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February 24, 2017 01:00 AM

ITC decision leaves USW, retreaders reeling

Miles Moore
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    WASHINGTON (Feb. 24, 2017) — The United Steelworkers (USW) union and U.S. retreaders are reeling in the wake of the U.S. International Trade Commission's (ITC) decision to not impose import duties on Chinese truck and bus tire imports.

    The 3-2 ITC vote on Feb. 20 that the U.S. truck and bus tire industry has not suffered material injury because of Chinese imports means the U.S. Department of Commerce will not order U.S. Customs and Border Protection to collect antidumping and countervailing duties from Chinese truck and bus tire manufacturers and importers.

    The USW union, which had petitioned the ITC for duties a year ago, expressed disappointment at the agency's decision, as did represesentatives of the U.S. retreading industry, which supported elevated duties on Chinese truck/bus tires as a way to keep an important price differential between new Chinese tires and retreaded truck tires.

    "Of all the stakeholders in this, retreaders are the ones who are hurt the most," said Terry Westhafer, president of Verona, Va.-based retreading firm Central Tire Co.

    Considering the fact that the Commerce Department had issued final antidumping and countervailing duties against Chinese tire makers in late January, Mr. Westhafer said it is hard to understand how the ITC failed to find material injury in this investigation.

    "The ITC has totally reversed this field, and you have to wonder why," he said. "Is it because of retaliation from the Chinese? Is it because the new tire manufacturers in the U.S. just made significant price increases? I would be interested in knowing.

    "Chinese imports have already seriously impacted my business," Mr. Westhafer said. "If this situation persists, the Chinese will just open the spigots full blast."

    Bob Majewski, chief technical officer for Newport, Ky.-based AcuTread Alliance Group and its AcuTread mold-cure retreading technology, also said he didn't understand the ITC ruling.

    "I don't know who got to them," Mr. Majewski said, meaning the ITC. "But China's dumping, and that's the sad part."

    Mr. Majewski said he sent a letter a week over the past several months to Senate Majority Leader Mitch McConnell (R-Ky.), House Speaker Paul Ryan (R-Wis.) and other legislators to bring their attention to the problems Chinese truck tire imports are causing U.S. retreaders.

    On the other hand, Mr. Majewski said, there is a silver lining for retreaders in that casing prices have plummeted in the last two years.

    "Two years ago, casings were $90 each and I couldn't get hold of any," he said. "Now, they're $40 each, and they're everywhere."

    Meanwhile, Mr. Majewski said, the best way forward for retreaders is to make the best product possible and sell it as aggressively as possible.

    "We've got to show people we have a quality tire," he said. "We have to tell them, 'Test it, don't just buy it.' I'm not going to go into the panic mode."

    USW International President Leo W. Gerard condemned the decision.

    "The ITC commissioners made a huge mistake," Mr. Gerard said. "While the Department of Commerce identified subsidies of up to more than 60 percent and dumping of up to almost 23 percent, the ITC failed to support relief for the injured workers.

    "That simply ignores the facts and the harm that Chinese unfairly traded exports have caused the workers," he said.

    ITC Vice Chairman David B. Johanson and Commissioners Meredith M. Broadbent and F. Scott Kieff voted against a finding of material injury, whereas Chairman Rhonda K. Schmidtlein and Commissioner Irving A. Williamson voted in the affirmative. Commissioner Dean A. Pinkert did not participate in the vote.

    The United Steelworkers union petitioned the ITC in January 2016, requesting antidumping and countervailing duty relief protection from Chinese truck and bus tire imports under Sections 701 and 731 of the Trade Act.

    Cooper Tire & Rubber Co., which manufactures all its truck and bus tires in China, applauded the decision.

    "Cooper supports free and fair trade, and we are pleased with the ITC's determination," the tire maker said.

    Walter Weller, senior vice president, strategic accounts at China Manufacturers Alliance L.L.C. (CMA), also said he was pleased with the ITC's decision. CMA is a wholly owned subsidiary of Double Coin and the domestic distributor of Double Coin tires.

    "Anybody considering all the facts, including the record profits for American manufacturers and their inability to even come close to satisfying domestic truck and bus tire demand, would have to conclude that this was the right thing to do," Mr. Weller said.

    Imports of truck and bus tires from China fell 14.4 percent last year to 7.63 million units as importers began anticipating the ITC would rule in favor of the USW.

    Overall truck/bus tire imports were down 3.8 percent in 2016 from 2015 to 13.9 million units as other countries -- notably Thailand and South Korea -- stepped in to fill the void being created by the lower imports from China, according to the 2016 import/export data from the Commerce Department.

    At the same time, the declared customs value of a Chinese truck/bus tire fell 14.5 percent to $102.84. See embedded chart for details.

    Other recent USW petitions to the ITC met with more success.

    In July 2015, the ITC voted 3-3 to find that Chinese passenger and light truck tire imports were causing material injury to the U.S. passenger and light truck tire industry. Commerce assessed countervailing duties ranging from 20.73 to 100.77 percent, and antidumping duties of 14.35 to 87.99 percent.

    On Feb. 3, 2017, the ITC voted 5-0 to find that Indian and Sri Lankan off-the-road tire imports were causing material injury to the U.S. OTR tire industry.

    The USW and Titan Tire Corp. were the petitioners. Countervailing duties levied in that case ranged from 2.18 to 5.38 percent. No antidumping duties were levied.

    Roy Littlefield IV, director of government affairs for the Tire Industry Association, said TIA kept a neutral position on the ITC investigation because of the division of opinion among its members.

    "We have great concern for the retreaders who definitely needed those rates to go up to be competitive," Mr. Littlefield said. "But on the other hand there is some relief for those who sell those tires.

    "We were surprised by the decision, especially under the Trump administration," he said.

    "We think that this is something they could look at again in the future."

    The ITC's report on the Chinese truck and bus tire investigation will be posted online by March 15.

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