POMPANO BEACH, Fla.-A proposed tax that threatens to virtually close the Puerto Rican market to imported used tires has U.S. exporters scrambling for allies to help fight the measure. One used tire exporter, alluding to the long-ago ``Boston Tea Party,'' even devilishly hints that ``taxation without representation'' could lead to a similarly styled tire-dumping protest.
The difficulty, as Howard Levy sees it, is rooted in what he readily acknowledges is a scrap tire problem in Puerto Rico, a U.S. commonwealth.
``We want to do our share to help resolve that problem,'' vowed the 32-year-old owner of Used Tire International Inc., Pompano Beach, Fla.
He's not alone.
Juan Baez Santiago-whose Tire Repair Services Inc. in Bayamon, Puerto Rico, sells used tires-said 60 percent of his country's landfills are at capacity and are now closed. The small island of 4 million people-and some 1.5 million cars-is being choked with waste which includes more than just scrap tires.
He has met with officials in Puerto Rico in search of solutions acceptable to both the used tire industry and government.
Right now, Puerto Rico's proposed solution-which is expected to be debated by its senate in November-is to levy a $10 tax on every imported used tire.
That will essentially kill the market for a product there that only has a value of about $6 per tire, Mr. Levy reasons.
``It's easy to point the finger of blame at us,'' he told TIRE BUSINESS.
``We don't want to dump tires anywhere in the world. What we need to find is solutions to the scrap tire problem, not eliminate the importation of quality used tires,'' Mr. Levy said.
The Puerto Rican government's tax initiative appears to be spurred by accusations that poor-quality used and new tires are being sold-``dumped''-there.
According to an Associated Press report, Daniel Pagan, executive director of Puerto Rico's Solid Waste Authority (SWA), said millions of defective passenger tires are being sold in Puerto Rico by southern and southeastern U.S. firms, which he did not identify.
``About 4.5 million tires are processed in municipal and clandestine waste dumps in Puerto Rico,'' Mr. Pagan said. ``Of those, 3 million are new and 1.5 million are used tires...which are not safe to be used.''
To help alleviate the problem, the SWA chief urged legislators to impose the $10 fee on all new and used tire imports, saying the U.S. commonwealth does not have the authority to stop the sale of defective tires ``because we would be violating rules protecting the free flow of goods among states.'' Attempts to reach Mr. Pagan were unsuccessful.
However, Mr. Santiago has met with Mr. Pagan, and believes the government ``is willing to listen to our point of view. My island comes first, before my business,'' the dealer said. ``I don't want it to become a dump.''
He said the government ``wants to educate the people, and get private firms involved in recycling,'' as well as provide incentives for businesses like cement companies to use tire-derived fuel.
But Mr. Pagan's claim was supported by Juan Del Rio Rey, vice president of Empresas Del Rio Rey, a nine-year-old, family-run wholesale new- and used-tire operation in Vegabaja, Puerto Rico.
While he said used tires only account for 6 percent of his country's tire imports, used tire exporters are being blamed for Puerto Rico's scrap tire woes-which he, too, acknowledged is a ``big problem.''
He echoed Mr. Pagan, charging some new-tire wholesalers in his country sell ``bad quality'' tires with blemishes, poor traction and sub-standard treadwear.
Mr. Del Rio Rey imports about a half-dozen containers of used tires per month, and estimates he would lose about 75 percent of his business if the tax is enacted.
``We have a lot of economic problems here,'' he said, ``and people who don't have a lot of money need to buy used tires.''
The proposed tax would make that nearly impossible.
His current cost per used tire is $8; the wholesale price is $11-$12, which translates to about $17 for a consumer. Passing along the tax to consumers could hike used tire prices to nearly low-end new-tire prices.
Mr. Levy, meanwhile, contends used tire exporters already pay their ``fair share,'' though he said to enter the Puerto Rican market they probably would not be opposed to paying an additional $1-$2-per-tire tax if-and only if-the subsequent revenues were earmarked by Puerto Rico for scrap tire research.
