Tire Tariff Has K Street Players Mobilizing

Posted September 14, 2009 at 6:40pm

A recent decision by the Obama administration to impose new tariffs on Chinese-made tires has put the lobbying organizations for several industries in overdrive. Groups that represent food and farm interests, retailers and certain exporters say they fear the tire matter may be just the beginning of myriad trade disputes with the Chinese.

Already, Beijing has initiated a World Trade Organization case against the new tariffs, which the Obama administration put in place in response to a complaint brought by the United Steelworkers union.

China, over the weekend, stepped up its efforts to impose tariffs on U.S. chicken and auto parts. But auto and chicken producers are not the only ones who are worried.

“If you’re a food and ag manufacturer, you don’t want to get into a trade war with China,— said Nick Giordano, vice president for the National Pork Producers Council. “While there’s a whole lot in the press about the trade imbalance, U.S. food and ag are exporting a lot to China, and for most of us it’s the greatest potential market in the world, bar none.—

Giordano said his industry already has a beef with the Chinese, who have upheld a ban on U.S. pork imports because of the H1N1 flu. That has hurt the pork industry dramatically because China last year was its second largest export market, he said. “We’re in the worst financial situation we have ever had among pork producers,— Giordano said. “This comes at a terrible time for us.—

The United Steelworkers brought the case against the Chinese tire imports under section 421 of the Trade Act of 1974 to remedy what the steelworkers said was an influx of Chinese tires, leading to tire manufacturing job losses in the United States.

It was the first successful 421 case, and other industries, especially retailers, will likely adopt that tactic now that the precedent has been set. Section 421 allows the president to impose remedies for any domestic industries that have been harmed by a surge in Chinese imports.

“We are concerned that this could open the floodgates to additional 421 cases in a variety of consumer goods, especially clothing,— said Erik Autor, vice president and international trade counsel for the National Retail Federation.

Stephanie Lester, vice president of international trade for the Retail Industry Leaders Association, said some of RILA’s members sell tires and had immediate concerns about the 421 case. But she said, those concerns could mount now as U.S. textile unions eye bringing a similar case.

“It would have a damaging impact on the apparel market,— Lester said. “Simply filing a case is damaging in and of itself. Retailers are struggling as it is, so to be hit with added costs and uncertainty, it doesn’t help them.—

Jim Jochum, a partner with Jochum Shore & Trossevin, which represented domestic importers of Chinese tires, said that even though his side lost, it is not giving up entirely.

After six months, the president can go to the International Trade Commission, which recommended the tariff, and see whether the tariff is having the desired effect, Jochum said.

“The tire importers are disappointed, and we’re evaluating our options,— Jochum said. “We will monitor the situation to see if jobs are lost, if costs go up and hurt consumers.—

Jochum said his side will also be reaching out to Members of Congress to get their support.

“I think you’re going to see a lot more activity on the Hill, especially once you get the ag groups involved and it’s beyond just tire importers,— he said.

Scott Paul, executive director of the Alliance for American Manufacturing, cheered the president’s decision. The alliance is a partnership between the steelworkers and some of the union’s employers.

“The president was true to his word,— Paul said. As for future cases, he said, that is possible.

“There are plenty of industries where there have been surges — textiles, any sort of consumer electronics or appliances, high tech products and paper,— he said. However, he noted, a more likely outcome than copycat cases is a “broad set of negotiations with China on trade.—