Sino-U.S. Urgently Negotiated to Sell US Special Tire Protection Cases

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The reporter learned on July 21 that an exclusive member of the Chinese Ministry of Commerce and the U.S. Trade Representative Office are in Beijing for emergency consultations on the China-US Tire Special Security Case.

On the 21st, the reporter learned from the relevant personages in the Legal Department of the China Minmetals Chemicals Import & Export Chamber of Commerce that the Ministry of Commerce is actively negotiating with the United States, lawyers are preparing for defense, and industry associations are liaising with the US Severe situation. "But it is still in the negotiation stage. It is unclear when there will be a conclusion."

If the United States International Trade Commission (hereinafter referred to as ITC) imposes punitive tariffs on Chinese tires, it will have a great impact on China's tire industry, especially for companies that produce passenger cars and light truck tires. Li Shengmao, an analyst of China Investment Advisor Automotive Industry Group, pointed out: "Especially tire companies like S-Guitar and ST Huanghai account for more than half of the total export business and will be affected even more."

On June 29, the United States International Trade Commission (ITC) proposed that Chinese tires for passenger cars and light trucks be subject to special tariffs of 55%, 45%, and 35% for three consecutive years on the basis of Chinese tires disrupting the US market. This proposal has yet to be approved by the Obama administration by September.

However, from the previous statement of the Chinese Ministry of Commerce, it can be seen that the Chinese side may have advantages in the negotiations. On the afternoon of July 17, the head of the Bureau of Fair Trade of the Ministry of Commerce issued a statement on July 14 stating that ITC reported that “fact-finding errors and lack of logic are not sufficient basis for restricting Chinese tires.”

The reason the Ministry of Commerce refuted was very strong. According to the relevant provisions of the WTO and the U.S. internal law, special protection measures should meet three conditions, namely, the surge in imported products, damage to the domestic industry, and the causal relationship between the two. The person in charge of the Ministry of Commerce pointed out that when determining the surge of imported products, ITC ignored the fact that the slowdown in the growth of Chinese product imports in 2008 and the sharp decline in the first quarter of 2009, which just explained that the Chinese product imports were subject to market demand. Driving up and down, it did not impact the market share of similar products produced in the United States. In identifying domestic industrial damage, ITC did not consider the fact that in 2007, when China’s product imports increased the most, the United States’ internal industry profits were the best. When determining the causality, ITC admitted that the US tire market can be divided into high, medium and low grades. Chinese products are mainly supplied to middle and low-end markets, while similar products produced in the United States mainly supply high-end markets. In this case, there should be no direct competition between the two products. ITC believes that the existence of a causal relationship is extremely far-fetched on the premise that Chinese products occupy a low market share.

However, according to Li Shengmao analysis, under the pressure of high unemployment rate, the Obama administration may still approve the ITC ruling report, but once it passes the special security case for tires, other industries in China that use exports as an important fulcrum may also suffer the same ruling.

Lu Baoping, head of the import and export department of Fengshen Tire Co., Ltd., said that the company’s “variety involved in the export volume last year was about 10,000, and the amount was about 1.5 million US dollars. If the proposal is not implemented, it is expected that this year's export value will be flat with last year's Or a slight increase; if implemented, it is difficult to guarantee."

According to statistics, China’s tire production, consumption, and exporting countries, tire production accounts for about a quarter of the world’s tire production. However, the number of tire companies in China is large, the industrial concentration is low, the product homogeneity is serious, and there are few high-value-added products. In addition, the proportion of China's tire exports is as high as 45%, and both the raw materials and the market are out, which restricts the autonomy of the domestic tire industry.

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