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UPDATE 1-US trade panel urges stiffer duties on Chinese tires

Published 06/29/2009, 12:21 PM
Updated 06/29/2009, 12:24 PM

(Adds minority statement, background, reaction)

WASHINGTON, June 29 (Reuters) - A majority of the U.S. International Trade Commission on Monday recommended President Barack Obama impose additional duties for three years on imports of low-cost Chinese tires that the panel says are harming U.S. industry.

In a case seen as a test of how the Obama administration will cope with Chinese trade issues, four members of the six-member commission recommended that Obama impose additional duties of 55 percent in the first year, 45 percent in the second year, and 35 percent in the third year on imports of passenger vehicle and light truck tires from China.

"In our opinion, these tariff levels would remedy the market disruption that we have found to exist," the four said in a statement. The complaint was brought by the United Steelworkers union, which said the imports have cost thousands of U.S. jobs.

Two other members of the commission disagreed, saying Obama should take no "trade-restricting" action.

"This is an industry in which the trend toward gradual downsizing appears likely to continue regardless of the commission's action today," the two said in a statement. But they joined the majority in urging that the Obama administration provide aid to displaced tire workers.

The trade commission will formally submit its recommendations to Obama in a report next month. He will then have until September to decide what, if any, action to take.

Trade experts are watching to see whether Obama will be tougher on China than predecessor George W. Bush, who routinely rejected petitions for restricting Chinese imports.

The steelworkers argue that some 5,100 workers have lost jobs because of low-price Chinese tire imports which hit 46 million in 2008. They want Obama to restrict Chinese tire imports to 21 million.

Chinese tire producers argue that U.S. companies largely abandoned the low-cost tire market before Chinese manufacturers moved in. Vic DeIorio, executive vice president of Chinese tire maker GITI, said in a statement he was disappointed that four of the six trade commissioners "felt compelled to take a decidedly protectionist path."

(Editing by Vicki Allen)

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