As Cheaper Chinese Tires Roll In, Obama Faces an Early Trade Test
Tuesday, September 8, 2009
ALBANY, Ga. -- At the vast Cooper Tire plant here, workers heard for years about their rivals in Chinese factories.
In meetings, managers urged employees to run production lines faster and more efficiently to help the company keep up. Overseas laborers were toiling for as little as 20 cents an hour, they were told, and working harder.
Even more ominously, while browsing the aisles of Kmart and Wal-Mart, Cooper employees could see that, sure enough, the Chinese tires were cheapest.
"They would have these meetings and say we're up against the Chinese," said Larry Burkes, 29, who worked at the plant, which rises on the city's outskirts just beyond a mobile-home park. "We'd hear it all the time: 'They work for less.' There was pressure."
Now the plant that employed 2,100 people in this small south Georgia city is being shut down, and the troubles afflicting the U.S. tire industry are at the core of what many consider to be one of President Obama's first major decisions on trade policy.
By Sept. 17, Obama must decide whether to slap a 55 percent tariff on tires imported from China, as recommended by a federal trade panel, or leave the matter alone, as a phalanx of lobbyists representing manufacturers in China and U.S. companies that import from them are urging.
From 2004 to last year, the number of Chinese tires imported to the United States more than tripled, and their share of the U.S. market rose from 5 percent to 17 percent. Over the same period, the share of the U.S. market served by U.S. factories declined by a similar amount. More than 5,000 U.S. jobs were lost.
Opponents of the tariff say the U.S. industry's shrinkage is unrelated to the surge in Chinese imports. The U.S. manufacturers, they say, have strategically moved into pricier, more profitable tires, shifting production of cheaper tires overseas.
"We hope the U.S. government will refrain from taking action, for the long-term healthy and stable development of U.S.-Chinese relations," a Chinese deputy commerce minister, Fu Ziying, said at a news conference last month. "The case is neither supported by facts nor does it have valid legal grounds."
The ballooning trade imbalance with China has provoked complaints that the relationship is crushing U.S. manufacturers. Critics of the relationship say China manipulates its currency and employs other protectionist policies that make it difficult for U.S. factories to compete.
Congress passed legislation in 2000 that allows the United States to impose tariffs and other protections if a surge in Chinese imports damages a U.S. industry. China agreed to the provision while negotiating to join the World Trade Organization.
The general "safeguard" provisions of the law have never been invoked, however. The Bush administration was asked four times to impose measures to protect a U.S. industry, but it declined each time.