Thread: Protectionism

So it begins...

This new case has just cropped up, ahead of the upcoming G20 Summit at Pittsburgh.

China Govt: Strongly Object To US Decision On Tire Tariffs

12 Sept BEIJING (Dow Jones)--China's Ministry of Commerce said Saturday it "strongly objects" to the U.S. move to impose steep import duties on Chinese passenger and light truck tires, and will reserve the right to refer the case to the World Trade Organization.

The strongly worded response comes just hours after U.S. Trade Representative Ron Kirk said the Obama administration will impose those import duties, responding to what the U.S. International Trade Commission determined to be a surge of Chinese tire exports that has rocked the domestic U.S. tire industry and displaced thousands of jobs.

Ministry spokesman Yao Jian said the decision "not only violates WTO rules, but also runs against U.S. pledges at the G-20 summits, constitutes an abuse of trade remedy measures, and sets an extremely bad precedent in the current backdrop of a world economy in crisis." ....

He added the U.S. decision sends a protectionist signal ahead of the G-20 summit in Pittsburgh, which will begin in less than two weeks.

This below give more details. The amount of imposed tariff is quite high.

Obama to impose strict tariffs on Chinese tires

A federal agency concludes that Chinese-made tires have disrupted the U.S. market and cost jobs. Some in the Chinese tire industry warn of retaliation.

12 Sept [LATimes] Reporting from Washington and Beijing - In a decision that could roil trade tensions with Beijing, President Obama agreed Friday to impose hefty tariffs on tires imported from China.

The decision came after the U.S. International Trade Commission, a federal agency, determined that a surge of Chinese-made tires had disrupted the domestic market and cost thousands of jobs in the U.S.

Within 15 days, the U.S. would add a duty of 35% in the first year, 30% in the second and 25% in the third on passenger vehicle and light-truck tires from China. That is less than the 55% tariff recommended by the trade panel, but analysts said it would still be large enough to keep most Chinese tires out of the competitive U.S. market. ....

Steel pipes from China is another area the Obama admin is imposing import tariff over the last few days.

Probably this is related to Obama trying to get trade union support for his health care reform package going through Congress.

China protests against U.S. steel pipes tariffs

10 Sept BEIJING (Reuters) - China's Ministry of Commerce on Thursday said a U.S. decision to impose preliminary duties on imports of Chinese-made steel pipes broke global trade rules, as it lobbies against an impending decision on tire shipments.

The case is one of the biggest to move through the U.S. trade litigation system in recent years as President Barack Obama faces a September 17 deadline to decide whether to curb tire imports from China. That will indicate the administration's stance on applying "safeguard measures" that China agreed to when it joined the WTO.

The $2.6 billion steel pipe case, and others that are pending, could push Beijing to become increasingly active in the World Trade Organization, which it has found to be a useful tool in keeping markets open to the exports that drive its economy. ....

Ohio must be a battleground state in the upcoming election and a bellwether for 2012. Sounds like the Bush steel tariff back in '02.

i hope china DOES bring this up through the WTO. they probably will, too, given how they're still smarting from the last decision which favored the US.

THIS is a truly political, bone-headed move by the obama administration.

Originally Posted by astralis

... THIS is a truly political, bone-headed move by the obama administration.

This is going to start a trade war between these two largest economies, at a time when the global recession is still dragging on.

I understand the two parties have 60 days before the WTO rules on this complaint.

China calls for WTO talks on US tire tariffs

1 hr ago [AP] BEIJING — China accused Washington on Monday of violating World Trade Organization rules by raising tariffs on Chinese tires and demanded talks in the WTO on the latest and most acrimonious in a string of trade disputes.

"The American side's imposition of protective measures on Chinese tires violates WTO regulations," Commerce Ministry spokesman Yao Jian said in a statement. ....

President Barack Obama approved the tariffs Friday to slow the rapid growth of U.S. imports of Chinese-made tires that have been blamed for the loss of thousands of American jobs. That drew an accusation of trade protectionism from Beijing.

Yao's statement called on other governments to oppose protectionism.

The White House said Obama acted under a provision in the U.S.-Chinese agreement on Beijing's WTO membership that allows Washington to slow the rise of Chinese imports to allow American industry to adjust.

