China Strongly Opposes US Tire Import Duties

by Mary Swire, Tax-News.com, Hong Kong

15 September 2009

President Obama’s announcement of the imposition of special duties on imports of some Chinese tires has provoked strong opposition from the Chinese government, particularly after a similar decision earlier with regard to Chinese steel pipe.

Following the announcement by the White House, the US Trade Representative, Ron Kirk, released a statement on the decision to impose the remedies under Section 421 of the 1974 Trade Act to stop a “harmful surge” of imports into the United States of Chinese tires for passenger cars and light trucks. He said that production of similar products in the United States has dropped, domestic tire plants have closed, and American jobs have been lost.

Based on the above, the US International Trade Commission had already recommended the decision to the US government. Three-year duties, consisting of an additional tariff of 35% ad valorem in the first year, 30% ad valorem in the second, and 25% ad valorem in the third year, are being imposed. President Obama also announced that Trade Adjustment Assistance will be targeted to help affected workers, industries, and communities immediately, while the tariff changes take effect.

"When China came in to the WTO, the US negotiated the ability to impose remedies in situations just like this one," said Ron Kirk. "This Administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system."

"These remedies are a necessary response to the harm done to US workers and businesses, designed to achieve the objective of curbing what the ITC determined was a harmful surge of Chinese tires into the US market," he continued. "China is America's second largest trading partner, and the health and strength of our relationship are very important to both countries. We consulted with China as allowed for under the WTO."

The Chinese government immediately criticized the additional duties and voiced their vigorous dissent, disputing that they did not violate WTO rules. It said that China, while there had been discussions with the United States, disputed the facts of the case as presented by the United States and was therefore extremely dissatisfied with the decision to continue with the imposition of the duties.

It was said that China could lose up to USD1.7bn in tire exports, and the government said that it reserved the right to take whatever action it felt necessary to protect the interests of Chinese companies.

Furthermore, this follows recent action taken by the United States to impose preliminary import tariffs of between 10.9% and 30.69% on Chinese suppliers of steel pipe used in the oil and gas industry. Pipe imports from China were valued at US$2.6bn in 2008. However, a final decision on those duties is not expected until early in January next year, after the US International Trade Commission’s formal approval, which is necessary for the duties to take force.

The Chinese government had also expressed their strong dissatisfaction with that proposed measure, and had voiced its opinion that it would increase costs in the US oil industry while throwing doubt on sources of supply, thereby delaying US projects.

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