September 11, 2009 Obama Administration today imposed a 35 percent levy on Chinese-made tires, less than the 55 percent a federal trade panel had recommended. The move came after the United Steelworkers union filed a trade complaint saying a flood of imported tires had cost thousands of U.S. jobs. "The President decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case," according to a White House statement released Friday night. (9:41 p.m.) ------------------------------------- UPDATE: China Responds: September 13 2009 China is launching an anti-dumping investigation into American car parts and chicken imports, the government announced today – two days after Barack Obama approved new tariffs on Chinese-made tyres. ------------------------------------ Seems like a China VS. USA trade war is coming, and it most likely will be a lose-lose situation. I don't understand, why did Obama choose to make a decision that would certainly anger China in the background of deep world economy crisis.
http://news.yahoo.com/s/afp/20090913/ts_afp/chinaustradedisputeprobe China hits back in trade dispute with US BEIJING (AFP) – China on Sunday hit out at US tariffs on its tyre exports and said it would investigate possible unfair practices in US exports of car parts and chicken meat, in a growing row between the two giants. Chinese foreign ministry spokeswoman Jiang Yu said the US tariffs amounted to a "grave" form of protectionism. "The United States, by making the decision, failed to honour its commitments made at the G20 financial summit and abused trade remedy measures, which is grave protectionism and will undermine China-US economic and trade ties as well as the early recovery of the world economy. "We hereby express our strong discontent and firm opposition to the US decision," she said, quoted by state news agency Xinhua. Earlier, China's commerce ministry announced a probe into the United States' own exports of car products and chicken meat to China, having warned it was likely to retaliate against the US tyre tariffs. "In line with national laws and World Trade Organisation rules, the commerce ministry has started an anti-dumping and anti-subsidy examination of some imported US car products and chicken meat," the commerce ministry said. "Recently, the commerce ministry has received word from domestic industries indicating that the above mentioned products had entered our nation's markets via dumping, subsidies and other unfair trade means. "This impacted domestic industries and the commerce ministry was requested we launch an anti-dumping and anti-subsidy probe." It gave no further details on the exact products involved or the alleged trade violations. China was responding to an announcement by The White House on Friday of punitive duties of an extra 35 percent on Chinese-made tyres. The dispute comes just weeks before Obama is due to host his Chinese counterpart Hu Jintao at the G20 summit this month, a meeting now sure to be a test of Washington's stated commitment to strengthening ties with Beijing. Obama approved an increased duty on all imports of passenger vehicle and light truck tyres from China for a period of three years. The decision was taken "in order to remedy a market disruption caused by a surge in tyre imports," the White House said. Obama had been under pressure domestically to curb rocketing imports of Chinese goods that critics suggest have cost more than 5,000 jobs in the United States. The government-run US International Trade Commission (USITC) had urged duties of up to 55 percent after union leaders claimed imports of cheap Chinese tyres had tripled over the last five years. However, to minimise Chinese anger, Obama opted for a lower figure, whereby tariffs, already at four percent, will soar by an additional 35 percent in the first year, 30 percent in the second and 25 percent in the third. China was already angered earlier in the week when Washington imposed tariffs on pipes used in the petroleum industry. On Sunday, Xinhua news agency quoted experts as saying that 100,000 Chinese jobs could be lost as a result of the US tariffs and that China's tyre industry would be worse off to the tune of one billion dollars. The United States has long grappled with a ballooning trade deficit with China amid allegations that Beijing has been manipulating its currency to make its exports more competitive. Obama entered the White House in January after campaigning for a robust trade policy with China.
Why did China violate the WTO rules in the first place and make a decision that would certainly anger the USA in the background of deep world economy crisis. If the USA is at fault, surely China will take their case to the WTO, right?
Once again as I've stated about Iraq, international policies between major powers should be based on what is most likely practical instead of moral (since cultural and historical situations dominates differences). Never go into a situation guns blazing even if you felt you're on the moral side, it's just dumb. Negotiate and use tact.
I'm not talking about what is moral. I'm talking about an agreed upon framework for trade. There is a proper remedy in which China can get redress if the USA has violated the agreed-upon rules. From where I sit, China is going to huff and puff and not a whole lot more. In that situation, it is most practical for the USA to enforce the rules (tangible, practical benefit) and let China eat a **** sandwich when it realizes these are the rules that they (China) agreed to. The big problem would be worrying so much about making China dislike you that you didn't assert your mutually agreed-upon rights. Otherwise, your "being practical" sounds a whole lot like letting people walk all over you.
China didn't dump tires into our market...this one was a mistake by Obama to please the Union. I think he screwed up. China has a right to be po'd.
Obama needs to get his head out of the bossom of the Unions... Unions are starting to cripple this country
He might have done it to get support from unions on health care. I think he made a critical error. We need China's help to get out of this recession - that play a key role. A trade war right now could derail everything. Obama was handling the economy well. This was his first mistake.
