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Ahmed Abdallah Mariette Burgess Robert Balzarini

United States — Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China US — Tyres (China). Ahmed Abdallah Mariette Burgess Robert Balzarini. OUTLINE. Context of Case USTIC Investigation and Findings Claims of parties involved

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Ahmed Abdallah Mariette Burgess Robert Balzarini

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  1. United States — Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from ChinaUS — Tyres (China) Ahmed Abdallah Mariette Burgess Robert Balzarini

  2. OUTLINE • Context of Case • USTIC Investigation and Findings • Claims of parties involved • Conclusions and Panel Recommendations

  3. BACKGROUND • April 20th, 2009 - United Steel Workers files petition with the United Stated International Trade Commission (USTIC). • USTIC launches an investigation under section 421 (b) of the Trade Act of 1974 : • To determine whether new pneumatic rubber tires from China are being imported in such increased quantities or conditions that THREATEN to cause market disruption for domestic producers.

  4. SECTION 421 OF THE TRADE ACT OF 1974 • Section 421 was entered into bilateral negotiations with China regarding its accession to the WTO. • It became Article 16 in the Chinese Accession Protocol to the WTO • It is designed to safeguard local producers against Chinese imports • Section 421 It is set to expire in 2013

  5. USTIC INVESTIGATION FINDINGS • Imports of consumer tires from China increased by 215% from 2004-2008. • Average cost of Chinese tires is less than $40, while other imports were over $50. • 4 tire plant closers across the U.S, with 3 more in threat of closure. • 15, 000 United Steel jobs at stake.

  6. USTIC HEARING • JUNE 2ND 2009. • Testimony of USTIC investigators • Testimony from members of congress, among them: • Arlen Spector, Senator from Pennsylvania • Evan Bayh, Senator from Indiana • Robert Casey, Senator from Pennsylvania

  7. USTIC HEARING 2 • Appearance in support of relief: • United Steel Workers • Appearance in opposition of relief • American Pacific Industries Inc. (API) and Fullurm Tire Co. • GITI Tire (China), GITI Tire (US) Ltd. • Sub-Committee of Tire Producers of the China Chamber of Commerce

  8. USTIC DETERMINATION AND REMEDY • USTIC concluded that Chinese tire imports DID cause market disruption to domestic production. • USTIC recommended the following remedy to President Obama: • First year: 55% ad valorem • Second year: 45% ad valorem • Third year: 35% ad valorem

  9. PRESDIDENT OBAMA IMPOSED DUTIES • Sept 11, 2009 the President imposed: • First year: 35% ad valorem. • Second year: 30% ad valorem. • Third year: 25% ad valorem.

  10. SECTION 421: TRADE ACT OF 1974 • China-specific safeguard in US law • Enacted October 2000 (one year before Chinese accession) • Authorizes the President to impose import restrictions or other necessary action if the ITC finds just cause (substantial cause of serious injury or threat to domestic industry). • ITC Investigation (market disruption): • The volume of the imports • The effect of imports on price in US • The effect of imports on domestic industry

  11. TRANSITIONAL PRODUCT-SPECIFIC SAFEGUARD MECHANISM • 16.1 - In cases where products of Chinese origin are being imported into the territory of any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. • 16.4 - Market disruption shall exist whenever imports of an article, like or directly competitive with an article produced by the domestic industry, are increasing rapidly, either absolutely or relatively, so as to be a significant cause of material injury, or threat of material injury to the domestic industry.

  12. TRANSITIONAL PRODUCT-SPECIFIC SAFEGUARD MECHANISM • 16.3 - If consultations do not lead to an agreement between China and the WTO Member concerned within 60 days of the receipt of a request for consultations, the WTO Member affected shall be free, in respect of such products, to withdraw concessions or otherwise to limit imports only to the extent necessary to prevent or remedy such market disruption. • 16.6 - A WTO Member shall apply a measure pursuant to this Section only for such period of time as may be necessary to prevent or remedy the market disruption.

