WASHINGTON—As the dust begins to settle from the U.S. government's decision on June 12 to set final antidumping and countervailing duties against passenger and light truck tires imported from China, the tire industry is awaiting the next step in the long-awaited process.
That day of reckoning comes on July 14, when the International Trade Commission (ITC) makes its final material injury determination, based on the duties levied by Commerce Department's International Trade Administration.
Meanwhile, the United Steelworkers (USW) union said it is pleased with the Commerce Department's decision that affirmed its preliminary findings that antidumping and countervailing duties against Chinese tire imports were warranted.
Some manufacturers and importers of Chinese tires, on the other hand, are saying either that they plan to conduct business as usual or that they will defer comment until the ITC's July 14 decision.
Commerce levied the following countervailing duties:
- 20.73 percent against Cooper Kunshan Tire Co. Ltd., Cooper Tire & Rubber Co.'s subsidiary;
- 37.2 percent against Giti Tire (Fujian) Co. Ltd., one of Giti Global Trading Pte. Ltd.'s manufacturing subsidiaries;
- 100.77 percent against Shandong Yongsheng Rubber Group Co. Ltd.; and
- 30.87 percent against all other producers/exporters.
In antidumping duties, the agency levied duties of:
- 29.97 percent against Giti Tire Global Trading Pte. Ltd., Giti Tire (USA) Ltd., and six affiliated Giti manufacturing entities in China;
- 14.35 percent against Sailun Group Co. Ltd. and nine subsidiaries and affiliates, including Dynamic Tire Corp. and Husky Tire Corp. in Canada;
- 25.30 percent against 65 “separate rate” companies; and
- An 87.99-percent “China-wide” rate on all other companies.
As a result, Sailun Group ended up with the lowest combination of duties—45.22 percent. Sailun sells the Sailun brand in the U.S. through American Tire Distributors Inc.
Sailun's rate is marginally lower than that for Cooper Kunshan Tire's 46.03 percent, but a Cooper spokeswoman noted that the 14.72-percent offset the company previously received from Commerce is still in effect, meaning that Cooper's total combined antidumping and countervailing duties will be 31.31 percent.
Cooper is waiting for the July 14 ITC vote, which will determine whether the final duties go into effect, the spokeswoman said. (Preliminary duties already are being assessed.)
“Until then, we will continue to monitor the situation with the overall goal of keeping Cooper and our customers competitive in the marketplace,” she told Tire Business.
The Findlay, Ohio-based tire maker has low-cost production in Serbia and cost-competitive production in the U.S., as well as at its wholly owned facility in China, according to the spokeswoman.
“This footprint gives us the wherewithal to respond to a changing marketplace,” she added, “whether it is due to tariffs or other factors.”
The extremely high duties against Shandong Yongsheng and the “China-wide” group are based on adverse facts because of the failure of those importers to participate in the investigation, Commerce said.
The department specifically excluded a long list of tires from the duties, including racing tires; retreaded tires; non-pneumatic tires; temporary spares; trailer and other specialty use tires; tires designed specifically for off-road use; and tires whose sizes are not listed in the passenger or light truck sections of the Tire and Rim Association Year Book.
USW International President Leo Gerard hailed the Commerce decision as a victory for his union.
“Today's announcement further validates our allegations made more than one year ago about the unfair trade practices of tires produced in China,” Mr. Gerard said.
“China is taking advantage of our market, but claims that no one is being injured,” he said. “That's simply not true.”
On June 9, USW officials and representatives of Chinese tire importers painted a con-tradictory portrait of the domestic tire industry during a hearing at ITC headquarters in Washington, D.C.
The USW and its legal counsel said the U.S. tire industry is being besieged by underpriced Chinese tires, whereas the Chinese importers insisted the U.S. tire industry is doing better than ever.
The Obama administration previously granted the USW relief in the form of three years of high tariffs on Chinese passenger and light truck tires—from September 2009 to September 2012.
