China rubber group urges no duties on Chinese consumer tyres

ERJ staff report (TB)

Beijing -- As President Barack Obama approaches the Sept. 17 deadline to decide whether to impose import duties on passenger and light truck tyres from China, the China Rubber Industry Association (CRIA) has issued a statement urging him not to take a “shortsighted” view that could harm the global tyre industry.

In taking its stance against duties, the CRIA comes down on the opposite side of the United Steelworkers union, which has been a vocal proponent of taking action to protect what it said are the livelihoods of US tyre plant workers and the health of US tyre manufacturing.

The Beijing-based CRIA said President Obama's rejection of calls for duties on Chinese-made consumer tyres “will protect American families.” The group's complete statement follows:

Will President Obama maintain his liberal posture on relations with China, fostering increasing cooperation and guaranteeing American-made products and services further access to China's soon-to-be largest consumer market in the world, or will narrow, shortsighted and protectionist special interests redefine the Administration's “China policy” moving forward?

Soon, we'll know.

President Obama must choose between a narrow special interest (the United Steelworkers union) and continued strong US-Sino relations, at a time when both countries have pledged their collaboration in response to the global economic crisis. The union, under Section 421-a law that has never before been invoked-has asked the Administration to impose extreme tariffs of at least 55 percent on imported Chinese tyres. President Obama must personally make the final decision on this matter by late September.

Not a single US tyre manufacturer has joined the union in their Section 421 efforts. In fact, the union makes no claim of unfair or illegal behavior by China's tyre makers, at least not in legal filings before the International Trade Commission. The USW simply demands the White House restrict trade because they believe “organised labour” now has an ally in the Oval Office who will support them regardless of the legitimacy of this particular claim or its potential outcomes.

We hope the USW is wrong.

This attempt seems aimed at forcing the White House to redefine its China strategy into a policy of confrontation instead of cooperation. Rejection of the 421 petition will send a strong signal that President Obama is committed to the balanced and cooperative approach necessary to keep the US and world economies growing-something that is front-of-mind for all American workers, consumers and job-creators.

We urge President Obama to make a principled choice to reject this restrictive effort to subvert trade law and make China a scapegoat. China had no part in the process that led US tyre manufacturers to decide over a decade ago to stop manufacturing entry-level tyres in the US These same companies have made clear that they still have no plans to manufacture entry-level tyres in the US Their decision to abandon entry-level manufacturing allowed others from around the world to fill this void.

Most importantly, it is well-known that China's entry-level tyre imports simply don't compete with US-produced premium tyres. Sales of US-produced premium tyres is affected by the woes of American auto makers and recent high gas prices, not imports of entry-level tyres from China, Mexico, South Korea or anywhere else.

The “USW tariff” will amount to a protectionist “zero quota” and would drive up all tyre prices. Morgan Stanley recently stated that “a tyre consumer may not be able to accept further price increases.”

This is the first protectionist action aimed at a product that is widely used by individual consumers. President Obama's rejection of this bid will protect American families. A price increase on entry-level tyres will hit low-income families hardest. These families might even defer replacing worn tyres-not a good thing for highway safety.

According to the International Trade Commission's report to the President, the “USW tariff” will likely not have the intended effect of adding a single USW job. However, independent studies suggest that 25,000 other American workers will be victimised by losing their jobs as a direct result of this politically-motivated and ill-conceived attempt to manipulate US-China relations.

President Obama affirmed at the G-20 summit that the last thing the world needs is a rise in protectionism. Now is the time for the President to make a clear statement that the world can depend on strong bilateral trading relations between the world's two most important economies and on deepening cooperation between the two countries on a wide range of global issues.

If the President invokes the 421 law, a flood of additional protectionist petitions is sure to follow from other special interest groups. This will only serve to further complicate and degrade US-China relations, threatening cooperation and putting the world's economic recovery at risk.

Instead of this dark and uncertain future, we urge President Obama to reject the USW's 421 petition. By doing so, the President will affirm the need for strong relations between our two countries and ensure a strong global recovery from the recent financial crisis that will be the by-product of US-China cooperation.

We in China look to President Obama for his international leadership. His pending Section 421 decision will indicate the type of leader he wants to be.

From Tire Business (A Crain publication)