UPDATE 3-US trade panel favors stiffer duties on Chinese tires
* Commissioners want to remedy harm to U.S. market
* Obama can embrace or ignore their proposals
* Fear other countries will export low-cost tires (Recasts lead, adds tire dealers, steelworkers; edits)
WASHINGTON, June 29 (Reuters) - President Barack Obama should impose duties of up to 55 percent on low-cost Chinese tires coming into the United States because they are disrupting American markets, members of a U.S. trade panel said on Monday.
Some U.S.-based tire importers responded that they would be squeezed unfairly if Obama accepts the recommendation by a majority of the International Trade Commission. The case is seen as a test of how Obama will cope with a growing list of Chinese trade issues.
Four members of the six-member trade commission recommended that Obama impose additional duties of 55 percent in the first year, 45 percent in the second year, and 35 percent in the third year on imports of passenger vehicle and light truck tires from China.
"In our opinion, these tariff levels would remedy the market disruption that we have found to exist," the four said in a statement. They were acting on a complaint by the United Steelworkers union, which said a surge of millions of Chinese tire imports has caused factory closings and cost 5,100 jobs.
Two trade commissioners disagreed, saying it would be better for Obama not to act. "This is an industry in which the trend toward gradual downsizing appears likely to continue regardless of the commission's action today," they said.
But the dissenters joined the majority in urging that the Obama administration provide aid to displaced tire workers under the U.S. Trade Adjustment Assistance program.
The trade commission will formally submit its recommendations to Obama in a report next month. He will then have until September to decide what, if any, action to take.
Trade experts are watching to see whether Obama, who criticized China during his campaign for what he called unfair labor practices and won strong labor support in his bid for the White House, will be tougher on China than predecessor George W. Bush.
Bush routinely rejected petitions for restricting Chinese imports.
CHINA BECOMING WORLD INDUSTRIAL PLANT
China's massive industrial overcapacity, its low labor costs and efficient infrastructure mean Chinese goods are spilling out into world markets, threatening profit margins, jobs, and the very existence of some sectors in Europe and the United States.
The U.S. steelworkers cited closings of U.S. plants by Goodyear (GT.N), Continental Tire (CONG.DE) and Bridgestone/Firestone 5808.T, and said more closings are pending. Continued...