But China had tires ready to ship at 12:01 a.m. Sept. 27, 2012, the minute the tariffs ended, according to Terence P. Stewart of the Washington law firm Stewart & Stewart, representing the union.
Despite a growing tire market in 2012-2014, the U.S. tire industry saw widespread declines in those years, Mr. Stewart said, thanks entirely to an upsurge in Chinese imports.
“The U.S. industry should have been able to participate in this growth,” he said. Instead, the U.S. industry lost nearly 28.5 million tires sold, $968 million in operating income and $265 million in wages in the years 2011-2014 because of Chinese imports.
Mr. Stewart was accompanied by presidents of several USW union locals, all of whom said production was ramping up at their plants entirely because of the promise of new relief against Chinese imports.
“Anyone who says that relief from Chinese imports doesn't affect American workers hasn't been to Findlay,” said Rodney Nelson, president of USW Local 207L representing the workers at the Cooper plant in Findlay, where the tire maker has its headquarters.
But Jonathan T. Stoel, attorney with the law firm Hogan Lovells U.S. L.L.P. and legal counsel for Moorpark, Calif.-based tire importer ITG Voma Corp., said it was absurd to say the U.S. tire industry is suffering at all.
“The pre-hearing report shows that not only the industry's profitability has been increasing throughout the commission's period of investigation, but each member of the domestic industry earned a profit in all three years,” Mr. Stoel said at the ITC hearing.
He noted that five existing U.S. tire makers and three new entrants are investing $3.3 billion in the U.S. These investments will increase U.S. tire making capacity by 42 million tires annually and create 6,700 jobs, he claimed.
One argument the Chinese importers make, which the USW disputes, is that there are four distinct tiers of tires in the U.S. market and Chinese imports don't compete directly with tires made in the U.S.
Gustavo Lima, CEO of Miami-based Oriente Triangle Latin America Inc.—a subsidiary of China's Triangle Group—said the Chinese tire industry is about seven years behind the U.S. industry technologically.
“That doesn't mean their tires aren't safe or well-made,” he said. “It just means a guy who drives a Corvette or Mercedes isn't going to put Chinese tires on his car.”
Both Messrs. Stoel and Lima declined comment on the June 12 Commerce determination, saying they would wait until the ITC votes on July 14.
Another group that declined comment was the Tire Industry Association, which opposed tariffs on Chinese tires in 2009.
Sentury Tire Americas—which didn't testify at the ITC hearing but is affected by the duties—said Commerce's determination hasn't affected its plans for the U.S. passenger, SUV and light truck tire market. Sentury's duties total 56.17 percent. Sentury sells the Landsail and Delinte brands.
“We view this recent decision as a temporary setback and are proceeding with our worldwide expansion,” said Maxwell Wee, director of sales for Sentury, in a June 16 press release.
The tire importer/marketer plans to move to a new headquarters and warehouse in Miami later this month, Mr. Wee told Tire Business. Meanwhile, parent Qingdao Sentury Tire Co. Ltd. is building a plant near Bangkok, which is scheduled to come on stream in the third quarter with an annual capacity of 5 million tires in the startup phase.
After its July 14 vote, the ITC will transmit the results of that vote to Commerce July 27, including detailed reasons for its decision.
Depending on which side one listened to at the recent ITC hearing, the U.S. tire industry is either besieged by underpriced passenger and light truck tire imports from China, or doing better than ever.
Those were the contradictory scenarios presented by advocates and opponents of antidumping and countervailing duties against Chinese tires at the June 9 hearing.
Dennis Mangola, senior consultant to ITG Voma, backed Mr. Stoel's assertions, noting that during the period of investigation, the domestic tire industry's capacity utilization was 91 percent—which is as close to full capacity as most industries ever get, Mr. Mangola said.
There are four separate tiers in the tire market, and the Chinese don't compete with the U.S. in the higher two tiers of that market, he said, adding that “no U.S. tire manufacturer has any desire or interest in making Tier 4 tires.”
