Editorial: The looming trade war over tires
- Source: Global Times
- [00:38 August 11 2009]
- Comments
Recent flights from China to the US must be loaded with lawyers, lobbyists, and industrial representatives all clamoring to make their case at the Washington trade office. At stake are China’s tire exports to the US, which support 100,000 jobs and have an export volume of $1.7 billion.
This is the seventh so-called “special safeguard” investigation the US government has launched against Chinese commodities. The tariffs or sanctions against Chinese goods proposed in the previous six cases were vetoed by then- President George W. Bush. But the latest push against Chinese tire imports would have a far broader impact if it were enacted.
With a Democratic president in the Oval Office needing to deliver on campaign promises, Chinese tire manufacturers have reason to be worried that the cheap tires they make will be effectively pushed out of the US market.
China’s tire exports have already taken heavy hits. In the first quarter of the year, tire exports dropped at least 26 percent and registered a 16 percent decrease in May and June.
The United Steelworkers (USW) have given some strong rhetoric but weak logic on the connection between US job losses and Chinese tire imports. The USW’s complaints mirror a rising protectionist mood in the US. Obama has to decide before September 17 whether or not to levy heavy tariffs on Chinese tires.
The Chinese government and the China Rubber Industry Association have struck the right tone in pointing out that the measure is discriminatory. Due to the lack of a thorough investigation and the fast-paced procedure, “special safeguard” protection could set a dangerous precedent and hamper trade between China and the US.
For a long time, Chinese exports like textiles and steel have been scapegoats of US domestic politics. Today, the two economies are so deeply intertwined that US protectionism would hurt both. With growing economic clout, China is also better positioned to launch other countermeasures.
China’s Rubber Industrial Association is urging the Chinese government to take strong actions against American exports into China.
Obama may reject the request of the USW in the broader interests of Sino- US relations, but it won't mean the end of this round of trade protectionism. Chinese government and industrial associations have to be prepared, including making more detailed retaliatory measures under the WTO framework.
