U.S. Trade Representative hears USW testimony calling for Chinese tire tariff
Officials from the United Steel Workers (USW) presented a wide-ranging overview of the union’s push for tariffs on Chinese tire imports during an Aug. 7 hearing before U.S. Trade Representative Ron Kirk.
The session was the final public step to determine Kirk’s pending recommendation to President Barack Obama over the tariff issue. Obama is to make the final decision on Sept. 17 in the Section 421 trade case filed by the USW in April.
“Massive job losses and factory closures” have resulted from “a flood of 46 million” tires valued at $1.7 billion that were imported from China last year, the union contends.
“Our trading relationship with China is complex and often contentious, but this case should not be,” says Leo W. Gerard, the USW’s international president. “The record is clear and the decision to provide effective relief should be a simple one.”
The Tire Industry Association (TIA) opposes implementing a tariff. The organization “strongly encourages President Obama to reject this, and all other ill-conceived proposals, concerning the importation of tires manufactured in China,” says TIA President Roy Littlefield.
“The bottom line is that it won’t help American workers, and it will only harm American consumers and tire dealers, many of whom are hard-working, independent businesspeople,” he asserts.
In July the International Trade Commission (ITC) noted that some type of tariff is necessary to reduce tire imports. The ITC commissioners who found market disruption recommended that tariffs be placed on car and light truck tires from China –– 55 percent in year one, 45 percent in year two and 35 percent in year three.
“The USW is urging a higher tariff in the first year so domestic tire workers get the full relief prescribed to prevent the undermining of any frontloading of inventories by Chinese exporters or U.S. importers who are dumping higher volumes prior to the President’s decision,” says Gerard.
Tom Conway, USW international vice president, cited the ITC report findings during his testimony to Kirk in an effort to refute opposing arguments, namely the “theory of attenuated competition between Chinese and U.S. tires based on three supposed ‘tiers’ in the market, and that the domestic industry voluntarily ‘abandoned’ parts of the domestic tire market.”
“Their argument to deny relief is a contradiction, too,” Conway told Kirk. “On the one hand, they claim that that imports from China will be replaced with other imports, or that there won’t be enough new incentive for the domestic industry to increase production. On the other hand, they state that relief will be too effective and that all imports from China will be blocked, the market will shrivel up, tens of thousands of salespeople will lose their jobs, and that prices will shoot up.”
He went on to say that “both arguments can’t be true. They can’t have it both ways.”
The USW has documented the damage to the domestic industry during 2004-2008 when tire imports from China increased 215 percent by volume. Capacity and production decreased by 17.8 and 26.6 percent, respectively, while employment was reduced some 14 percent and domestic sales fell 28 percent. Some 5,100 domestic tire production jobs were lost during this time and additional 3,000 are scheduled for elimination by consumer tire plant closures by the end of this year, according to Gerard.
“These are hard-working men and women, many of whom have spent their entire careers in the industry,” Gerard told Kirk. “Their jobs provide the income, health insurance and retirement benefits that sustain middle class families and stabilize entire communities. As you consider what remedy to recommend, I urge you to keep those workers front and center in your mind.”
The USW represents more than 15,000 tire workers at 13 plants in nine states, which accounted for nearly half of the industry’s production capacity in 2008.
For more information, visit www.tireindustry.org and www.usw.org/tires.
