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September 13, 2009

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China angered by US tariffs on tires

CHINA strongly opposes a US decision made on Friday night to impose special protectionist tariffs on tire imports from China, Ministry of Commerce spokesman Yao Jian said yesterday.

Yao said China had held negotiations with the United States over the case but the United States was sticking to its decision, which is serious trade protectionism with which China is strongly dissatisfied.

The ministry said the United States had violated the WTO rule by this decision, and also its relevant commitments made at the G20 financial summit.

Yao said China would reserve all rights to take responsive actions to firmly protect the interests of Chinese companies.

US President Barack Obama decided to impose punitive tariffs on all car and light truck tires from China for three years.

Import relief

"The president decided to remedy the clear disruption to the US tire industry based on the facts and the law in this case," White House spokesman Robert Gibbs said in a statement on Friday.

The US Steelworkers union, which represents workers at major US tire manufacturers, filed a petition against China earlier this year for import relief and won a favorable ruling from the US International Trade Commission.

The panel recommended Obama impose a 55 percent tariff on Chinese tire imports which would be reduced to 45 percent in the second year and 35 percent in the third before being removed.

Obama, who had to make a decision on the tire case before September 17, set tariffs at 35 percent for the first year, 30 percent in the second and 25 percent in the third, according to the White House.

China's Ministry of Commerce said on its Website yesterday the United States lacked any basis for the case because tire products exported to the United States from China had actually declined 16 percent this year, compared to last year. China's tire exports to the United States in 2008 only rose 2.2 percent from 2007.

China said the business situation of US tire producers had shown no apparent change after the entry of Chinese products. There exists no direct competition between China's tire products and the US-made ones as China's tires mainly go to the US maintenance market.

Leaders from around the world have reached consensus to oppose trade protectionism since the outbreak of the financial crisis.

But the tire case is an abuse of protectionist measures, the ministry said, hurting not only the interests of China, but also those of the United States.

It would also send a wrong signal to the world ahead of the upcoming Group of 20 nations in Pittsburgh on September 24 and 25, and could trigger a chain reaction of trade protectionist measures that will slow world economic recovery, according to the Website statement.

Raise prices

The tariffs were also strongly opposed by US tire distributors and retailers, who said the restrictions would raise prices, hurting cash-strapped consumers.

"Tariffs will not create manufacturing jobs in the United States," said Jim Mayfield, president of Del-Nat Tire Corp, which sells private-label tires, including Chinese-made imports.

He said that, for the past 15 years, major US producers had focused on higher profits and better performing tires instead of what industry insiders call "tier-three tires" that serve lower end and second-hand automobiles.

With tariffs imposed, the biggest hit would be felt by American consumers who buy US$50 Chinese-made tires and weren't able to afford US brands costing upward of US$150, several distributors warned.

Some low-income consumers are stretching their tires well beyond their useful life, Mayfield said.


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