WTO Rejects Chinese Complaint Against U.S.'s Anti-Dumping Tariffs on Tires

World Trade Organization judges rejected China’s complaint that U.S. tariffs on Chinese car and light-truck tires violate global trade rules, saying the Obama administration “did not fail to comply with its obligations.”

President Barack Obama announced the three-year duties on $1.8 billion of tires from China in September 2009, acting on a complaint by the United Steelworkers union, which represents 15,000 employees at 13 tire plants in the U.S. The union said Chinese tire exports to the U.S. tripled from 2001 to 2004 to 41 million and called for a cap on annual imports of 21 million.

The case was the largest so-called safeguard petition filed to protect U.S. producers from growing imports from China. Union leaders and Democratic lawmakers said at the time the decision was proof of Obama’s commitment to safeguarding domestic workers and jobs.

The Chinese government said the tariffs broke WTO rules and were a “serious case of trade protectionism, which China resolutely opposes.” It lodged a complaint at the Geneva-based WTO against the duties just three days after Obama announced them.

‘Major Victory’

“This is a major victory for the United States and particularly for American workers and businesses,” U.S. Trade Representative Ron Kirk said in a statement from Washington today. “This outcome demonstrates that the Obama administration is strongly committed to using and defending our trade remedy laws to address harm to our workers and industries.”

Trade complaints against China have surged since Obama became president -- as have retaliatory steps by the Chinese government. China calls U.S. complaints against its exporters signs of protectionism while the U.S. says it’s enforcing trade rules.

The two countries, the world’s largest and second-largest economies with $366 billion in annual two-way goods trade in 2009, have clashed over access to each others’ markets for products including steel pipes, auto parts, poultry, movies and music. China ran up a $201 billion trade surplus with the U.S. in the first nine months of this year, more than the U.S. deficit with the next seven-largest trading partners combined, according to Commerce Department data.

That gap, together with the drop in American manufacturing employment and the U.S. contention that the yuan -- which has gained 2.4 percent since a two-year peg to the dollar ended on June 19 -- is undervalued, has made China a target for Congress and voter anger.

Opposition

The Tire Industry Association opposed the tariffs, saying they would create shortages and hardships for tire retailers without helping domestic manufacturers. Findlay, Ohio-based Cooper Tire & Rubber Co., the second-biggest U.S. tiremaker, and the U.S. unit of Osaka, Japan-based Toyo Tire & Rubber Co., which has a plant in Atlanta, were also against the tariffs.

One year after the duties kicked in, they have “reversed a massive decline in domestic production and provided much-needed relief to workers, their employers and communities from a flood of Chinese tires,” according to Leo Gerard, president of the Pittsburgh-based United Steelworkers.

The tariffs are calculated as a percentage of tires’ value. Obama imposed a levy of 35 percent in the first year, 30 percent in the second year and 25 percent in the third year, on top of the 4 percent duty applied to all passenger-vehicle and light-truck tires imported into the U.S. market.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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