Obama's order Friday raised tariffs for three years on Chinese tires — by 35 percent in the first year, 30 percent in the second and 25 percent in the third.

The United Steelworkers brought the case in April and said more than 5,000 tire workers have lost jobs since 2004 as Chinese tires flooded the U.S. market.

China's government said Sunday it is launching antidumping investigations into imported U.S. auto and chicken products.

The Commerce Ministry said it would look into complaints that American auto and chicken products are being dumped into the Chinese market or are benefiting from subsidies.

Originally Posted by Merlin

...Probably this is related to Obama trying to get trade union support for his health care reform package going through Congress.

Here is an analysis of this complex issue.

President Obama pays off unions, places tariffs on China to keep support for healthcare legislation

11 Sept [Examiner] In a move sure to anger the Chinese government and possibly spark a trade war, President Barack Obama announced late Friday evening that he would place trade tariffs on imported tires manufactured in China.

Despite the upcoming G20 summit to be held in Pittsburgh on September 24-25, where China will have a large presence, the President took action now in what looks to be a move to retain union support in the heated healthcare reform battle.

In a move that appears to some as preemptive, the United Steelworkers union (USW) filed a lawsuit in advance of the President's move stating that China's dumping of tires into the American market has lead to a loss of over 5,000 jobs. But most acknowledge that as support of the trade unions is needed to pass the President's healthcare reform legislation and that they also contribute vast amounts of money and support to Democratic politicians, the move is seen as somewhat of a “payoff.”

The President could have accepted, rejected or changed the US International Trade Commission ruling which stated that increased imports of Chinese tires into the US has hurt manufacturers here. A powerful union, United Steelworkers, blames the increase for the loss of thousands of American jobs. The tariff will be in force for three years at a 35% rate for the first year, 30% for the second, and 25% for the third year . ....

The pipes issue is more interesting than the tires.
Chinese hit with AD tariff Europe, Middle East and Africa Market analysis | Metal Bulletin Research
Ergo the Chinese lost the anti-dumping case in Europe for the pipes so U.S. would most likely succeed in shutting them out of their market as well.

EU imposes tariffs on imports of steel pipe from China | The Australian

Chinese exports have flooded the EU ever since China joined the WTO in 2001. Total shipments to the EU from China were $US357 billion ($431bn) last year, up from $US67bn in 2000.

The EU's steel sector, a $US250bn-a-year business with 420,000 employees, has been vulnerable to imports because of Europe's high labour and environmental costs. Eurofer, the lobby group that represents European steelmakers, has lobbied hard for higher tariffs.

Yep the pipes the pipes are calling...
Ministry: EU tariffs on Chinese steel wire rods unnecessary_English_Xinhua
the wire rods are next...

This is significant since if you logically extend this the next step is to propose anti-dumping tarrifs on all steel parts, assembly, and materials from China based on similar grounds.

Trade wars a coming... :(

De-politicize is one of the best ways to get things done, IMHO.

China probes U.S. imports, seeks WTO talks - MarketWatch

HONG KONG (MarketWatch) -- China said Tuesday it has gone ahead with its planned probe of U.S. chicken and auto-parts imports, but Beijing also sought to defuse fears of a deepening trade conflict with Washington, stressing its desire for good relations.

"U.S. and Chinese trade and economic relations are the most important bilateral relations. We don't want to see anything bad happen to bilateral relations," Commerce Ministry spokesman Yao Jian was quoted as saying in an Agence France-Presse report.

Yao also cautioned other countries against copying the U.S. in imposing tariffs on exports of Chinese tires, according to a report by Dow Jones Newswires.

He said China would take measures to support its tire and other relevant industries, adding he did not believe the dispute with the U.S. would hurt foreign investment in China.

China called for talks with the U.S. at the World Trade Organization on Monday, a move that seen as signaling its eagerness to keep the trade tensions within context of international law and avoid inflaming passions that could lead to a bigger dispute.