  13. CHINA’S CLAIM • Despite the absolute increases in subject imports, a decline in the rate of increase in the final year of the period of investigation (2008) meant that subject imports were not “increasing rapidly” in accordance with paragraph 16.4 of the Protocol. • The United States' “contributes significantly” definition in its statute was at odds with the ordinary meaning of the “significant cause” standard in paragraph 16.4 of the Protocol. • The USITC failed to properly demonstrate that subject imports were a “significant cause” of market disruption. • The remedy applied in this case was inconsistent with paragraph 16.3 of the Protocol as it was not limited to the market disruption caused by rapidly increasing imports; and that, contrary to paragraph 16.6, the three year duration exceeded the period of time necessary to prevent or remedy the market disruption.

  14. WTO RULING: PANEL CONCLUSION • In December 2010, a WTO panel found that the US had not violated its obligations. • Tires safeguard measures – protect against Chinese dumping.

  15. WTO RULING: PANEL CONCLUSION • Under Section 16 of the Protocol, WTO Members have the right to impose safeguard measures on imports from China when such imports are “increasing rapidly” so as to be “a significant cause” of material injury to the domestic industry. • China immediately appealed ruling

  16. WTO RULING: APPELLATE PANEL CONCLUSION • September 2011 - the Appellate Body rejects China’s appeal; affirms original panel ruling • United States did not act inconsistently with its WTO obligations when it imposed a tariff or • “safeguard” measures

  17. WTO RULING: APPELLATE PANEL CONCLUSION • USITC did not err in its assessment of the conditions of competition in the US market • USITC's finding that rapidly increasing imports from China are a significant cause of material injury to the domestic industry within the meaning of Paragraph 16.4 of China's Accession Protocol

  18. WTO RULING: APPELLATE PANEL CONCLUSION • USITC's finding that rapidly increasing imports from China are a significant cause of material injury to the domestic industry within the meaning of Paragraph 16.4 of China's Accession Protocol.

  19. WTO RULING: APPELLATE PANEL CONCLUSION • Found that the United States did not act inconsistently with any of its WTO obligations • Appeal Board made no recommendation to the DSB pursuant to Article 19.1 of the DSU

  20. PRECEDENCE • 6 previous USTIC investigations under Section 421. • The products were: • Pedestal actuators (Affirmative) • Wire hangers (Affirmative) • Bake drums and rotors • Ductile water works fittings (Affirmative) • Uncovered innerspring mattress units • Circular welded non-alloy steel pipe (Affirmative)

  21. PRECEDENCE • None were provided relief under the Bush administration • Therefore, this case of pneumatic tires establishes precedence in regards to how the WTO interprets Article 16 • It also establishes the differences between the Bush and Obama administrations in regards to trade with China

  22. US/CHINA TRADE RELATIONS • Large victory for US labor unions and producers. • Completely upheld US safeguard measures against China. • Possible retaliation from China: - Antidumping and countervailing cases against U.S. autos and poultry

  23. SIGNIFICANCE OF RULING ON WTO DISPUTE SETTLEMENT PROCESS • This is the first case to address a provision in China’s WTO Accession Protocol that allows other WTO Members to impose product-specific restrictions on Chinese imports when the imports enter a member country in such significant numbers so as to cause material harm to its domestic industry.

  24. SIGNIFICANCE OF RULING ON WTO DISPUTE SETTLEMENT PROCESS • US Safeguards can be put in place for a three-year period. • Section 16 of China’s Accession Protocol, which allows for safeguards, expires at the end of 2013.

  25. SIGNIFICANCE OF RULING ON WTO DISPUTE SETTLEMENT PROCESS • Unclear whether this means new safeguard measures cannot be put in place after 2013 or whether existing safeguards cannot continue after this date, the approaching expiration date seems to have deterred other US industry groups from seeking safeguard measures. • No safeguard petitions have been filed since the Chinese tires safeguard order was issued in 2009

  26. WORKS CITED • USTIC:http://usitc.gov/trade_remedy/731_ad_701_cvd/investigations/2009/421_tires/safeguard.htm. Visited Feb, 2012 • Grimmett, Jeane J. Chinese Tire Imports: Section 421 Safeguards and the WTO. Congressional Research Service: http://assets.opencrs.com/rpts/R40844_20110131.pdf. Visited Feb 2012

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