GENEVA (Jan. 20, 2010)—The World Trade Organization's Dispute Settlement Body has voted to establish a panel to investigate whether U.S. tariffs on passenger and light truck tires made in China violate WTO policies.
The Chinese government formally petitioned the WTO in December to investigate the three-year tariffs, which President Obama ordered Sept. 2, in response to a 4-2 International Trade Commission vote that he do so.
The United Steelworkers had petitioned the ITC in April 2009, asking for relief via Section 421 of the Trade Act, which allows U.S. industries to claim damages and seek remedies in light of sharply increased imports from China.
The tariffs President Obama ordered amount to 35 percent the first year, 30 percent the second and 25 percent the third, on top of the 4-percent tariff the U.S. traditionally levies on Chinese tires. The ITC in July 2009 had recommended tariffs of 55, 45 and 35 percent.
The USW had requested quotas on Chinese tire imports, but hailed the tariffs as necessary to preserve U.S. tire manufacturing jobs. More than 5,000 tire workers lost their jobs between 2004 and 2008 because of Chinese tire imports, with another 3,000 poised to lose their jobs in 2009, the union said.
U.S. tire wholesalers and retailers argued in opposition that China-made tires don't even compete directly with the tires now made in the U.S. Tariffs would only price low-end Chinese tires out of the market, creating supply shortages and killing jobs on the retailing and wholesaling end, they said.
Cooper Tire & Rubber Co. and Toyo Tire U.S.A. Inc. backed the Chinese government and the tire retailers. The USW had the support of other unions as well as various manufacturing and agricultural industries claiming injury from Chinese imports.
The Chinese government protested the tariffs, saying they violated the General Agreement on Tariffs and Trade and were inconsistent with U.S.-China trade agreements. On Dec. 9, it asked the WTO to form a panel to investigate the tariffs.
Investigation by a WTO panel is part of the appeals process, and it probably will take a long time, according to Paul Fiore, TIA director of government and business affairs. “The process could outlast the tariffs themselves,” he said.
WTO dispute settlement panels usually consist of three industry experts, according to various sources. It generally takes the WTO up to 45 days to appoint the panel, and the panel generally takes at least six months to consider the issue and write a final report.
The tire tariffs are set to run until September 2012, though President Obama has the option of conducting a review of the tariffs this coming March.