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Cheap Chinese tires become election issue

Cheap Chinese-made passenger and light truck tires have been a recurring issue in the Presidential election.

In last week's foreign policy debate, President Barack Obama said the Chinese were flooding the United States with cheap tires "and we put

a stop to it and as a consequence saved jobs throughout America."

Republican Mitt Romney has argued that defending American tire companies from foreign competition repays unions for their campaign support but is bad for the nation because tariffs raise prices and is bad for workers because protectionism stifles productivity.

Charleston native Charlotte Lane was serving on the U.S. International Trade Commission when the United Steelworkers brought the case against Chinese tires in 2009. Lane, who finished her eight-year term on the commission last year, now practices law in Charleston. She remembers the tire case well.

Most disputes like the China tire case are brought under the law that says tariffs can be imposed if products are being dumped at prices below cost. But the tire case was brought under a provision that says tariffs can be imposed if, for any reason, a product is coming into the country in such huge amounts it is disrupting industry.

Lane recalled that she voted in the majority when the U.S. International Trade Commission found, in a 4-2 decision, that Chinese tires were disrupting the U.S. market.

The commission's recommended remedy: impose a 55 percent tariff on Chinese-made passenger tires for the first year, a 45 percent tariff the second year and a 35 percent tariff the third year.

President Obama chose to impose a 35 percent tariff the first year, 30 percent the second year and 25 percent the third year.

Lane recalled that the tire case "was a really big deal" while she was on the commission. "Interestingly enough, the provision the tire case came under was added when China came into the World Trade Organization in 2001," she said.

"There have been several market-disruption cases," she said. "The others, (then-President) George Bush turned down. This is the only one where the President imposed tariffs.

"It was really interesting because most cases are brought by industry," she said. "This one was brought by the United Steelworkers." (The United Rubber Workers merged with the steelworkers union in 1995).

"It was interesting from a political standpoint because it was brought shortly after the President took office, brought by a huge labor union, and with the backdrop that a President had never put tariffs on a product under this provision.

"It was clear when we looked at it that market disruption was taking place, domestic workers were being injured."

Under the law, six to nine months prior to the expiration of the tariffs, Obama could have asked the International Trade Commission to investigate whether the tariffs needed to continue. He did not do that.

The tariffs expired Sept. 26.

In an article in the current issue of the United Steelworkers' magazine titled, "Tire Tariffs Worked," the union noted that it brought the case against Chinese tires.

The article reports that after the trade commission found that the tires were damaging the U.S. industry, "the Obama administration acted on its recommendation to impose a graduated tariff of 35 percent the first year, 30 percent the second year and 25 percent the third year."

Not mentioned in the article is the fact that the trade commission actually recommended higher tariffs.

The union reported that the tariffs Obama imposed worked.

The tariffs "allowed many American tire manufacturers to maintain stability and return to profitability in the aftermath of the global economic crisis and prolonged recession that followed," the article quotes Steelworkers International President Leo Gerard as saying.

The article goes on to quote Gerard as saying, "Because the tariffs were so effective, extending them to a fourth year could have resulted in compensation being paid to China, so we refused to pursue an option that could potentially reward China for its actions.

"There should be no doubt that President Obama's decisive action and leadership at a critical time saved the domestic tire sector," Gerard said.

Contact writer George Hohmann at business@dailymail.com or 304-348-4836.


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