A report in the state-run China Daily on Tuesday said the filing was done under the WTO's dispute-settlement mechanism. If the matter is not settled within 60 days Beijing can request a WTO panel investigation and ruling on the matter

China probes U.S. imports, seeks WTO talks - MarketWatch

Ohch.... giving the Economist's stand on free trade (tm), this type of strong language OpEd is not unexpected.





Barack Obama and free trade
Economic vandalism

Sep 17th 2009
From The Economist print edition
A protectionist move that is bad politics, bad economics, bad diplomacy and hurts America. Did we miss anything?

Correction to this article

YOU can be fairly sure that when a government slips an announcement out at nine o’clock on a Friday night, it is not proud of what it is doing. That is one of the only things that makes sense about Barack Obama’s decision to break a commitment he, along with other G20 leaders, reaffirmed last April: to avoid protectionist measures at a time of great economic peril. In every other way the president’s decision to slap a 35% tariff on imported Chinese tyres looks like a colossal blunder, confirming his critics’ worst fears about the president’s inability to stand up to his party’s special interests and stick to the centre ground he promised to occupy in office.

This newspaper endorsed Mr Obama at last year’s election (see article) in part because he had surrounded himself with enough intelligent centrists. We also said that the eventual success of his presidency would be based on two things: resuscitating the world economy; and bringing the new emerging powers into the Western order. He has now hurt both objectives.
Deeply tyresome

Last year the fear was that Mr Obama would give in to enormous protectionist pressure from Congress. By introducing the levy, Mr Obama has pandered to a single union, one that does not even represent a majority of American tyre-industry workers, and he has done so against the interests of everyone else (see article). America’s tyre-makers, who have more or less given up making low-end tyres at home in favour of importing them (often from joint-ventures in guess where) declined to support the application for import “relief”. Consumers will have to pay more. The motor and garage trades will be harmed. And no one can seriously imagine that any American tyre-making job will be saved; firms will simply import cheap tyres from other low-cost places like India and Brazil.

One might argue that these tariffs don’t matter much. They apply, after all, only to imports worth a couple of billion dollars last year, hardly the stuff of a great trade war. China is incandescent with rage; but China is a master of theatrical overreaction. Its actual response so far has been the minor one of announcing an anti-dumping investigation into American chicken and car-parts exports. The whole affair might blow over, much as did the furore surrounding George Bush’s selective steel tariffs (much worse ones than Mr Obama’s on tyres) back in 2002. Presidents, after all, sometimes have to throw a bit of red meat to their supporters: Mr Obama needs to keep the unions on side to help his health-reform bill.

That view seems naive. It is not just that workers in all sorts of other industries that have suffered at the hands of Chinese competitors will now be emboldened to seek the same kind of protection from a president who has given in to the unions at the first opportunity. The tyre decision needs to be set into the context of a string of ominously protectionist policies which started within weeks of the inauguration with a nasty set of “Buy America” provisions for public-works contracts. The president watered these down a bit, but was not brave enough to veto. Next, the president stayed silent as Congress shut down a project that was meant to lead to the opening of the border to Mexican trucks, something promised in the NAFTA agreement of 1994. Besides these sins of commission sit the sins of omission: the president has done nothing at all to advance the three free-trade packages that are pending in Congress, with Colombia, Panama and South Korea, three solid American allies who deserve much better. And much more serious than that, because it affects the whole world, is his failure to put anything worthwhile on the table to help revive the moribund Doha round of trade talks. Mr Bush’s tariffs, like the Reagan-era export restraints on Japanese cars and semiconductors, came from a president who was fundamentally committed to free trade. Mr Obama’s, it seems, do not.

America is needed to lead. The global trading system has many enemies, but in recent times the man in the White House could be counted as its main champion. As the driver of the world’s great opening, America has gained hugely in terms of power and prestige, but the extraordinary burst of growth that globalisation has triggered has also lifted hundreds of millions out of poverty over the past few decades and brought lower prices to consumers everywhere. The global recession threatens to undo some of that, as country after country is tempted to subsidise here and protect there. World trade is likely to slump by 10% in 2009, and a report from the London-based Global Trade Alert claimed this week that, on average, a G20 member has broken the no-protectionism pledge once every three days since it was made. For Mr Obama now to take up the no-protection cause at the G20’s forthcoming meeting in Pittsburgh would, alas, be laughable. But if America does not set an example, no one else is likely to.
Dumb and dumber

Nor is the potential fallout from Mr Obama’s wrongheaded decision limited to trade. Evidence of a weak president being pushed leftward might cause investors to worry whether he will prove similarly feeble when it comes to reining in the vast deficits he is now racking up; and that might spook the buyers of bonds that finance all those deficits. Looming large among these, of course, are the Chinese. Deteriorating trade relations between the world’s number one debtor and its number one creditor are enough to keep any banker awake at night.

