Tyre Ruling Poses First Test of Obama's China Trade Policy - Tire Review Magazine

Tyre Ruling Poses First Test of Obama’s China Trade Policy

(Financial Times) A U.S. federal agency said yesterday tariffs should be imposed on Chinese tyre imports, presenting the first clear-cut test of Barack Obama's approach to trade relations with Beijing.

The International Trade Commission recommended tariffs following a case brought by the United Steelworkers union.

The union said a surge in Chinese tyre imports had overwhelmed domestic producers and cost almost 7,000 US jobs.

Four of the six ITC commissioners agreed that the domestic market had been disrupted and suggested that the US impose tariffs on $1.7bn (£1bn) of Chinese tyre imports for three years.

The president has until September to decide whether to act on the advice.

George Bush, his predecessor, rejected every recommendation that the ITC gave him.

"This is really the Obama administration’s first test on whether it is going to be protectionist or not," said Chad Bown, an economics professor at Brandeis University and fellow at the Brookings Institution.

Mr Obama suggested on the campaign trail that he would support domestic industry against unfair competition from abroad, although in office he has tried to temper some protectionist moves by Congress.

"This is the first decision . . . that he has direct control over and is sitting in his lap," Prof Bown said.

Leo Gerard, president of the USW, declared the ITC vote "a great victory" and predicted that Mr. Obama would act on the recommendation. "It is time for the promise of enforcing US trade laws to be fulfilled," he said.

Chinese manufacturers have been joined by some U.S. importers of Chinese tyres in fighting the case.

Vic Delorio, executive vice-president of Giti Tire, a Chinese tyremaker, said yesterday the ITC remedy "will not help US workers. We look forward to working with the Obama administration on this issue as it reviews the commission’s work. The administration has a broader set of responsibilities and a wider vantage point."

The union is appealing for tariffs using section 421 of the trade law, created when China joined the World Trade Organisation in 2001, which allows member countries to restrict Chinese imports if they decide a flood of them has damaged domestic businesses.

Although the US has never acted on the 421 rule, other countries have and there are signs that its use is on the rise. India has opened four such investigations this year. (Tire Review/Akron)

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