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Unite against tire tariff hike, exporters urged

By Si Tingting, Li Fangfang, Ding Qingfen in Beijing and Bi Xiaoning in Dalian (China Daily)
Updated: 2009-09-14 07:29

A mechanic changes a tire at a garage in Rizhao, East China's Shandong province, on Saturday. [China Daily]

Fan Rende was so angry on Saturday he skipped breakfast, lunch and dinner to work on a petition to United States President Barack Obama in protest at the higher tariff placed on Chinese tire imports.

The chairman of the China Rubber Industry Association was especially incensed as he feels the decision was made based on "bunch of lies".

"The new tariff will be highly damaging to China's tire industry and may cause 100,000 Chinese tire workers to lose their jobs," said an emotional Fan.

He urged the Chinese government to adopt mandatory retaliatory measures against US manufacturers of agricultural products and automobiles.

Fan's association, the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, and other affected firms, have already sent one petition to Washington, as well as appealing to the US Court of International Trade.

China's tire companies may stop exporting to the US for the first year of the new tariff, bringing an initial loss of about $1 billion, Fan estimated before adding that the US had already ordered the nation's firms to stop supplying tires.

"The effect will be immediately obvious," he said, adding that the basis for the decision was seriously flawed.

According to China's Ministry of Commerce, tire producers pose no direct challenge to those in the US, while the nation's tire exports to the US have not witnessed tremendous growth since 2007.

"China's tire exports are mainly to the US automobile maintenance market, while those made by local producers are supplied to car producers," said the ministry statement.

He Weiwen, council member for the China Society for American Economy Studies, said China would be justified in taking retaliatory measures.

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"We could levy higher tariffs on tires and automobiles imported from the US. China should not let the US car firms make easy money from its vast car market. We should teach them a lesson," said He.

Analysts also called for Chinese enterprises to unite against the US trade barriers and reduce their exports to the country.

"Gradually, US companies will notice that trade barriers do them no good and will start seeking dialogue with their Chinese counterparts," the chairman of an export company that won a lawsuit against a similar US effort told China Daily on condition of anonymity.

The tariff duties may also impact US importers of Chinese tires and US tire companies with tire production operations in China, said Hubert Tse, a Shanghai lawyer.

There are 20 tire producers in China and four - Bridgestone/Firestone, Goodyear, Michelin and Cooper - are from the US, said Fan.

Cooper already filed a complaint on the higher tariff with an open letter last month.

Although China's tire makers are disappointed by the news, some are already preparing to adjust.

Giti Tire China, which generates $800 million a year from exports to the US, has already shifted focus to the domestic market, as well as Europe, Southeast Asia, South America and Africa, said its executive director Shen Weijia.

Wang Guomei, director of overseas marketing for Shandong Linglong Rubber, said his firm will use the changes as an opportunity to improve the quality and brand image of its tires in the global market.

"We will also put more focus on developing new products during the grace period, but we won't give up on the US market," said Wang.

Half of Linglong's total revenue last year came from tire exports, 50 percent of which went to the US.