Commerce's antidumping decision sparks debate

WASHINGTON—The United Steelworkers union is pleased with the decision from the Commerce Department's International Trade Administration setting final antidumping and countervailing duties against passenger and light truck tires imported from China.

Meanwhile, most manufacturers and importers of Chinese tires are saying either that they plan to conduct business as usual or that they will defer comment until the International Trade Commission makes its final material injury determination July 14.

In its June 12 decision, Commerce affirmed its preliminary findings that antidumping and countervailing duties against Chinese tire imports were warranted.

The agency levied countervailing duties of 20.73 percent against Cooper Tire & Rubber Co. and its Chinese subsidiaries; 37.20 percent against Giti Tire Global Trading Pte. Ltd. and its subsidiaries; 100.77 percent against Shandong Yongsheng Rubber Group Co. Ltd.; and 30.87 percent against all other importers.

In antidumping duties, Commerce levied duties of 29.97 percent against Giti Tire; 14.35 percent against Sailun Group Co. Ltd. and its subsidiaries; 25.30 percent against 65 “separate rate” companies; and an 87.99-percent “China-wide” rate.

The extremely high duties against Shandong Yongsheng and the “China-wide” group were based on adverse facts because of the failure of those importers to participate in the investigation, Commerce said.

Commerce specifically excluded a long list of tires from the duties, including racing tires, retreaded tires, non-pneumatic tires, temporary spares, trailer and other specialty use tires, tires designed specifically for off-road use and tires whose sizes are not listed in the passenger or light truck sections of the Tire and Rim Association Year Book.

Giti Tire Group said it was disappointed at the decision, noting that the antidumping and countervailing duties are more than double the level the agency announced earlier in 2015.

A Cooper spokeswoman noted that the 14.72-percent offset on duties the company previously received from Commerce is still in effect, meaning that Cooper's total combined antidumping and countervailing duties will be 31.31 percent.

Cooper is waiting for the July 14 ITC vote, which will determine whether the final duties go into effect, the spokeswoman said. Preliminary duties already are being assessed.

“Until then, we will continue to monitor the situation with the overall goal of keeping Cooper and our customers competitive in the marketplace,” she said.

Cooper has low-cost production in Serbia and cost-competitive production in the U.S., as well as at its wholly owned facility in China, according to the spokeswoman.

“This footprint gives us the wherewithal to respond to a changing marketplace, whether it is due to tariffs or other factors,” she said.

USW International President Leo W. Gerard hailed the Commerce decision as a victory for his union.

“Today's announcement further validates our allegations made more than one year ago about the unfair trade practices of tires produced in China,” Gerard said in a June 12 news release.

“China is taking advantage of our market but claims that no one is being injured,” he said. “That's simply not true.”

On June 9, USW officials and representatives of Chinese tire importers painted a contradictory portrait of the domestic tire industry at a hearing at ITC headquarters.

The USW and its legal counsel said the U.S. tire industry is being besieged by underpriced Chinese tires, whereas the Chinese importers insisted the U.S. tire industry is doing better than ever.

The Obama administration previously granted the USW relief in the form of three years of high tariffs on Chinese passenger and light truck tires, from September 2009 to September 2012.

China had tires ready to ship at 12:01 a.m. Sept. 27, 2012, the minute the tariffs ended, according to Terence P. Stewart of the Washington law firm of Stewart & Stewart, representing the union.

Despite a growing tire market in 2012-14, the U.S. tire industry saw widespread declines in those years, thanks entirely to an upsurge in Chinese imports, Stewart said.

“The U.S. industry should have been able to participate in this growth,” Stewart said. Instead, the U.S. industry lost nearly 28.5 million tires sold, $968 million in operating income and $265 million in wages in the years 2011-14 because of Chinese imports, he said.

Stewart was accompanied by presidents of several USW union locals, all of whom said production was ramping up at their plants entirely because of the promise of new relief against Chinese imports.

“Anyone who says that relief from Chinese imports doesn't affect American workers hasn't been to Findlay,” said Rodney Nelson, president of USW Local 207L representing the workers at the Cooper plant in Findlay, Ohio.

But Jonathan T. Stoel, attorney with the law firm of Hogan Lovells U.S. L.L.P. and legal counsel for Moorpark, Calif.-based tire importer IMG Voma Corp., said it was absurd to say the U.S. tire industry is suffering at all.

“The pre-hearing report shows that not only (has) the industry's profitability been increasing throughout the commission's period of investigation, but each member of the domestic industry earned a profit in all three years,” Stoel said at the hearing.

He noted that five existing U.S. tire makers and three new entrants are investing $3.3 billion in the U.S. These investments will increase U.S. tire making capacity by 42 million tires annually and create 6,700 jobs, he said.

One argument Chinese importers make, which the USW disputes, is that there are four distinct tiers of tires in the U.S. market and Chinese imports don't compete directly with tires made in the U.S.

Gustavo Lima, CEO of Miami-based Oriente Triangle Latin America Inc., said the Chinese tire industry is about seven years behind the U.S. technologically.

“That doesn't mean their tires aren't safe or well-made,” he said. “It just means a guy who drives a Cor-vette or Mercedes isn't going to put Chinese tires on his car.”

Both Stoel and Lima declined comment on the June 12 Commerce determination, saying they would wait until the ITC votes on July 14.

Another group that declined comment was the Tire Industry Association, which opposed tariffs on Chinese tires in 2009 but has not been active in the current investigation.

Sentury Tire Americas, which didn't testify at the ITC hearing but is affected by the duties, said Commerce's determination hasn't affected its plans for the U.S. passenger, SUV and light truck tire market.

“We view this recent decision as a temporary setback, and are proceeding with our worldwide expansion,” said Maxwell Wee, director of sales for Sentury, in a June 16 news release.

Sentury soon will announce the opening of a new headquarters and warehouse in Miami, Wee said. Meanwhile, the company is opening a new plant near Bangkok in the third quarter of this year with an annual capacity of 12 million tires, he said.

After its July 14 vote, the ITC will transmit the results of that vote to Commerce July 27, including detailed reasons for its decision.