September 14, 2009 / 4:36 PM / 10 years ago

Obama move on China tires could spur more requests

WASHINGTON (Reuters) - President Barack Obama’s decision to restrict tire imports from China after union workers complained of a surge could lead to copycat cases in areas such as steel, clothing, paper, machinery and consumer goods, trade experts said on Monday

A Chinese-made tire sits outside of the Redco Tire Inc tire dealer in Denver, Colorado September 14, 2009. The tire will be subject to a U.S. decision to impose special duties on Chinese tires which could open the door to a host of trade complaints against Chinese products, creating tensions as Western nations seek Beijing's support at a G20 meeting. REUTERS/Rick Wilking

“It’s a target-rich environment,” said Lewis Leibowitz, a lawyer who represents the Consuming Industries Trade Action Coalition, which opposed relief in the tires case.

“There’s almost anything you can hit. And even within import categories that have gone down, there may be smaller product categories that have gone up,” Leibowitz said.

The question of which industries could qualify for relief is complicated by the fact that overall U.S. imports from China, after years of steep rises, have fallen in 2009 because of the global and U.S. economic downturn, he said.

U.S. retailers, worried about a spate of new cases, urged Obama to “be more judicious” in deciding future requests.

Obama’s decision late Friday to restrict the tire imports was the first time the United States had used a special import safeguard provision against China known as Section 421.

It triggered an angry response from China, which said it planned to challenge the action at the World Trade Organization and begin new anti-dumping investigations against U.S. auto parts and chicken imports.

Beijing agreed to the anti-surge measure when it joined the World Trade Organization in 2001 and former President Bill Clinton’s administration relied heavily on that commitment to help persuade a reluctant Congress to approve the pact.

However, Clinton’s successor, George W. Bush, turned down four Section 421 petitions that reached his desk and the U.S. International Trade Commission rejected two other requests for relief before they got that far.

CLOTHING IMPORTERS CONCERNED

That irritated many Democrats, who said it eroded trust between the White House and Congress on trade.

Obama’s decision is a big step toward “a new trade policy ... that looks at the consequences of expanded trade,” Rep. Sander Levin, a Michigan Democrat who is chairman of a key trade subcommittee in the House of Representatives.

But, he said, “I think it’s not correct to talk about a flood” of new cases because the U.S. International Trade Commission will have to closely examine whether new petitions meet the legal standard required for relief.

“There has to be market disruption. There has to be injury. There has to be an impact on jobs in this country” before the ITC will forward a petition to the president’s desk, he said.

The United Steelworkers union, which filed the tire protection petition earlier this year, said a tripling of Chinese tire imports from 2004 to 2008 had cost more than 5,000 U.S. jobs.

Still, U.S. clothing importers, who fear they could be the next to face import restrictions, called Obama’s decision in the tires case “a dangerous precedent.”

“The administration has told unions that they have the power to limit imports even when all the evidence indicates that import protection will not boost U.S. production or U.S. jobs,” said Laura Jones, executive director of the U.S. Association of Importers or Textiles and Apparel.

Cass Johnson, president of the National Council of Textile Organizations, acknowledged his group was actively looking at the possibility of a Section 421 case.

“This decision signals that 421 is a viable option regarding apparel imports from China,” Johnson said.

U.S. steel companies also have praised Obama’s action, which opens up another avenue for them to seek relief against competition from China.

“You may see a number of cases filed by the end of the year” in various sectors, said Scott Paul, executive director of the Alliance for American Manufacturing, whose members include the United Steelworkers and United States Steel.

But even in instances where imports have surged, “you have to have a ready, willing and able domestic industry or industrial union that’s willing to file a case,” Paul said.

Obama’s willingness to impose Section 421 could lead to “a lot more self-policing” by China and perhaps even to broader talks between the two countries on a number of sensitive trade concerns, Paul said.

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