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IMPORTANT: As of July 1st, 2011, functions once performed by the Wisconsin Department of Commerce have been moved to other state agencies and the Wisconsin Economic Development Corporation. The former Commerce web site will continue to exist for the next several months as resources are moved to new web site locations. We will make every attempt possible to direct our users to the new locations as web resources are moved.
Bureau of Export Development
PO Box 7970
Madison, WI 53707-7970
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Vol. 9 #1, September 2009
Tire Tariff Dispute with China
On Friday, September 11, 2009, President Obama authorized a
three-year increase of the tariff on imports of passenger vehicle and
light truck tires from China from the existing 4% duty to 35% for the
first year, 30% during the second year, and 25% for the third year.
The decision came after the U.S. International Trade Commission (ITC)
recommended duties of 55% to counter a tripling of tire imports from
China from 2004 to 2008. The United Steelworkers Union, which
represents 15,000 employees at 13 tire plants in the U.S., filed a
petition with the ITC, saying that cheap imports were forcing factories
to close and were responsible for 5,000 job losses.
The Office of the U.S. Trade Representative reported four tire plants
closed in 2006 and 2007 and three more are closing this year. During
that time, just one new plant opened. Between 2004 and 2008,
China's market share in the U.S. went from 4.7% of tires purchased to
16.7%, the office said. China’s tire exports to the United States
fell by 16% in the first half of 2009 from a year earlier due in part
to the declining auto market, after a gain of 2.2% in the whole of 2008.
As part of its accession to the World Trade Organization (WTO), China
agreed to a special safeguard mechanism that would allow its trading
partners to implement remedies in response to import surges and under
other circumstances. The President decided that the increased
tariffs were appropriate to the disruption to the U.S. tire
industry. White House spokesman, Robert Gibb, said it was "simply
about enforcing the rules of the road and creating a trade system that
is based on those rules and is fair for everyone."
The Chinese government quickly responded, saying "It is an abuse of the
trade remedy measures and made an extremely bad start against the
backdrop of global financial crisis.” China will reserve “all
legitimate rights, including referring the case to the WTO." Chen
Deming, China's Minister of Commerce, said the penalties would hurt
relations with the United States.
In August, the United States won a major WTO case involving Chinese limits on imports of books, movies, and music downloads.
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