China May Appeal Tire Tariff to WTO

Bloomberg News
Sunday, September 13, 2009

China "strongly opposes" President Obama's decision to impose tariffs on tire imports from the country and may refer the case to the World Trade Organization, its Ministry of Commerce said.

The United States had violated rules of the WTO and the tariff is a breach of the commitments made by the nation at Group of 20 summits, the ministry said in a statement posted on its Web site, citing spokesman Yao Jian.

The move will harm both countries' interests and will produce a chain reaction of trade protectionism, slowing world economic recovery, the ministry said.

The decision is intended to bolster the faltering U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.

The U.S. government placed tariffs on tire imports from China, backing a United Steelworkers union complaint against the nation's second-largest trading partner, according to a White House statement. The tariffs will amount to 35 percent the first year, 30 percent the second and 25 percent the third.

The U.S. duties on Chinese tires are not expected to spark a trade war, White House spokesman Robert Gibbs said to reporters in Minneapolis, where Obama is trying to drum up support for his health-care reform efforts.

"For trade to work for everybody, it has to be based on fairness and rules," Gibbs said. "We're simply enforcing those rules and would expect the Chinese to understand those rules."

The case brought by the United Steelworkers is the largest safeguard petition filed to protect U.S. producers from increasing imports from China.

"It is an abuse of the trade remedy measures and made an extremely bad start against the backdrop of global financial crisis," China's statement said. China will reserve "all legitimate rights, including referring the case to the WTO."

The decision is a blow to Chinese producers such as GITI Tire, the country's largest tiremaker, as well as U.S. retailers of low-cost imports.

"By taking this unprecedented action, the Obama administration is now at odds with its own public statements about refraining from increasing tariffs," said Vic DeIorio, executive vice president of GITI Tire in the United States. "This decision will cost many more American jobs than it will create."

Obama's decision signals a marked shift from the policy of the Bush administration, which had rejected taking action in four similar cases it reviewed.

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