Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



New U.S. China-Specific Safeguard Case / Market Disruption Case Against Chinese Tires

On June 18, 2009, the U.S. International Trade Commission (USITC) announced its determination in a section 421 case that imports of certain passenger vehicle and light truck tires from China had surged and were causing material injury/market disruption in the United States. The USITC made an affirmative determination, finding that certain passenger vehicle and light truck tires from China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. This is a China-Specific safeguard case (as opposed to a global safeguard case), which was brought against China under the WTO Protocol of Accession and U.S. domestic law implementing the Protocol provisions.

The U.S. Steelworkers had filed a petition in which it alleged that a huge increase in Chinese tire imports had forced plant shutdowns and the loss of jobs in six states over the past five years. The USITC agreed. The Steelworkers has requested that a quota to be imposed to limit imports of Chinese tires in the future. The USITC will meet later this month to recommend a remedy, which could be a quota, tariff on imports or some combination.

The next step in the process after the recommendation is that President Obama must decide whether to take the USITC's recommendation. So far, when the USITC has made recommendations of additional surtaxes or quotas, president Bush refused to accept the recommendations. This is going to be difficult decision for President Obama as he will surely upset the Chinese Government, which has worked tirelessly (no pun intended - well maybe so) to dissuade governments from implementing China-specific safeguard remedies.

What happens here will set a trend for the future if President Obama gives unions the relief they have requested under U.S. law.  It is important to note that the USITC decision was a split decision with Chairman Shara L. Aranoff and Commissioners Charlotte R. Lane, Irving A. Williamson, and Dean A. Pinkert voted in the affirmative. Vice Chairman Daniel R. Pearson and Commissioner Deanna Tanner Okun voted in the negative.

To obtain copies of the filings and decisions in this case, please go to the following link - http://www.usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2009/421_tires/safeguard.htm

China's MOFCOM expressed "deep regret" at a U.S. trade panel ruling that Chinese tires had flooded the U.S. market, the first step in what could be the Obama administration's first trade dispute with Beijing. MOFCOM spokesman Yao Jian said "The decision does not conform to objective facts, and also violates relevant World Trade Organization rules in addition to U.S. law."

Lawyers representing Chinese tire producers make some very interesting points that may cause President Obama to be reluctant to implement a remedy.  Apparently, U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in and no U.S. tire producers had joined the steelworkers' complaint. 

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