China is actually following the WTO rules by starting an "investigation" into the dumping of US auto parts and chickens. But we all know what the conclusion of this "investigation" will lead to. Anyway, the bottom line is China has more chips on the table for now. It will be hard for the US to play this game.
If someone lays a tariff on you in contravention to the rules, there is a process where a country can take another country before an arbiter panel which can authorize punitive sanctions. If China files an official complaint with the WTO, I will re-evaluate. Examples of this process were the recent ruling against Airbus, as well as a slightly older ruling against the USA for steel tarrifs. I understand that they are mad. That is what the Chinese response says to me. But because they are upset, it doesn't mean they have a grievance according to the rules. What China is doing right now is saying "Oh, yeah? I bet your breaking the rules too!" To me it is more indicative of displeasure than indicative of a real violation. From reading, I think part of the problem is that dubbya ignored several instances when instituting tariffs would have been proper, probably out of some misguided slavish devotion to the ideal of free markets. From China’s perspective, if the other guy goes from letting you get away with whatever you like to someone protecting their rights to the letter of the rules, it will naturally elicit an unfavorable response. I imagine that China will institute a tariff on something minor to show their displeasure. If it is small and symbolic enough, I'm sure the USA will just ignore it. But if China tries to institute some massive tariff in contravention to the WTO rules, I’m reasonably sure that USA will file a complaint. An example of how this works is the steel tariff case above. Dubbya tried to stand his ground against the ruling in the steel case, and the WTO sanctions got progressively nastier. So it really isn’t just a case of who has more muscle to throw about. Short of leaving the WTO, China and the USA are both subject to its rules. As I said, if China actually submits a complaint to the WTO, that is an indication that there is a reasonable chance that the USA is actually violating the rules.
Looks like the US action didn't go thru WTO if I understand this correctly. http://www.businessweek.com/globalbiz/content/sep2009/gb20090913_714101.htm "In its trade complaint to the U.S. International Trade Commission, the USW invoked a provision in China's 2001 accession to the World Trade Organization that allows protection from surging imports from the country. The union documented a tripling of Chinese tire imports from 2004 to 2008 that it said threatened thousands of jobs at U.S. tire factories. No U.S. tiremakers backed the complaint, though that was expected since most of them manufacture tires in China and hence do not want to anger Beijing. The ITC ruled in the union's favor. That left Obama to decide whether to accept the decision and if so to what degree. He issued his decision five days before a Sept. 17 deadline and one night after commencing a hard push to get health-care reform approved in Congress. "
Right. But the US imposed the tariffs in accordance with the WTA rules (according to them). According to the rules of the WTO, there are certain circumstances when you are allowed to impose tariffs. According to the USA, this is one of those circumstances. Conversely, if China finds something that the US is doing that enables tariffs, China can invoke those tariffs without going to the WTO. The only time you go to the WTO is when you think the other side is doing something that violates the agreements. According to the USA, the WTO agreements let the USA invoke the tariffs. They are invoking them within the framework. It is only when one party thinks the other party has done something outside the framework that a complaint is submitted. Imagine a renter's lease. I rent an appartment to you. As the renter I write in a clause for damage fees that is invoked if you trash the apartment. When you move out, I can invoke these fees without taking you to court according to the terms of the contract, simply by returning only part of the deposit. However, if you think I invoked the fee clause under conditions that don't match the terms of the contract, you can take me to court to get the fees refunded.
^^^ WTA? too much tennis? Sweet Lou 42 mentioned earlier, he did it to please the union. i doubt it's according to the rule. and China just send the complaint to WTO, so...
As noted earlier, Obama actually went with a less severe tariff than was recommended by the US International Trade Commission. That recommended tariff was based on rules set up when China joined the WTO to prevent major market distortions. Notice also that the tariff is maximized this year and goes down in following years as the market incorporates the new Chinese supply.
The problem with your lousy argument (as usual) is that China IS investigating within WTO rules and WILL submit a complaint to the WTO. It is NOT levering tariffs on US poultry or auto parts outside of the framework. And for god's sake, let's try to pretend some semblance of honesty here. Everyone and their mother knows the situation has nothing to do with China dumping tires in the US and everything to do with the little economic leverage the US forced out when China applied for the WTO. Free trade has nothing to do with it. There are also plenty of studies that show that tire manufacturers (domestic ones) are increasingly shifting lower end tire production to China, leading to an increase in the market share of Chinese made tires during the recession years. Hence you are not seeing the likes of Goodyear complaining about it and the only complaints are from the usual suspects, the Teamsters Union, Steelworkers Union, etc etc etc. Take your pick.
Goodyear and other tire manufacturer stocks jumped notably this week after the announcement. The move certainly benefits those companies - they just aren't complaining because they do business in China and don't want to piss them off.
