ITC Rules in Favour of USW Petition

The quantity of Chinese made consumer tyres is indeed harming the local industry, the US International Trade Decision has ruled. On June 18 the ITC voted 4-2 in favour of a United Steelworkers initiated petition, which seeks to restrict permissible imports to 2005 levels. A ruling in favour of the petition means the ITC will meet again later in June to decide upon recommendations for the Obama administration.

Following the ruling, GITI Tire issued a statement saying it was “disappointed” about the outcome. The Shanghai based company pointed out that US tyre manufacturers have for some time been reducing production in the low-cost end of the market where Chinese brands now compete. “If there is a barrier placed on tyres produced in China, we believe that US manufacturers will simply increase importation of tyres from other countries,” the company said in its statement.

The USW is, predictably, pleased with the ruling. “We anticipate the remedies that will be delivered to President Obama will allow the time necessary to rebuild the US tyre industry,” commented USW president Leo W. Gerard. His words were backed up by USW International vice president Tom Conway, who added: “We anticipate that the final decisions on remedies will improve domestic job security, increase production and sales, and allow for investment in capital equipment to better compete in the global market for the long term.”

One question, however, remains unanswered: Should President Obama decide to adopt the USW recommended quota of 21 million Chinese consumer tyres per annum, where will Chinese manufacturers instead send their excess production? The United Kingdom is already acknowledged as having the largest budget tyre segment (as a percentage of the whole market) of any European market, and inundating the consumer tyre market with even more cut-price tyres would most likely lead to sinking prices and reduced profit margins.