U.S. tires facing major tax crisis

On September 2, the U.S. Trade Representative’s Office will issue a ruling on the tire special security case. According to legal procedures, U.S. President Barack Obama will announce his final decision on the case by September 17.

Prior to this, Vice Minister of Commerce Zhong Shan led a delegation to the United States from August 17 to August 18 to hold talks with the White House Security Committee, the Ministry of Finance, the Office of the Trade Representative, the Ministry of Commerce, and the State Council and other departments to carry out the tire special security case and the United States. Negotiations and consultations to express the position and concerns of the Chinese government.

From January to July, tire exports dropped sharply

According to the China Rubber Industry Association, China is a tire producing and exporting country. In 2008, tire production reached 350 million, of which 40% were exported and about one-third were exported to the United States.

Affected by the financial turmoil, China's tire exports fell a bit in the first half of this year. The decrease ranged from 26% to 29% in January to April and around 16% in May to June. If the relief measures are recommended by the U.S. side, China will lose its tires to the United States. At the same time, it will also affect the survival and development of the domestic tire industry and related upstream and downstream industries, or affect the employment of about 100,000 workers.

According to the statistics released by Huangpu Customs on August 21, from January to July of this year, Guangdong Province exported more than 21 million tires, which was a significant drop of 27% from the same period of 2008. Guangdong tires are mainly exported to the United States, Africa, the European Union, Hong Kong, and Latin America. Affected by the international financial crisis, the demand for auto consumption in the international market has been significantly weakened, sales volume has continued to decline, and downstream demand has fallen into a slump, causing the current international tire market to shrink. The increase in trade friction between China and China caused a sharp drop in Chinese tire exports. In July, Guangdong’s tire exports to the United States, Africa, and the European Union showed a sharp contraction of more than 30%.

According to statistics from Hangzhou Customs, from January to July 2009, Zhejiang exported a total of 18.882 million tires worth US$410 million, a decrease of 19.4% and 15.5% over the same period of 2008, respectively. According to a person from Zhejiang Provincial Department of Commerce, the national case involved in the tire case was US$2.2 billion, of which the amount involved in the province was about US$200 million. The companies involved were mainly “Zhejiang Rubber” and “Hankook Tire” in Jiaxing, both of which were actively involved in the industry. The collective response of the association organization.

Special protection measures face enormous costs

The U.S. trade emergency committee sent a letter to President Obama on August 19, urging it to make a final decision after seriously considering the impact of all possible relief measures in the China Tire Special Protection Case.

The committee said that the imposition of high tariffs on China's tire products will have a devastating effect on many aspects of the U.S. economy and will send very negative signals to many other countries that are under pressure to restrict U.S. exports.

The committee also pointed out that taking into account the enormous costs faced by the USTC’s proposed restrictions on Chinese tires during the financial crisis, the committee urged President Obama to consider the use of non-trade restrictions so that they can adapt to local conditions and the workers involved in the case. Provide any necessary adjustments and other assistance without compromising the efforts of other U.S. workers, companies, and the United States in supporting the recovery of the global economy.

The American Tire Manufacturers Association also did not blame the impact of imports on the decline in output. The Association’s 2009 report released on August 10 projects that in 2009 passenger vehicle replacement tire production will decline by 9% (or 18 million) to 176 million; light-card replacement tire production will drop by 18% to 24 million. Article. In 2010, it will increase by 3% and 8% respectively. The report boils down to four reasons: drastic drop in car sales, low consumer confidence, high unemployment and a depressed property market.

"Compromise" or beneficial to both parties

Yao Jian, the spokesperson of the Ministry of Commerce, also expressed his attitude toward the issue of whether to take trade retaliatory measures. He said: “First of all, we must actively discuss with the countries concerned. We also believe that important world economies will adopt appropriate Measures, restraints and restrictions on the use of trade remedy measures, we do not want to see the next trade war. Now many experts put forward a list of trade retaliation, I think the Ministry of Commerce will also evaluate the experts' recommendations, of course, the most important Still, we need to look at the domestic and international markets because the trade war cannot revitalize the economy, and excessive trade remedy measures not only hurt the other party, but also hurt domestic consumers or the corresponding companies."

The senior consultant of the Chinese tire enterprise delegation in the United States publicly stated: “The key to victory and defeat first depends on the game between the US tire manufacturing industry and the trade retail industry. According to calculations, once the Chinese tires levy a special tariff of 55%, Sino-US tire trade may not With the re-existence, the 100,000 jobs in the related positions will not be guaranteed, and more importantly, the US end-consumer has become a fixed customer group for Chinese tires. If you want to re-select high-priced tire products, given the current economic situation, it is clear that this decision has been made. There is no public support.”

The source also stated that it is expected that the U.S. government will eventually adopt the "eclectic" plan. At present, the US tariff on Chinese tire imports is 4.4%. After ITC ruled that the special tariff was 55%, the U.S. government may take a balance between these two ends. Chinese enterprises must make every effort to gain favorable chips and obtain a "trade-off plan" that is beneficial to China.

Industrial Structure Triggers Trade Conflicts

According to the statistics of the Ministry of Commerce, from the last October to June this year, 77 foreign trade frictions have occurred, and the number of them and the amount involved are unprecedented. Following the special case of tire protection, the European Union announced the initiation of an anti-dumping investigation against Chinese-exported aluminum alloy wheels. Earlier this year, steel hubs, fasteners, and brakes exported to China by Australia, India, Brazil, and Argentina were exported to China. Discs and knuckles were anti-dumped. As China's auto industry emerges from its childish period, the pace of exports is bound to accelerate, and more and more parts and components and even entire vehicles will inevitably become involved in all kinds of trade barriers.

What causes China's foreign trade friction to increase rapidly? According to analysis by industry experts, first, China has a large total economy, and China is the world’s second largest exporter, so trade friction is more normal; second, many of China’s important export products are labor-intensive products. It may be related to the employment of workers in many countries. Therefore, in the context of the financial crisis, the world economy is in a difficult situation. The foreign counterparts are having a hard time. They hope that they can take measures to curb the increase in the unemployment rate, so they must take labor. Intensive product operation. Thirdly, as far as cars are concerned, the main reason is that many foreign auto parts enterprises have closed down. Even those companies that have survived have not accepted small-batch orders due to reduced orders and higher costs. This leaves room for Chinese companies. This also caused a lot of trade friction.

Industry experts further pointed out that adjusting the industrial structure is not only a need for exports, but also a necessity for China to move from a large economy to a strong country. Since the beginning of this year, both the academic and industrial circles have proposed the "upgrade of the industrial structure through the financial crisis." Only in this way can we solve the impact of the sudden drop in exports caused by the global financial crisis on the Chinese economy. For tire companies, they should increase investment in R&D, accelerate the change in the growth pattern of tire exports, increase the competitiveness of export products, explore new markets, and divert risks.

View related topics: China and the United States tire special security case

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