China on offensive as US weighs tire import curb

Friday, the US Trade Representative will hold a hearing on a US Steelworkers' proposal to cut imports in half. Last year, the US imported about 46 million tires from China.

China's tire producers are pushing back against a US threat to curb imports in the latest sign of China's increasing assertiveness on global trade.

The row over tires has stoked concerns in China that major trading partners are resorting to protectionism as they struggle to rebuild their economies and safeguard jobs. And Chinese tire producers have undertaken an aggressive lobbying campaign in Washington that underscores both China's increasing global reach and its reliance on exports of manufactured goods.

Last week, Beijing filed complaints at the World Trade Organization against the US and the European Union over restrictions on poultry and screws, respectively.

But the tire dispute is perhaps the biggest spoiler so far, in Chinese eyes. State-run media have framed it as an egregious example of how the US bends trade rules to suit its domestic interests.

In June, a US federal trade body upheld a United Steelworkers' petition that claimed a surge in low-cost Chinese tires had disrupted the domestic tire industry and cost at least 4,400 jobs. It proposed safeguard measures to cut imports from China in half. Last year, the US imported nearly 46 million Chinese-made tires.

The US Trade Representative is holding a public hearing Friday in Washington on the proposal. It then goes to the White House for a final decision next month. Unionists have called it a test of President Obama's campaign promises to stand up for American workers.

Chinese tire producers and an industry association have sent a delegation to Friday's hearing and rallied support from US tire distributors.

"It's a big case. There's big money involved. It's not only [about] China's tire industry, as it may also lead to other US industries wanting protectionist measures on Chinese imports," says Fan Rende, chairman of the China Rubber Industry Association in Beijing.

Mr. Fan disputes the assumption that fewer Chinese tire imports means more American jobs. He says Chinese tires, some of which are produced by US-Chinese joint ventures, don't compete with higher-value US tires.

The United Steelworkers says this is a myth, and that US factories idled production as Chinese imports began to soar. Its petition notes that the value of these imports nearly tripled between 2004 and 2008, to $1.8 billion.

Since 2007, however, the pace of growth has tapered off as the US economy slowed, another reason why China says higher tariffs aren't warranted. The US buys around 1 out of every 3 tires that China exports, and a sudden drop in sales would lead to heavy job losses in China, according to the rubber association.

Stan Abrams, a US lawyer and lecturer at Beijing's Central University for Finance and Economics, says more trade rows are likely to break out between China and importing countries in North America and Europe.

"It's not going to be the last that we see over the next 12 to 18 months. It's where things are going. The politics of protectionism usually lag the economic recovery," he says.

In a replay of the tire dispute, Reuters reported last month that a US manufacturing group is pushing for higher tariffs to curb imports of Chinese steel pipes used in oil production. The trade is worth an estimated $2.6 billion a year.

The US ban on Chinese poultry was imposed two years ago amid food scares. Catfish farmers also found themselves shut out of the American market. China argues that these bans are discriminatory and not based on safety standards.

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