Obama likely to refuse special duty on China tires

By Ding Qingfen (China Daily)
Updated: 2009-08-10 09:09

Signs are getting stronger that United States President Barack Obama will turn down a proposed special duty against Chinese tire imports, said a Chinese business executive returning from a week-long trip to the US.

"More groups are lining up against the proposal," Shen Weijia, executive director of Giti Tire China, told China Daily.

The nine-member Chinese team, including tire makers, spent the week lobbying US authorities and attending a hearing held by the US trade representative.

They returned to Beijing last night.

"The visit to the US was fruitful this time," Shen said.

Opposition to the duty is growing in the US as the move is being seen as harmful to consumers and one that could cast a shadow over economic relations. Early next month, the US trade representative will send a proposal to Obama, who will have to make a final decision by Sept 17.

This is widely believed as a test case for Obama on US-China trade.

"There is a high probability Obama will reject it, thanks not only to the growing criticism within the US against the proposal, but also to the growing importance of China in helping the US tide over the economic recession," said Zhang Yuqing, World Trade Organization (WTO) dispute settlement panelist.

In hearings that included the trade representative, Ministry of Commerce and the Department of Labor, the Chinese delegation denied that Chinese tire imports hurt US industry, emphasizing the plan would eventually harm US consumer benefits.

Nine representatives from the US attended the hearing but seven of them, including retailers, said they were strongly opposed to the proposal, Shen said.

"Only the United Steelworker Union and its lawyer were struggling for it."

In April, the union, which represents half of US tire workers, filed a petition for a special duty on Chinese imports to protect their jobs, winning a favorable proposal from the International Trade Commission two months later.

But no American tire makers sided with the union, as Chinese tire makers are targeting the low-end market that major US tire counterparts like Michelin and Goodyear decided to give up years ago.

About 15 percent of China's tire production is exported to the US, and from January to May, Chinese tire exports to the US dropped by 15 percent year-on-year, said the China Rubber Industry Association.

"Considering the package of factors, Obama will not easily agree with the proposal," Zhang said.

The ruling, if passed by Obama, will lead to about 100,000 job losses for Chinese tire workers. Worse than that, other nations may quickly follow suit and expand the measure into sectors beyond tires if the ruling comes into effect.

The local tire industry strongly objected to the proposal, saying it would harm both Chinese and US industries. Sources from the Ministry of Commerce of China said the Chinese government will appeal to the WTO if the ruling is approved.