``To get a tire into Puerto Rico from the U.S., we pay (a duty of) 6.6 percent of its value, the same as a new-tire importer pays-and that's fair.'' But he claimed the government there wants ``to make it so you can get a (used) tire in, but no one will buy it.''
Those who will be hurt most by the proposed tax, Mr. Levy asserted, are the poor who, unable to afford new tires, instead purchase used tires. Pricing that product out of their reach will force them to drive longer on old, threadbare tires, periling their safety.
Besides affecting exporters, the tax would also hurt U.S. common carriers, by which most exporters ship their tires, Mr. Levy said, not to mention the many new-tire dealers and retreaders in Puerto Rico who also sell used tires.
According to Juan Ramon Perez, Mr. Levy's 43-year-old partner from Mayaguez, Puerto Rico, ``Half of the people gainfully employed in Puerto Rican tire shops are there because of the used tire industry.'' He operates three tire stores and a warehouse there and claims ``hundreds'' of tire dealers there sell used tires, though not all are direct importers.
``...Our intention is not to sell junk-let the scrap tires in America stay here and be recycled in America,'' Mr. Levy reiterated.
``We're offering a product that's well-accepted by the motoring public as a viable alternative to recapped or new tires. We're not selling anything in (foreign) countries that we're not selling in the good-old U.S.A., and used tires have been sold (here) since the beginning of tire manufacturing.''
Mr. Levy also charges that ``there has been undue pressure-call it arm twisting of various foreign governments-being done by major tire manufacturers to close the markets and eliminate our products.'' Yet he pointed out virtually all the major tire makers sell used tires in their company-owned stores.
For instance, in Venezuela as well as in Fort Lauderdale, Fla., he said he bought used tires from Goodyear-owned stores.
``We're only helping recycle the product they (new-tire makers) made'' by offering a viable alternative to people who can't afford new tires, he continued.
``Do new-car manufacturers want to put out of business the guys selling used cars?'' he asked. ``I don't think so.''
Under the auspices of the National Association of Used Tire Exporters (NAUTE), of which he is president, Mr. Levy attempted to set up a round table discussion with Goodyear, Bridgestone/Firestone Inc. and Pirelli Armstrong Tire Corp.-tire makers he contends are behind various countries' attempts to close their markets to used tires.
His efforts received no response.
Within the last few years Argentina, along with other Latin American countries including Costa Rica, Ecuador and Colombia, have shut their doors to used tire exports, and Mr. Levy specifically blames those three tire manufacturers. The common denominator? ``They all have tire plants in Venezuela,'' he pointed out.
``I guess from Goodyear's or Firestone's point of view, it's better that a tire with 10,000 or 20,000 miles of tread life left should go into a landfill than on the car of a poor person....
``If I were (those companies), I'd be bragging about our product not only getting one life, but two or three. But they choose to take the low rather than the high road.''
Under U.S. law, a tire must meet a minimum 2/32-inch tread depth requirement. Mr. Levy supports that standard for exportation, but is unhappy with Puerto Rico's proposal for a 5/32-inch requirement, which he said will eliminate many used tires.
``The U.S. government is supportive, and wants to see used tires exported because they're U.S. products,'' he said, producing a stack of correspondence he's had with various American legislators, the U.S. State Department, and with U.S. Trade Representative Michael ``Mickey'' Kantor.
``This is restraint of trade-that's all it is.''
The NAUTE currently has approximately 40 members, one of whom is Vice President Ben Rallo, who heads Ben's International Tire Co. Inc.
The Puerto Rico situation ``has got everyone very edgy. When they start talking about a $10 tax on a used tire, it's frightening...horrendous,'' Mr. Rallo said from his Fairfield, N.J., office.
Used-tire dealers feel they're being ``squeezed'' by the multi-national tire makers, he said. The proposed tax would affect not only importers in Puerto Rico, and U.S. exporters, but also ``the poor guy who's trying to survive'' by buying-or selling-used tires.