And America needs China for a lot more than T-bonds. Any hope of securing a climate-change agreement at Copenhagen in December on a successor treaty to Kyoto will require close co-operation between America and China. So does the work of negotiating with North Korea on its nuclear weapons. And as for Iran, where America is keen to seek a fresh round of UN sanctions in the hope of forcing it to scrap its nuclear programme, China holds a power of veto at the Security Council. Under the relevant trade laws, Mr Obama had the absolute discretion not to impose the recommended tyre tariffs on the grounds of overall economic interest or national security. Given everything that is at stake, his decision not to exercise it amounts to an act of vandalism.

Barack Obama and free trade: Economic vandalism | The Economist

October 1, 2009
Unexpected Tariff May Further Strain U.S.-China Trade Relations
By KEITH BRADSHER

HONG KONG — Companies that import solar panels to the United States are facing up to $70 million in unexpected tariffs.

The bill comes at a time when the industry is already struggling and could hurt both foreign solar panel makers and foreign and American distributors.

It could also further strain trade relations between the United States and China.

The issue began with a short letter to United States customs officials last December from the small American subsidiary of a Spanish energy company. The subsidiary, GES USA, wanted to know what the tariff would be to import certain solar panels from China.

On Jan. 9, the customs agency wrote back that the panels had become too sophisticated to qualify for duty-free import. Instead — because the panels contain a basic electronic device for safety and energy efficiency — they would be treated as electric generators, subject to a duty of 2.5 percent.

Such low-level duties are standard on many imports, and are much less punishing than the punitive tariffs aimed at restricting the trade of a certain good, for example, the 35 percent tariff on Chinese tires announced three weeks ago.

But the duties come at a particularly difficult time for the global solar power industry. Many panel manufacturers are losing money because of fierce competition from ever-expanding production in China and a worldwide downturn that has driven down prices. Raising prices now to cover past tariffs will be hard because the market is glutted with panels; prices have fallen a fifth since early this year.

The decision is legally binding on most solar panels imported into the United States. But virtually no one in the industry became aware of it until the last few weeks, Meanwhile, unpaid duties piled up, along with penalties that are likely to double the cost.

The United States exported almost as much solar panel equipment as it imported in the first seven months of this year — $605 million in imports and $555 million in exports, according to Commerce Department data.

The Solar Energy Industries Association, a coalition of domestic and foreign companies that is headed by an executive from Suntech, a Chinese solar company, argues that American tariffs on solar panels could lead other countries to impose tariffs on American exports.

The customs decision is dividing the industry between importers and companies that produce solar equipment in the United States. And with China accounting for a rising share of American imports, the tariff could become a sticking point in bilateral trade relations already troubled by the dispute over tires, autos and chicken parts.

Some Chinese solar panel manufacturers are already planning to move final assembly of solar modules to plants in the United States, a step that could allow them to avoid the duty someday, said Rhone Resch, the chief executive and president of the industry association.

The duty generally applies to solar panels that provide power to a residential, commercial or industrial electrical system; small solar panels imported with built-in light bulbs are already counted as electric lights and are subject to a tariff of 3.9 percent.

Lawyers are critical of the industry for not spotting the problem sooner.

“It is somewhat unusual for an industry to take as long as eight months to become aware of a customs ruling that affects it,” said Mel Schwechter, a partner at Dewey and Leboeuf in Washington and a former president of the Customs and International Trade Bar Association.

Customs decisions, even for a single importer, are made public on the agency’s Web site and on commercial Web sites, said Mr. Schwechter, who is not advising any of the participants in the dispute.

