Analysis: U.S. tariffs on Chinese tires cast protectionism shadow over world economy
www.chinaview.cn 2009-09-12 16:18:46   Print

    By Xinhua Writers Liu Lina and Liu Hong

    WASHINGTON, Sept. 11 (Xinhua) -- The widely watched China tire case was concluded on Friday when U.S. President Barack Obama made a ruling to impose punitive tariffs on all car and light truck tires imported from China.

    Analysts say the ruling may cast shadow of protectionism over the already fragile world economy.

    CONTROVERSIAL RESOLUTION

    This ruling came at a time when the U.S. economy is at an uncertain turning point from the worst recession since World War II.

    The case is widely seen as a test of conflicting pressures on Obama to protect jobs in the United States and to promote free trade around the world.

    The powerful U.S. Steelworkers Union representing workers at major tire manufacturers in the country filed a petition against China in April for import relief and won a favorable ruling from the U.S. International Trade Commission (ITC).

    The panel recommended Obama impose a 55 percent tariff on the Chinese tire imports, which would be reduced to 45 percent in the second year and 35 percent in the third before being removed.

    The steelworkers asked for protection under Section 421 of the U.S. trade law, which requires petitioners to show that imports from China have disrupted the U.S. market.

    Obama, who must make a decision on the tire case before Sept. 17, at last set punitive tariffs at 35 percent for the first year,30 percent in the second and 25 percent in the third, according to the White House.

    The new tariffs, on top of an existing 4 percent tariff on all tire imports, will take effect on Sept. 26.

    Although the final rates of tariffs are lower than that the ITC recommended before, it still is high enough to restrict tires imports from China.

    "The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," White House Spokesman Robert Gibbs said in a statement on Friday.

    Chinese tire producers say the low-cost Chinese tires have never disrupted the U.S. tire industry. In fact, they are complementary, not competitive to the U.S. products. Besides, China is adjusting its export policy in dealing with the financial crisis.

    "Imports of tires from China have been falling rapidly for several months. According to the latest official data, imports of tires are down almost 9 percent this year," said David Spooner of Squire, Sanders & Dempsey, counsel to the Chinese tire industry.

    The U.S. economy, despite some positive signs of recovery, is still in critical situation, with increasing unemployment rate.

    The latest data showed the unemployment rate for July reached 9.7 percent, the highest in 27 years.

    Recent polls also showed that domestic support for Obama, who is promoting the controversial medicare reform, has been falling in recent months.

    Observers said that the president needs his people to help make domestic reform smoother.

Special Report:  Global Financial Crisis

 

Editor: Wang Hongjiang
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