However, the USW and its counsel questioned the entire idea of tiers in the U.S. tire market. Even if tiers exist, they said, U.S. producers haven't abandoned the lower-price market, while dealers regularly promote Chinese tires as competitive with high-quality domestic tires.
“Our opponents are saying that anything from China is in Tier 4, so you don't have to worry about it,” said Elizabeth J. Drake of Stewart & Stewart. “That's a self-serving definition.”
Several members of Congress, all of whom have tire companies in their respective districts, also testified in favor of a finding of material injury, including Sens. Jeff Sessions, R-Ala.; Sherrod Brown, D-Ohio; and Tim Kaine, D-Va.; and Reps. Robert Aderholt, R-Ala., and David Price, D-N.C.
Rep. Price noted the ITC's pre-hearing report that showed consumer tire imports from China had increased 84 percent since 2012 and also that Chinese tire makers undersold U.S. producers in 100 percent of the commission's price comparisons.
“It's safe to say that this is nothing new, particularly in regard to the trade-distorting practices historically employed by the Chinese government,” he said.
Sen. Charles E. Schumer, D-N.Y., urged the ITC “to act decisively to level the playing field for tire imports to protect U.S. tire workers in Western New York from unfair Chinese trade practices.”
In a press statement released prior to the ITC hearing, Sen. Schumer outlined a number of points, including that “there are over a thousand New Yorkers employed by Good-year Dunlop's tire plant in Tonawanda and rubber facility in Niagara Falls who produce passenger car and light truck tires who (are) impacted by unfairly priced tire imports from China.”
He explained that the ITC's preliminary decision showed that tire manufacturers in New York and across the country “have suffered significant injury from China's unfairly-supported tire imports in recent years.” Between 2011 and the first quarter of 2014, he noted, nearly 15 percent of the domestic workers in the tire manufacturing industry lost their jobs despite the American economic recovery.
Sen. Schumer claimed that protections that once existed for U.S. producers—”that leveled the playing field against trade cheats like China and allowed American workers to compete and succeed in the global marketplace”—expired in 2012, “and this report provides further evidence that the Department of Commerce and ITC must work to level the playing field for U.S. manufacturers.
“From tires to steel to stealing intellectual property, the bottom line is that China is a repeat-offender trade cheat; and the 1,000-plus productive and talented workers at tire manufacturers like Goodyear Dunlop in Tonawanda and Niagara Falls need the Department of Commerce and ITC to be the cop on the beat and level the playing field for the American worker,” he continued.
“More than 1,000 hard-working Americans' jobs are being put at risk,” Sen. Schumer added, “because they are forced to compete with artificially-cheap foreign imports, and that needs to change ASAP.
“American manufacturers and workers can compete and win, but it is essential that foreign competitors—especially from China—play by the same rules.
“So I am urging the feds to consider the substantial evidence of damage caused by foreign dumping and act decisively to impose protections that will ensure U.S. workers can compete on a level playing field.”
In his testimony, Sen. Rob Portman, R-Ohio, said that “the fate of the tire industry is very important to my state,” and referenced the presence of Goodyear and Cooper and their workers in Ohio.
In particular, he said, Cooper Tire's plant in Findlay saw its daily output cut by more than 4,000 tires a day last year, down from 21,500 tires daily in 2012 just after the previous round of import tariffs had expired.
Sen. Portman singled out China's tire makers for “unfair practices—selling below costs and government subsidies” that have made it possible for Chinese producers to undercut U.S. tires consistently and deeply “to the detriment of American workers.”
He also said he got involved with this case after meeting with USW workers from Cooper's Findlay factory earlier this year to discuss the challenges posed by imported Chinese tires that violate trade laws. Following that meeting, Sen. Portman sent a letter in February to the U.S. Secretary of Commerce urging the Administration to closely study this case.
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