WASHINGTON (June 29, 2009)—The United Steelworkers union was happy and tire distributors disappointed with the U.S. International Trade Commission's majority recommendation today to slap three years of duties on Chinese passenger and light truck tire imports.
Commissioner Charlotte R. Lane—backed by Chairman Shara L. Aranoff and Commissioners Irving A. Williamson and Dean A. Pinkert—read the majority recommendation at an ITC public hearing for President Obama to impose 55-percent ad valorem duties on Chinese tire imports in the first year, 45 percent in the second year, and 35 percent in the third year.
“In our opinion, these tariff levels would remedy the market disruption that we have found to exist,” Lane said.
Commissioner Deanna Tanner Okun, speaking for herself and Vice Chairman Daniel R. Pearson, recommended no action against Chinese tire importers. “This is an industry in which the trend toward gradual downsizing appears like to continue regardless of the commission's action today,” Okun said. “Implementing a trade restriction would be far more likely to cause market disruption than to alleviate it.”
Both sides, though using somewhat different reasoning from each other, also recommended that President Obama expedite trade adjustment assistance aid to laid-off tire workers.
In its petition under Section 421 of the Trade Act, the USW had asked the ITC for a three-year quota on Chinese tire imports, not duties. However, USW International President Leo W. Gerard seemed perfectly pleased with duties in his public reaction to the vote.
“Today's remedy vote by the ITC is a great victory for the USW, its members and all U.S. tire workers,” Gerard said in a press release. “The tariffs voted by the commissioners should remedy the market disruptive surge in Chinese tire imports that have caused harm to the domestic industry.”
However, tire distributors still feel restrictions against Chinese tires will only hurt the U.S. market, according to Vic DeIorio, executive vice president of GITI Tire U.S.A. Ltd. GITI Tire U.S.A. is the Rancho Cucamonga, Calif.-based marketing subsidiary of Shanghai-based GITI Tire, and DeIorio among other tire dealers and distributors testified against the USW petition at an ITC hearing.
“Chinese-made tires have filled a market void created when U.S. manufacturers abandoned the economy segment of the mass market,” DeIorio said in a press statement. “The duty will not have the effect of increasing domestic production of low-cost tires—it simply will not help U.S. workers.” Duties also will raise tire prices at a time when U.S. consumers can ill afford the increase, he said.
Lane did not give the commission's reasons for choosing duties over quotas as a trade remedy in this case. All commissioners will have the opportunity to discuss their reasoning in the report due to President Obama and the Office of the U.S. Trade Representative July 9.
President Obama then will have until Sept. 17 to determine what action he will take in the Chinese tire case. All options are open to him; that includes accepting either the majority or minority decision from the ITC, or even ordering a quota as the USW originally requested.