WTO upholds US import tariffs on Chinese produced tyres

The World Trade Organization (WTO) has upheld the US government’s decision to impose 35 per cent import tariffs on Chinese produced passenger car tyres in September 2009. Two years later these have been lowered to 25 per cent, as initially planned. However, the Chinese authorities maintain that the original ruling has seriously harmed Chinese producers and the decision to uphold it will “intensify their difficulties.”

The WTO’s decision to uphold the tariffs, published on 5 September 2011, rejected a Chinese complaint, saying the US did not “fail properly to establish that rapidly increasing imports from China were a significant cause of material injury to the domestic industry…”

In response the Chinese Ministry of Commerce, known locally as Mofcom, “expressed its regret,” with an unnamed spokesperson saying: “The measures taken by the United States in 2009…are protectionist measures.” The official said the tariffs, which didn’t gain support from the US industry, hurt China’s legitimate trading interests and didn’t help reduce US tyre imports, according to the local China Daily newspaper.

China Daily went on to reports that although US imports of Chinese tyres declined by about 24 per cent in 2010 and 6 per cent in the first half of 2011, US tyre imports still grew 20 per cent in 2010 and 9 per cent in the first half. The suggestion is that the import tariffs were unfairly biased against Chinese produced imports rather than tyre imports per se

The newspaper quoted US Trade Representative Ron Kirk as saying in a statement that the WTO ruling is a “tremendous victory for the US as well as for American workers and manufacturers”. However there have been seriously divergent opinions on the necessity of the tariffs within the tyre business and even within the US tyre business itself.

In addition Yan Wei, chief economist of Orient Securities Co Ltd told China Daily that: “The tariffs did little to create jobs for the US but largely shifted the import source from China to countries such as Brazil and Mexico.”

Nevertheless the WTO ruling states that for the reasons set out in its report the US “did not err in its assessment of the conditions of competition in the” and “did not fail to properly evaluate whether imports from China met the specific threshold of “increasing rapidly””. And therefore the tariffs still stand and, to some extent the doorway remains open for the US to extend this decision further in future.