China ministry "regrets" U.S. tire trade finding

BEIJING (Reuters) - China’s Ministry of Commerce expressed “deep regret” at a U.S. trade panel ruling that Chinese tires had flooded the U.S. market, the first step in what could be the Obama administration’s first trade dispute with Beijing.

The International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets, following a complaint by the United Steelworkers union which hopes to cap Chinese tire imports at their 2005 level.

“China has repeatedly expressed its opposition to foreign governments’ using safeguard clauses to launch investigations of Chinese products,” Commerce Ministry spokesman Yao Jian said in a statement posted on the ministry’s website on Friday.

“The decision does not conform to objective facts, and also violates relevant World Trade Organization rules in addition to U.S. law.”

Lawyers representing Chinese tire producers argue that U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in. They also noted that no U.S. tire producers had joined the steelworkers’ complaint.

“We hope the U.S. will fully consider the actual situation of this case and proceed from the overall interests of the two countries’ industries,” Yao said.

U.S.-based steel makers have long complained that Chinese incentives to its steel industry have resulted in a flood of steel exports to countries like the United States. Tires are often reinforced with steel wire.

The union’s complaint says that closings of U.S. plants by Goodyear, Continental Tire, and Bridgestone/Firestone have cost thousands of jobs.

This is not the first time that imported Chinese tires have ruffled relations between the two countries. Two years ago, Chinese-made radial tires imported by an American dealer were recalled after the manufacturer stopped including a safety feature that prevented the tires from separating.

Reporting by Lucy Hornby, Editing by Dean Yates