WASHINGTONIt's all over but for the shouting.
The U.S. International Trade Commission (ITC) issued its final report Aug. 17 on countervailing and antidumping decisions for Chinese passenger and light truck tires one week ahead of the statutory deadlinerestating that the agency's six commissioners reached opposite conclusions on the same data.
In the end, three ITC commissioners agreed with the United Steelworkers (USW) union that an upsurge of passenger and light truck tire imports from China was causing material injury to the U.S. tire industry.
The other three commissioners, however, agreed with Chinese tire manufacturers and importers that the financial statistics for the U.S. tire industry during the period of investigation (POI) did not suggest material injury caused by Chinese imports or any other source.
The unsurprising revelations came in the heavily redacted, 230-page public version of the report a week before the Aug. 24 deadline.
The commissioners presented their reasons for finding as they did at the ITC public hearing July 14.
Under ITC rules, the 3-3 vote represented an affirmative determination of material injury, meaning that the countervailing and antidumping margins calculated by the U.S. Department of Commerce became final.
On Aug. 10, Commerce issued a notice setting final antidumping duty levels ranging from 14.35 to 87.99 percent and final countervailing duty levels of 20.73 to 116.33 percent. The agency directed U.S. Customs and Border Protection to begin collecting the duties, which will be in effect for the next five years.
The USW petitioned the ITC in June 2014 for relief against Chinese passenger and light truck tire imports, under Sections 701 and 731 of the Trade Act.
Between 2009 and 2012, the USW obtained elevated tariffs against the same categories of imports under Section 421 of the Trade Act, which grants relief to U.S. industries injured by rapid increases in Chinese imports.
In its petitions and at subsequent ITC hearings, the union presented statistics showing that Chinese tire imports to the U.S. skyrocketed from 2012 to 2014, after the tariffs lapsed.
In their affirmative determination in the final report, Vice Chairman Dean A. Pinkert and Commissioners Irving A. Williamson and Rhonda K. Schmidtlein noted the USW statistics were accurate.
This increase in market penetration at the expense of the domestic industry is particularly noteworthy in light of the fact that subject imports competed in overlapping geographic markets and segments of the U.S. market with the domestic industry, the commissioners wrote.
Four of the five biggest U.S. purchasers of passenger vehicle and light truck (PVLT) tires reported purchasing both Chinese and domestic passenger and light truck tires simultaneously, according to the commissioners.
Importers increased their U.S. shipments of PVLT tires from China of both branded and private label tires from 2012 to 2014, they said.
Chinese tire imports also pervasively undersold domestic tires at sizable and increasing margins between 2012 and 2014, according to the commissioners. They said they found underselling 100 percent of the time in 72 possible quarterly comparisons.
The domestic tire industry and all domestic manufacturers were profitable during the POI, according to the commissioners, noting that increasing consumer demand and lower raw materials costs made that likely. Nevertheless, they said the domestic industry also saw declines in shipments, net sales, production and employment during the period.
The dissenting commissionersChairman Meredith M. Broadbent and Commissioners David S. Johanson and F. Scott Kieffdisagreed with the other three commissioners on basic figures, holding that the domestic tire industry maintained steady levels of output and employment during the POI.
While the domestic industry lost market share during a time of rising demand, we have found that the decline in market share was not directly related to subject import volume increases, and the decline in market share coincided with significant improvement in the domestic industry's financial position, the dissenters wrote.
We also do not find that subject imports prevented price increases, that otherwise would have occurred, to a significant degree during the POI, they wrote. Although apparent U.S. consumption increased during the POI, we do not find significant price suppression in light of the substantial decline in costs relative to prices and the lack of evidence of any cost-price squeeze.
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