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June 01, 2020 10:41 AM

USW again seeking tire trade relief with DOC petitions


Bruce Davis
Tire Business
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    WASHINGTON—The United Steelworkers union has turned its crusade to protect U.S. tire workers from "dumped and subsidized" passenger and light truck tires on four new targets—South Korea, Taiwan, Thailand and Vietnam.

    In antidumping and countervailing duty petitions filed May 12 with the Department of Commerce and the International Trade Commission, the USW alleges dumping margins on these types of tires as high as 217 percent for Thailand, 195 percent for South Korea, 147 percent for Taiwan and 33 percent for Vietnam.

    The petitions also detail what the USW claims are "numerous" government subsidies benefiting Vietnamese tire producers, including loans, tax breaks and grants.

    Passenger and light truck tire imports from these four countries totaled 85.3 million tires last year, up nearly 20 percent from 2017, according to Commerce Department figures. That total equals roughly 38 percent of the U.S. aftermarket for those products.

    The imports were valued at $4.4 billion last year, up nearly 32 percent over 2017.

    "This deluge of unfairly traded imports hurt our domestic industry and workers, including many USW members," USW International President Tom Conway said. "Even though demand for (these) tires increased, domestic producers were still forced to grapple with reduced market share, falling profits and lost jobs."

    Reaction to the USW's action thus far has been pointed by a few, who noted that such actions of the past decade did little more than raise prices for consumers while preserving only a few jobs.

    Most companies that replied to queries for comment declined to do so until they'd had more time to study the USW's petitions.

    By country, the increases in imports of passenger and light truck tires during the three-year period under review (2017-19) are:

    • Thailand—up 28.2 percent to 45 million units;
    • Vietnam—up 32.9 percent 12.1 million units; and
    • South Korea—up 2.6 percent to 19.2 million units.

    Imports from Taiwan, by contrast, fell 15.7 percent to 9.13 million units.

    Indonesia, No. 4 on the passenger tire import ranking and No. 5 on the light truck tire list, was not targeted by the USW. The union did not comment on why it didn't include Indonesia in this action.

    This is the sixth such action the USW has taken in the past dozen years covering tire imports. Among those are the AD and CV duty petitions on passenger/light truck tires from China in 2015, an action that yielded elevated import duties—over 100 percent in some cases—that are still in effect. They are cited as the reason for a 90-plus percent drop in shipments from China of those tires—fewer than 4 million units last year from nearly 60 million in 2014.

    Coincidentally, these duties on Chinese imports are up for review this summer under the Commerce Department's sunset regulations.

    Chinese producers, looking for continued access to the U.S. market, have invested in production capacities in Thailand, Malaysia and Vietnam over the past decade as "offshore" sources for consumer tires to export to the U.S. without paying the elevated duties imposed on products from China.

    "Slowing Chinese imports was vitally important to saving the domestic tire industry," according to Kevin Johnsen, who chairs the USW's Rubber & Plastics Industry Conference. "But Chinese producers found a way around our safeguards, and other bad actors are eager to take advantage of U.S. demand."

    The USW said its petition is the first to contain a currency undervaluation subsidy under new rules Commerce issued earlier this year. The union alleges the Vietnamese government's systematic undervaluation of the Vietnamese dong in relation to the U.S. dollar constitutes a countervailable subsidy.

    "The USW has long sounded the alarm on the dangers of currency manipulation and its impact on trade," Conway said. "Now, under the Commerce Department's new rules, we must address it for what it is: an illegal subsidy."

    Tire Business, over the years, has tracked nine separate projects in these countries involving Chinese producers, with a combined investment value of more than $2 billion and representing roughly 50 million units of capacity. Three of these projects, though, are for truck, bus and/or off-road tires, and four of them have only recently come on stream or are still under construction.

    In its petition to the ITC, the USW requests that pricing data be collected on four specific tire sizes:

    • 225/65R17, 100-105 load index, H speed rating;
    • 205/55R16, 89-94 load index, H speed rating;
    • P215/55R17, 93-98 load index, T speed rating; and
    • LT245/75R16, 111-116 load index, R speed rating.

    These are the same sizes tracked for the 2014-15 USW antidumping petition, but updated with more recent load index information.

    The USW claims the legal right to file these petitions because it represents more than a quarter of U.S. workers affected by the dumping.

    The Pittsburgh-based labor union represents approximately 15,000 workers at five firms that produce passenger/light truck tires in the U.S.—Cooper Tire & Rubber Co., Goodyear, Michelin North America Inc., Sumitomo Rubber North America Inc. and Yokohama Tire Corp. The USW claims plants operated by these firms represent more than two-thirds of the U.S. industry's installed capacity for such tires.

    According to Commerce Department procedures, the ITC has until June 29 (45 days from the day the petitions were filed) to reach a preliminary determination on whether the U.S. should impose AD and/or CV duties on the targeted products. Commerce, however, has the power to extend that deadline.

    According to the ITC's summary of the USW's petitions, the commission must "determine whether there is a reasonable indication that an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of passenger vehicle and light truck tires from (South) Korea, Taiwan, Thailand, and Vietnam … that are alleged to be sold in the United States at less than fair value and alleged to be subsidized by the government of Vietnam."

    If the ITC agrees that AD and/or CV duties are warranted, it must transmit its views to Commerce within five business days, or in this case, by July 7 at the latest. Commerce then must undertake its own investigation to determine the extent of the injurious behavior and determine what, if any, duties are warranted.

    In previous cases, this process has lasted months, and in one case—the USW's 2016 complaint against Chinese truck/bus tires—took nearly three years to resolve as it initially was rejected then reinstated under appeal.

    The ITC's ability to investigate the USW's claims are granted under the Tariff Act of 1930.

    Because of COVID-19-related restrictions on access to the ITC building in Washington, the commission is conducting this preliminary phase investigation through written submissions, written testimony, etc.

    Interested parties wishing to comment may do so by email at [email protected]. Make reference to investigations 701-TA-647 and/or 731-TA-1517-1520.

    Parties wishing to submit documents must do so through the ITC's Electronic Document Information System, edis.usitc.gov. Parties must set up an account through the EDIS to do so.

    The deadline to submit written opening remarks and testimony is June 1, and June 8 for written briefs with information and arguments pertinent to investigation.

    All written submissions must conform to the ITC's rules, which can be found in the commission's Handbook on Filing Procedures, available via the ITC's website usitc.gov/documents/handbook_on_filing_procedures.pdf.

    Last year, Thailand was the No. 1 source of imported passenger tires into the U.S., with 37.3 million units. South Korea was No. 2 with 17.2 million, Vietnam No. 6 with 9.95 million and Taiwan No. 7 with 8.46 million. Together, that's nearly 73 million units, or 47 percent of the 154.5 million total car tires imported.

    Thailand also was No. 1 on the light truck tire import table, with 7.67 million units. Vietnam was No. 4 with 2.13 million, South Korea No. 6 with 1.99 million and Taiwan No. 9 with 671,154 units. Together they total 12.5 million, or 47 percent of the 26.7 million light truck tires imported.

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