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US tire duties 'serious trade protectionism'

(Xinhua)
Updated: 2009-09-12 17:00

BEIJING: China strongly opposes a US decision made Friday night to impose special protectionist tariffs on tire imports from China, Ministry of Commerce (MOC) spokesman Yao Jian said Saturday.

Yao said China has held negotiations with the US over the case but the US still sticks to this decision, which is serious trade protectionism, with which China is strongly dissatisfied.

A Chinese worker moves large tires at an assembly line for buses made by Chinese auto manufacturer Foton Motor Group in Beijing, China, Friday, Sept. 11, 2009. [Agencies]

The Ministry said the US had violated the WTO rule by this decision, and also its relevant commitments made on the G-20 financial summit.

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

According to Los Angeles Times report Saturday, within 15 days, the US would add a duty of 35 percent in the first year, 30 percent in the second and 25 percent in the third on passenger vehicle and light-truck tires from China.

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The report said the decision came after the US International Trade Commission determined that a surge of Chinese-made tires had disrupted the domestic market and cost thousands of jobs in the US.

The Ministry said on its website Saturday the US lacked bases for the case because tire products exported to the US from China had actually declined 16 percent in the first of this year, compared to the same period last year. China's tire exports to US in 2008 only rose 2.2 percent from 2007.

It said the business situation of the US tire producers has shown no apparent changes 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 for the US maintenance market.

Leaders from around the globe have reached consensus to oppose trade protectionism since the outbreak of the financial crisis. But the tire case, lacking factual bases, is an abuse of protectionist measures. It not only hurts the interests of China, but also those of the US, the Ministry said.

The protectionist move by the Obama administration will ultimately hurt the US-China trade relations, which are becoming more and more important due to the global financial crisis, some economists warned.

"There is rising protectionism in the US against Chinese goods," said Derek Scissors, a research fellow at the Heritage foundation's Asian Studies Center, noting that the harm will be inevitably passed on to consumers.

"The US must stop taking decisions against China, even small ones, without putting forth an explicit trade policy, which we have thus far failed to do," he told Xinhua.

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

US tire distributors and retailers oppose tariffs

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

With tariffs imposed, the biggest hit would be felt by American consumers who buy 50-dollar Chinese-made tires and can't afford US brands that cost upwards of 150 dollars, warned many distributors.

Some low-income consumers are stretching their tires well beyond their useful life, coming in "with duct wrapped around the tire" to cover fraying steel belts, said Mayfield.