decision, which is being forwarded to President Obama for his consideration, would place a three-tiered additional duty on the tyres based on their value – 55 per cent in the first year, 45 per cent in the second year, and 35 per cent in the third year. The fees would presumably make the retail cost of Chinese tyres more expensive in the US.

The duty plan was not sought by the United Steelworkers, which petitioned the government for a rollback in the number of consumer tyres imported from China. On June 18, the ITC ruled in favor of the USW by a 4-2 vote. That same 4-2 majority made the duty recommendation. In addition to the duty, the ITC recommends that the President direct the US Department of Labor and the U.S. Department of Commerce to provide expedited consideration of Trade Adjustment Assistance for firms and/or workers that are affected by the imported tyres.

As expected, the USW hailed the ITC decision. Leo Gerard, USW international president, said: “Today’s remedy vote by the ITC is a great victory for the USW, its members and for all US tyre workers. The tariffs voted by the commissioners should remedy the market disruptive surge in Chinese tyre imports that have caused harm to the domestic industry.”

“Both our own economic analysis as well as that of the ITC show that the recommended tariffs will have significant beneficial effects for the domestic industry,” said Tom Conway, USW vice president. “We applaud the Commission’s decision and look forward to working with the Obama Administration to see that it is fully implemented.”

On the other side of the aisle, Giti Tire called the decision “decidedly protectionist” and said it would take its case to President Obama. “The administration has a broader set of responsibilities and a wider vantage point to devise a successful solution in this case,” said Vic DeIorio, Giti Tire’s executive vice president in the US.

“The proposed remedy if enacted will not help US workers. Chinese-made tyres have filled a market void created when US manufacturers abandoned the economy segment of the mass market,” said DeIorio. “The duty will not have the effect of increasing domestic production of low-cost tyres – it simply will not help US workers. Rather, the result will be that American tyre manufacturers will continue to focus on premium tyres, as they have said they will do.

“If there is a barrier placed on tyres produced in China, US manufacturers and distributors will simply increase importation of tyres from other countries, such as Venezuela. What’s more, duties will result in higher tyres prices for American consumers at a time when they can ill afford it,” DeIorio added.

A news report from Oregon said that Les Schwab Tire Centers “reacted negatively to a trade panel recommendation for higher tariffs,” and that “Much of the company’s business is based on sales of less expensive imported tyres.” Schwab released a statement that said the only thing higher tariffs will mean is higher prices for US consumers. (Tire Review/Akron)