·  USW

USW President Gerard Statement: U.S. Prevails Before WTO in China Challenge of Tire Trade Case

Contact: Gary Hubbard, 202-778-4384 (O); 202-256-8125 (C);  ghubbard@usw.org

Pittsburgh (Dec. 13) -- Leo W. Gerard, President of the United Steelworkers (USW) issued the following statement today, applauding an announcement by Ambassador Ron Kirk, U.S. Trade Representative, that a World Trade Organization (WTO) dispute settlement panel found in favor of the United States, a challenge by China on imposition of import duties on passenger and light truck tires under the Section 421 safeguard mechanism included in China’s Protocol of Accession to the WTO.

“The USW has never shied from using every tool we have available to fight for fair trade and to fight for our members’ jobs.  Today’s decision confirms that the rules of trade, when vigorously enforced, can be made to work for working people.

“When President Obama imposed the tariffs on Sept. 11, 2009, he became the first president to provide trade relief under Section 421.  Since the tariffs have been in effect, U.S. domestic tire production has increased, tire producers have made new capital investments, and new jobs have been created for American tire workers.

“We applaud the Obama Administration for standing up and defending American jobs in its original decision to impose relief and in its strong defense of that action at the WTO. We look forward to continue working with the administration to take full advantage of all enforcement tools available to us so that the benefits of fair trade are made available to all Americans.

“Fair trade law enforcement should be the standard of our government in requiring China to fulfill its obligations under its accession agreement with the WTO more than a decade ago.”

 

BACKGROUND:

The USW original petition was filed in April 2009 under the Section 421 provision of the U.S. Trade Act of 1974.  The Section 421 trade act provision was an important commitment made by the Chinese to permit its entry into the WTO. It was designed to facilitate the mutually beneficial growth in trade by reducing the adverse effects of distortions inherent in China’s non-market economy.

When the International Trade Commission (ITC) examined the surge in tire imports from China, it discovered material injury to the domestic industry through continuous declines in U.S. producer’s domestic capacity, production, shipments and employment from 2004 to 2008.

Notably, domestic tire capacity declined from 226.8 million tires to 186.4 million tires during the four-year investigation period, while actual production dropped from 218.4 million tires to 160.3 million tires. As capacity utilization fell from 96.3 percent to 86 percent, the number of production workers substantially declined as did their hours worked and wages.

The tariffs were implemented Sept. 26, 2009 at 35 percent, shortly after President Obama announced the order. The second year implementation rate of 30 percent has been in effect since Sept. 26, 2010. The final year implementation rate of 25 percent will begin Sept. 26, 2011.

The WTO panel found in favor of the United States with respect to all of China’s claims.  Both sides have the right to appeal the panel’s findings to the WTO Appellate Body within 60 days.

For documents and background on the USW trade case: USW Section 421 Tires.

For a copy of the first-year implementation report on the positive impact of the duties on China imports underwritten by the Alliance for American Manufacturing (AAM), see 'Obama's Bold Economic Move on Chinese Tire Imports is Paying Off.'

 

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