US steelmakers have expressed their appreciation and support for the decision of President Obama and US Trade Representative Ron Kirk to apply significant duties to imports of tires from China, in the Administration's first Section 421 case ruling.
The Obama Administration announced its decision late Friday to restrict Chinese tire imports under the special import safeguard provision against China known as Section 421. This is the first time that a US president has exercised his power to grant relief under this provision. According to the ruling, tariffs will be applied to Chinese tire imports of 35 percent for a year beginning September 26, 30 percent in the second year, and 24 percent in the third and final year.
The American Iron and Steel Association (AISI), on behalf of its member companies which represent 75 percent of US and North American steelmaking capacity, praised the decision and noted in a press release, “This marks the first time that a US Administration has imposed a trade remedy in a Section 421 China surge case after the ITC has found market disruption and has recommended trade relief. America’s steel industry joins with many other US manufacturing industries that have faced Chinese government industrial targeting, subsidies and export promotion policies in strong support of the position that our WTO-consistent Section 421 law must be a ‘live’ trade remedy statute -- and a vital trade tool for US industries and their workers -- to address market disruption caused by damaging import surges from China.”
Mr. Thomas Danjczek, president of the Steel Manufacturers Assocation (SMA), a trade group which represents 70 percent of steel producers in the United States, also expressed his appreciation to the Administration, and to the Congressional Steel Caucus, which Danjczek says urged the President to set a precedent for trade law enforcement, thereby validating use of the Section 421 safeguard.
According to Danjczek, “It is a significant development in both trade law enforcement and our US trade relationship with China. It is time for the US to rectify a steeply tilted international playing field where private US manufacturers compete against foreign companies and cartels that are reliant upon market distorting practices such as currency manipulation that create a false comparative advantage, and result in the hollowing out of US manufacturing.”
The chairman, president and chief executive of Nucor, the US' largest steel producer (by volume), Dan DiMicco also praised the Administration for its decision in the Chinese tire case, commenting on Monday, "The Administration's strong action in the Chinese tire case is a victory for rules-based trade, American workers and manufacturers, and our overall economy. President Obama is setting a course for better and fairer trade between our two countries.”
During its World Trade Organization accession in the year 2000, China agreed to the Section 421 clause, a special safeguard mechanism that allowed its trading partners to implement remedies in response to import surges. Section 421 relief to a domestic industry is discretionary for the President of the United States. Four such cases were presented to former President George W. Bush, but he denied relief in every instance.
In regards to the Section 421 ruling against Chinese tires, according to USTR, “The President decided to remedy the clear disruption to the US Tire industry based on the facts and law in this case.”
The Section 421 case against Chinese tires was brought by the United Steelworkers Union (USW) in April, though no US tire manufacturers joined the case.