US trade officials, unions hail WTO ruling on China tyres

06 September 2011 20:14  [Source: ICIS news]

WASHINGTON (ICIS)--US trade officials on Tuesday hailed a World Trade Organization (WTO) decision in support of a 2009 US tariff on Chinese auto and light truck tyres, and union leaders said the tariff has helped revive the US tyre sector.

A WTO appellate panel on Monday denied a Beijing appeal of an earlier decision by the WTO in support of the US tariff on imports of Chinese-made auto and light truck tyres.

The US imposed a tariff on imports of those Chinese tyres – also referred to as entry-level or low-cost tyres – in 2009, charging that Chinese manufacturers were causing a disruption of the US tyres market with a surge of imports.

China challenged the US tariff at the WTO, but the trade organisation ruled in the US favour in December last year, holding that the tariff was justified and within US rights under WTO rules.

US Trade Representative (USTR) Ron Kirk said that Monday’s appellate ruling in the US favour was “a tremendous victory for the US as well as for American workers and manufacturers”.

“We have said all along that President Obama’s decision to impose duties on Chinese tyres was fully consistent with our WTO obligations,” Kirk said, adding: “A WTO panel agreed with us and now the appellate body has confirmed it.”

The tariffs, which run through September 2012, were for 35% in the first year, 30% in the second year and 25% in the third.

Gary Hubbard, a spokesman for the United Steel Workers (USW), also hailed the WTO appellate decision, saying that the tariff was in part responsible for reviving US production of the sort of entry-level passenger and light truck tyres that had been shouldered out of the market by Chinese imports.

The USW, which also represents rubber workers at US tyre plants, noted that since the tariff went into force in 2009, the US tyre industry “has invested significantly in new capacity” and has consequently hired more production staff.

The union cited a recent decision by Bridgestone-Firestone to put $135m (€95.9m) into a plant expansion and earlier investments by Cooper Tire and Continental Tire on expansions and a new green-field production facility.

Hubbard said the tariff and the WTO affirmation of it was crucial in helping to protect the US high-end tyre industry as well.

“The way this works is that an exporter will start to flood the low end of a product market, wipe out that low end and then move the trade battle into the higher end market,” said, noting that turning back the surge of entry-level Chinese tyre imports also served to protect higher market US tyre production. 

Tyres are a key end market for styrene-butadiene-rubber (SBR).

($1 = €0.71)

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