WTO Rules U.S.Tariffs on Chinese Tire Imports Legal (Businessweek)
Dec. 13 (Bloomberg) -- World Trade Organization judgesrejected China’s complaintthat U.S.tariffs on Chinese car and light-truck tires violate global trade rules, sayingthe Obama administration “did not fail to comply with its obligations.”
President Barack Obama announced the three-year dutieson $1.8 billion of tires from Chinain September 2009, acting on a complaint by the United Steelworkers union,which represents 15,000 employees at 13 tire plants in the U.S. The unionsaid Chinese tire exports to the U.S. tripled from 2001 to 2004 to41 million and called for a cap on annual imports of 21 million.
The case was the largest so-called safeguard petitionfiled to protect U.S.producers from growing imports from China. Union leaders and Democraticlawmakers said at the time the decision was proof of Obama’s commitment tosafeguarding domestic workers and jobs.
The Chinese government said the tariffs broke WTOrules and were a “serious case of trade protectionism, which Chinaresolutely opposes.” It lodged a complaint at the Geneva-based WTO against theduties just three days after Obama announced them.
“This is a major victory for the United States and particularly for Americanworkers and businesses,” U.S. Trade Representative Ron Kirk said in a statementfrom Washingtontoday. “This outcome demonstrates that the Obama administration is stronglycommitted to using and defending our trade remedy laws to address harm to ourworkers and industries.”
Trade complaints against China have surged since Obamabecame president -- as have retaliatory steps by the Chinese government. China calls U.S.complaints against its exporters signs of protectionism while the U.S. says it’senforcing trade rules.
The two countries, the world’s largest andsecond-largest economies with $366 billion in annual two-way goods trade in2009, have clashed over access to each others’ markets for products includingsteel pipes, auto parts, poultry, movies and music. Chinaran up a $201 billion trade surplus with the U.S.in the first nine months of this year, more than the U.S. deficit with the nextseven-largest trading partners combined, according to Commerce Department data.
That gap, together with the drop in Americanmanufacturing employment and the U.S.contention that the yuan -- which has gained 2.4 percent since a two-year pegto the dollar ended on June 19 -- is undervalued, has made China a targetfor Congress and voter anger.
The Tire Industry Association opposed the tariffs,saying they would create shortages and hardships for tire retailers withouthelping domestic manufacturers. Findlay, Ohio-based Cooper Tire & RubberCo., the second-biggest U.S.tiremaker, and the U.S. unitof Osaka, Japan-based Toyo Tire & Rubber Co., which has a plant in Atlanta, were alsoagainst the tariffs.
One year after the duties kicked in, they have“reversed a massive decline in domestic production and provided much-neededrelief to workers, their employers and communities from a flood of Chinesetires,” according to Leo Gerard, president of the Pittsburgh-based UnitedSteelworkers.
The tariffs are calculated as a percentage of tires’value. Obama imposed a levy of 35 percent in the first year, 30 percent in thesecond year and 25 percent in the third year, on top of the 4 percent dutyapplied to all passenger-vehicle and light-truck tires imported into the U.S. market.
Samuelson provides a dissenting opinion.