Mr. Resch said the industry, which is relatively new, lacked the resources to constantly track tax and regulatory decisions.

Duties will be doubled if customs officials determine that companies have been negligent in not paying them earlier.

Importers might also be liable for duties on all solar panels brought into the United States in the five years before the ruling if customs officials decide that the companies were guilty of “material misstatement or omission” for failing to notice sooner that solar panels had evolved to the point that they no longer met duty-free rules.

The association plans to challenge the classification of the panels as generators in court, Mr. Resch said.

But before starting what could be lengthy litigation, the safest strategy for each importer, according to trade lawyers, is to pay immediately the duties and accrued penalties for shipments received since January, and to start paying the duty going forward.

“We’re taking this very seriously — it has a large financial impact in the United States and it has global ramifications,” Mr. Resch said.

Top officials at Customs and Border Protection, the agency that succeeded the Customs Service, could overrule the technical specialists who determined that the sophisticated panels should be treated like electric generators. Such a move would extend duty-free treatment to the latest solar panels. But that would mainly benefit Chinese producers, whose share of the market has surged in the last two years.

It would also reduce the incentive for companies to manufacture panels in the United States — a politically touchy decision at a time when American cities have been vying for panel factories even as the industry is shifting production to China.

Importers, a mixture of foreign and American manufacturers and distributors, are liable for duties and penalties, not consumers who bought imported panels in recent years.

Imports account for almost half of the solar panels sold in the United States.

Customs issued its ruling on Jan. 9, less than two weeks before President Obama took office. The ruling said that a panel from Trina Solar of China was really a generator because it was equipped with a diode that allows electric current to pass around areas of the panel that are shaded. The diodes have become standard on solar panels, and are effectively required to meet American safety standards.

Javier Muniz, the chief executive of GES USA, said through a spokeswoman that GES solicited the customs opinion last winter for a project that did not end up being built. GES did not tell other companies about the ruling, he added.

Even Trina Solar, the Chinese panel maker, became aware of the decision only “in recent weeks,” a Trina spokesman said. Industry leaders have tried to keep the customs decision secret in the last few weeks while holding emergency meetings to decide on a legal strategy, but Mr. Resch discussed the decision after being asked repeatedly about it.

Unlike many large overseas manufacturers, Trina still exports directly from China to independent distributors in the United States. Trina does not have a American subsidiary to import the panels and handle the customs paperwork.

“Trina Solar is currently classified as an exporter and is not liable for the duty arising from these regulations,” said Terry Wang, the company’s chief financial officer.

Suntech, China’s biggest manufacturer of solar panels, said that it was aware of the customs decision and was looking into it.

Mr. Resch estimated that the duty would cost the industry $70 million this year, and there would be more tariffs in the years to come.

That calculation assumes the industry will be found negligent for not paying the duty on panels imported since January and will be accessed the doubled duty. It assumes the industry will not be found liable for shipments in the preceding five years.
http://www.nytimes.com/2009/10/01/bu...gewanted=print

US mulls new duties on China steel pipes
FT.com / China - US mulls new duties on China steel pipes
By Justine Lau in Hong Kong

Published: October 8 2009 06:35 | Last updated: October 8 2009 07:49

The US Department of Commerce announced on Wednesday that it would launch an investigation into the import of seamless steel pipes from China, a move that could lead to new duties being imposed and strain already sour trade relations between Washington and Beijing.

The US investigations, which could lead to a 98.7 per cent duty on Chinese steel pipes imports, came shortly after a European Union decision to impose anti-dumping tariffs on the same category of products.


According to the Department of Commerce, imports of Chinese steel pipes jumped 132 per cent from 158,128 tonnes in 2006 to 366,091 tonnes in 2008. In value terms, they had risen by 218 per cent to $382m last year.

A full-blown trade row erupted last month after Barack Obama, US president, signed an order to impose a duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff.

That was seen as his first big test on world trade since taking office in January, and the decision suggested Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.

In retaliation, Beijing accused Washington of “rampant protectionism” and threatened action against imports of US poultry and vehicles.

The Chinese government had not reacted to Wednesday’s announcement.

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Gotta protect his union buddies...