Lila Kalick of the Campaign for America’s Future penned an excellent piece analyzing the prospects for U.S.-China trade policy under the Obama Administration.   And she notes the significance of the recent ITC decision in favor of U.S. tire manufacturers who were dealing with a surge of tires from China:

On Monday, The International Trade Commission (ITC) unanimously voted to recommend that President Obama impose tariffs on the import of Chinese tires for three years. The new administration will have until September 17 to decide what, if any, relief to provide based on the ITC’s recommendation. Will Obama cave to the power of business lobbies and conservatives to follow in the footsteps of President Bush, or support a policy that will help our long term economy?

Read more.

##

TireBusiness.com is running a poll asking “Do you agree with the ITC’s ruling in favor of the United Steelworkers’ petition seeking to impose quotas on Chinese tire imports?” 

The choices are:  (1) Yes, these imports have harmed the domestic tire industry; (2) No, the imports are an effect, not a cause, of the domestic makers pulling out of some segments; (3) think imports have hurt the domestic industry, but I don’t think trade restrictions are the answer and (4) I’m not sure.

ManufactureThis just answered the poll and selected choice #1.

##

Several weeks ago, ManufactureThis reported on the ongoing action by the U.S. International Trade Commission on a request by United Steelworkers in early 2009 requesting that the Administration cut the number of Chinese tire imports.  
 
As we reported then, the petition – and the ITC’s response – was based on both the market disruptions that occurred because of China’s unfair (and often illegal) trade practices as it relates to its tires, as well as safety problems that caused two deaths, several serious injuries and a number of tire separation incidents in the U.S. 
 
The original petition requested that the government only allow 21 million tires from China to be imported into the U.S. in the coming year, which would bring imports back to less half the 46 million units imported in 2008. 
 
Earlier this month, the ITC ruled in favor of the petition, finding that as a result of its cheating both economically and safety-wise, China’s tires were indeed a source of concern both to U.S. manufacturers and consumers. 
 
As AAM’s Steven Capozzola noted, yesterday the ITC took further action by recommending to the White House that three years of tariffs be applied to imports of Chinese tires.  Its suggested remedy would impose tariffs of 55%, 45% and 35% respectively over a three-year period and would have the same affect on decreasing the number of imports as would quotas – in fact, some analysts believe that the tariffs may even have a greater impact. 
 
These remedies will be formally presented to President Obama on July 9, with White House action to accept or reject them due by September 17th.  The ITC ruling also left the door open for either U.S. Trade Representative Ron Kirk or President Obama to impose additional tariffs or import restrictions.

 
So lets recap on Chinese tire manufacturers - they cheat, their tires blow up, and if history tells us anything, they are not likely to clean up their act anytime soon.  With Americans headed to their cars for vacation purposes over the next few months, they want to be sure that their spouses, their children, and Fido and Fluffy are being carried to the beach or into the woods on tires that will get them there safely. 
 
The jobs of U.S. manufacturers and their employees - who play by the rules and obey trade and safety rules that China ignores – must be protected.
 
Should President Obama accept the ITC’s recommendations?  Should the U.S. impose corrective tariffs on Chinese tires?  Um, duh. 

##

Rep. Mike Michaud (D-Maine) has introduced the Trade Reform, Accountability, Development and Employment (TRADE) Act of 2009 which calls on the president to submit a plan to renegotiate existing trade deals, as well as incorporating benchmarks that Congress would set on various issues.

Over 100 House Democrats, including nine committee chairmen, have already co-sponsored the bill, which also calls for a new “fast-track” law that would require Congress to vote in favor of a new trade agreement before the president offers can sign it.

Rep. Michaud said the bill is “consistent with what the president said he would do before he was elected.”

What ManufactureThis finds interesting is that the bill, like the Administration’s recent initation of a WTO case against China, reflects a potentially growing awareness of just how seriously U.S. trade policy needs to be revised in order to rebuild U.S. manufacturing.  The U.S. has lost more than 4 million jobs in this decade, and has fallen below 1998 production levels.  It’s good to Washintgton getting serious about addressing these problems.

##

Obama Administration criticizes China’s web filtering requirement.

Senators worry about the future of our employer-based health care system.

