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Move toward U.S. tire duty going flat
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08:25, August 10, 2009

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Signs are getting stronger that United States President Barack Obama will turn down a proposed special duty against Chinese tire imports, said a Chinese business executive returning from a week-long trip to the U.S..

"More groups are lining up against the proposal," Shen Weijia, executive director of Giti Tire China, told China Daily.

The nine-member Chinese team, including tire makers, spent the week lobbying U.S. authorities and attending a hearing held by the U.S. trade representative.

They returned to Beijing last night.

"The visit to the U.S. was fruitful this time," Shen said.

Opposition to the duty is growing in the U.S. as the move is being seen as harmful to consumers and one that could cast a shadow over economic relations. Early next month, the U.S. trade representative will send a proposal to Obama, who will have to make a final decision by Sept 17.

This is widely believed as a test case for Obama on U.S.-China trade.

"There is a high probability Obama will reject it, thanks not only to the growing criticism within the U.S. against the proposal, but also to the growing importance of China in helping the U.S. tide over the economic recession," said Zhang Yuqing, World Trade Organization (WTO) dispute settlement panelist.

In hearings that included the trade representative, Ministry of Commerce and the Department of Labor, the Chinese delegation denied that Chinese tire imports hurt U.S. industry, emphasizing the plan would eventually harm U.S. consumer benefits.

Nine representatives from the U.S. attended the hearing but seven of them, including retailers, said they were strongly opposed to the proposal, Shen said.

"Only the United Steelworker Union and its lawyer were struggling for it."

In April, the union, which represents half of U.S. tire workers, filed a petition for a special duty on Chinese imports to protect their jobs, winning a favorable proposal from the International Trade Commission two months later.

But no American tire makers sided with the union, as Chinese tire makers are targeting the low-end market that major U.S. tire counterparts like Michelin and Goodyear decided to give up years ago.

About 15 percent of China's tire production is exported to the U.S., and from January to May, Chinese tire exports to the U.S. dropped by 15 percent year-on-year, said the China Rubber Industry Association.

"Considering the package of factors, Obama will not easily agree with the proposal," Zhang said.

The ruling, if passed by Obama, will lead to about 100,000 job losses for Chinese tire workers. Worse than that, other nations may quickly follow suit and expand the measure into sectors beyond tires if the ruling comes into effect.

The local tire industry strongly objected to the proposal, saying it would harm both Chinese and U.S. industries. Sources from the Ministry of Commerce of China said the Chinese government will appeal to the WTO if the ruling is approved.

Source: China Daily

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