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President Obama decided on September 11, 2009 to impose safeguard restrictions on imports of tires from China. The three-year remedy consists of an additional tariff of 35 percent ad valorem in the first year, 30 percent ad valorem in the second, and 25 percent ad valorem in the third year.
This action was brought under a safeguard statute that applies specifically and exclusively to U.S. imports from China. It was included in the 'U.S.-China Relations Act' (H.R.4444) of 2000, the same law that inter alia extended permanent normal trade relations (i.e., unconditional most-favored-nation treatment) to China, clearing the way for the United States to recognize China's accession to the World Trade Organization. The law amended the Trade Act of 1974 by adding a new section 421 providing that,
If a product of the People's Republic of China is being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of a like or directly competitive product, the President shall, in accordance with the provisions of this section, proclaim increased duties or other import restrictions with respect to such product, to the extent and for such period as the President considers necessary to prevent or remedy the market disruption.
The law also provided definitions for these terms, defined the entities with a right of action, and established the procedures to be followed after a petition is filed.
This is the first time that the law has actually led to the imposition of restrictions on imports, but not the first time that petitioners filed a complaint with the U.S. International Trade Commission (USITC). During the Bush administration, that agency conducted section 421 investigations on imports of Chinese steel wire garment hangers (2002-2003), brake drums and rotors (2003), ductile iron waterworks fittings (2003), and uncovered innerspring units (2004). All but the last of those cases produced USITC recommendations for the imposition of import restrictions, but President Bush rejected each of these recommendations.
On June 18, 2009 the USITC reached by a vote for four to two an affirmative determination that Chinese imports cause or threaten market disruption. Imports of the products in question from China reached $1.79 billion in 2008. The USITC voted on the proposed remedies on June 29, 2009. Four of the commissioners voted to recommend a higher level of protection than President Obama ultimately decided to grant, calling for an additional duty for a three-year period set at 55 percent ad valorem in the first year, 45 percent ad valorem in the second year, and 35 percent ad valorem in the third year. They also recommended that, if applications are filed, the U.S. Department of Labor and the U.S. Department of Commerce provide expedited consideration of Trade Adjustment Assistance for firms and/or workers that are affected by subject imports. Two commissioners did not find market disruption to exist, and urge that no trade restricting action be taken. They instead urge that the U.S. government be prepared to provide economic adjustment assistance to displaced tire workers.
The petitioner in this case is the United Steelworkers of America (USW), which filed its petition on April 20, 2009. The USW represents about 15,000 tire workers at 13 plants in nine states. Arguing that domestic production of consumer tires declined by over 25 percent during 2004-2008, and that the Chinese producers' share of the consumer tire market in the United States increased from less than five percent to more than 17 percent, the USW requested that China be limited to an annual import quota of 21 million consumer passenger tires for a three-year period. This would limits imports from China to the 2005 level.
The Tire Industry Association (TIA) did not support the steelworkers' petition, instead releasing on June 17, 2009 a position statement declaring that 'a reduction of this magnitude in the quantity of Chinese tires imported would itself create a market disruption, and cause very real harm to our member companies and the U.S. consumer.'
Several members of Congress supported action under the law. They include Chairman Charles Rangel (Democrat-New York) of Ways and Means Committee and Trade Subcommittee Chairman Sander Levin (Democrat-Michigan), who issued a joint statement on June 19, 2009 supporting the affirmative ruling, with Levin saying, 'I believe that, unlike the Bush Administration, President Obama will decide the safeguard case on the merits, not on an ideological rejection of import relief.'
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