China might take retaliatory measures in US tire case

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By Ding Qingfen (China Daily)
Updated: 2009-08-26 07:53

China is expected to take retaliatory measures if US President Barack Obama agrees next month to a plan to impose tariffs on some Chinese-made tires, experts said yesterday.

There is only a week left for the US Trade Representative (USTR) to submit the final proposal on the Chinese tire import case, also the largest of its kind in China by volume, at $2.2 billion.

Experts said the outcome is uncertain despite strong evidence that Chinese tires have not disrupted the American market, as well as efforts by the Chinese government during the past three months to stave off a US-imposed tariff.

"The prospect is not very positive, and we have to be ready for the worst," said He Weiwen, a council member of the China Society for American Economy Studies.

"China's government should not tolerate unreasonable and unfair behavior by the US and must fight back firmly and quickly," He said.

The USTR proposal is expected to be submitted on Sept 2, and Obama is expected to decide the case before Sept 17.

If approved by the president, duties of up to 55 percent will be imposed on Chinese-made tires exported to the United States, which could lead to a loss of 100,000 jobs in Chinese manufacturing sectors.

Last Wednesday, under the leadership of Vice-Minister of Commerce Zhong Shan, a team headed for the US to consult with authorities.

The results were not positive, an unnamed official from the ministry's bureau of fair trade of imports and exports said.

"The Obama administration is under great pressure from labor unions and other groups," the official said.

Experts said China should prepare to retaliate if the US approves the tariffs.

"If the US says no to tires from China, China could take measures to limit automobile imports from the US," He said.

Despite the recession, demand for autos from Chinese consumers is still rising.

During the first half of this year, China imported $1.02 billion worth of automobiles from the US, up by 9.1 percent from a year earlier.

"It's unfair for Chinese laborers, after we made the American auto makers happy, if the US launches sanctions against Chinese tire exports," He said.

He said China also can take retaliatory measures against US imports.

"When the special guarantee (tariff) measures last for more than three years, China has the right to cancel the import tariff reductions required by World Trade Organization (WTO) rules on some selected categories of products from the US," He said.

Fu Donghui, deputy general manager of the Shanghai-based Allbright Law Firm, said it "legitimate for China to take reprisal measures against the United States if the special guarantee case is not in line with WTO rules".

Cases of this type are not uncommon.

In early 1987, the US government announced plans to levy a 200 percent tariff on imports of some products from Europe after high duties were levied on American agricultural products.

Former US President George W. Bush had planned to impose six special guarantee measures against China, but all six proposals were rejected.

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