Obama Enforces Trade Laws on China Tire Imports

by James Parks, Sep 12, 2009

President Obama took decisive action yesterday to provide relief to the domestic consumer tire industry in response to surging exports of tires from China. His actions will bring relief to many workers and their families and reverse course after eight years of neglect of trade laws by the Bush administration.

In July, the U.S. International Trade Commission (ITC) ruled in favor of a United Steelworkers (USW) petition filed under Section 421 of the Trade Act of 1974. The ITC found that tariff relief was needed to urgently reduce the negative impact of those tire imports. Obama’s decision imposes an increased duty on tires from China for three years. The duties are 35 percent in the first year, then 30 percent and 25 percent in each of the following years.

United Steelworkers President Leo Gerard praised the decision:

For far too long, workers across this country have been victimized by bad trade policies and government inaction. Today, President Obama made clear that he will enforce America’s trade laws and stand with American workers. The President sent the message that we expect others to live by the rules, just as we do.

In a blog on Huffington Post, Gerard says Obama showed real grit and stood up for American workers.

 By placing tariffs on imported Chinese tires, President Obama put himself in the line of fire for the jobs of U.S. workers, for the preservation of U.S. manufacturing and, ultimately, for the stabilization of the U.S. economy.

Click here to read the entire post.  

Although Obama imposed a different remedy than recommended by the ITC, USW Vice President Tom Conway says the union is optimistic that the steps taken by the president “will provide real, effective relief.”

AFL-CIO President John Sweeney pointed out that the decision comes as the federation begins its 26th Constitutional Convention in Pittsburgh, “a city that has been hit hard by the loss of our manufacturing base and unfair trade policies.” 

…we welcome the Obama administration’s decisive action to enforce our trade laws and balance our trade policy.

Evidence presented to the ITC showed that more than 5,100 domestic consumer tire production jobs were lost between 2004 and 2008 by the flood of tire imports from China that undersold producers in the United States. Domestic tire companies have announced they will close more plants and eliminate another 3,000 jobs by the end of this year.

President Obama’s decision will provide relief to the domestic consumer tire sector in response to surging exports of tires from China. It sends a strong message that the U.S. government will take the necessary action to ensure that American workers and producers can compete on fair terms in the global economy.

U.S. Trade Representative Ron Kirk said Obama’s decision simply enforces the law and follows promises made by China:

When China came in to the [World Trade Organization], the U.S. negotiated the ability to impose remedies in situations just like this one. This administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system.

Research by the USW shows that between 2004 and 2008, the domestic tire industry has suffered massive injury. Capacity by the tire companies is down 17.8 percent, and production is down by 26.6 percent. Employment has been reduced by 14.2 percent along with reductions in hours worked and wages paid. Net domestic sales were down 28 percent.

“Workers have a right to expect that our trade laws will be enforced,” Gerard says.

Past experience shattered those expectations. President Obama has struck a blow for restoring confidence in the rule of law. This decision means a better deal for hardworking American men and women and the millions of manufacturers, farmers and ranchers, and service providers who ask only for a chance to compete on fair terms.  It also means China and other countries can no longer assume they can engage in predatory trade practices with impunity. 

The President understands that providing effective relief from import surges for the U.S. tire industry in this case is fully consistent with our WTO obligations. And it is the right thing to do.

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