More than 100 House Democrats call for new rules on trade.

As the vote roundup continues in the House, what is the outlook for climate change in the Senate?

##

Yesterday we noted the significance of the Obama administration bringing its first trade case against China in the World Trade Organization (WTO).  Well, it looks like positive reaction has been swift and widespread.  There has been much approval of this important step in enforcement of U.S. trade law, including from such diverse voices as the American Iron and Steel Institute (AISI), which called it a “critical step,” the United Steelworkers (USW), who gave it “strong support,” and Sen. Debbie Stabenow (D-MI), who said “I hope the WTO holds China accountable.”

##

The U.S. tells China to honor its commitments on trade by filing a WTO case on export restrictions and question China’s requirement for filtering devices on computers.

Three automakers—including Ford—receive the first federal assistance for clean energy retooling.

Speaker Pelosi continues rounding up votes for climate change legislation.

##

The Obama administration has announced that it will bring its first trade case against China in the World Trade Organization (WTO).  The Office of the U.S. Trade Representative has launched a case against China for imposing restrictions on exports of raw materials used to make steel, aluminum and chemicals. By restricting exports, China gives its producers a price advantage over U.S manufacturers.

AAM Executive Director Scott Paul commented on the USTR for taking this important step:  “We commend Ambassador Kirk and the Obama Administration for beginning to hold China accountable for market-distorting practices that both restrict raw material exports and give an unfair advantage to Chinese manufacturers while raising costs for American manufacturers.  This trade case could be the first step in a new and promising era of trade enforcement.  The aggressive pursuit of this WTO case now– along with a 421 decision by President Obama in September to grant relief for tire workers and manufacturers against Chinese tire imports– is essential to leveling the playing field for American workers and businesses.  Enforcing our nation’s trade laws is crucial to preserving good jobs, protecting the rule of law, and eliminating anti-competitive and market-distorting practices around the globe.”

Read: additional information on the recent Section 421 petition regarding a surge of tires from China.

Read: why it’s important to enforce U.S. trade laws.

##

Brief statement from Alliance for American Manufacturing (AAM) Executive Director Scott Paul on today’s U.S. International Trade Commission ruling in favor of domestic U.S. tire manufacturers (section 421 petition brought by the United Steelworkers):

“It’s good news that the International Trade Commission voted in favor of the nation’s tire manufacturers.  As with so many other manufactured products from China, its tire industry benefits from illegal government subsidies, labor exploitation, lax environmental standards, and illegal currency manipulation. As a result, U.S. producers, who play by the rules, can’t fairly compete.   We’re hopeful the Obama Administration will enforce the ITC’s wise ruling.”

##

This morning, the House Steel Caucus  held a hearing entitled “Stabilizing Steel.”  The purpose of the hearing was to discuss the current state of the U.S. steel industry and manufacturing.  Constituents, steel industry experts, and steel industry officials all testified about the danger of losing the domestic steel industry and the impact that would have on our country.

The economic downturn and a failure to adequately enforce our trade laws have had a staggering impact on steel production in the U.S. with an extensive amount of job loss as a result.  Entire communities are facing unprecedented challenges.  To illustrate this point, Richard McCormack, Editor & Publisher of Manufacturing & Technology News, read off a list of phrases used during the hearing to describe the difficulties faced by steel manufacturers and workers, including:
• “scary time”
• “devastation”
• “can’t survive”
• “lowest point in the history of the nation”

According to Robert E. Scott of the Economic Policy Institute (EPI), 5.3 million manufacturing jobs have been lost since 2000.  More specifically, the steel industry has lost nearly 53,000 direct jobs over that span, and 523,131 total jobs when including those which are supported by the industry and more indirectly by the wages spent on items such as groceries.

Those testifying called for stronger enforcement of our trade laws to stem the flow of unfairly traded imports into the U.S.  Specifically, there were calls for efforts to address currency manipulation by the Chinese government and for the application of countervailing duties on non-market economies.  Mr. Scott of EPI cited a study produced by the Alliance for American Manufacturing which outlines the massive energy subsidies provided to Chinese steel producers by their government.  These subsidies exceeded $15 billion in 2007 alone.

There were calls for continued investment in our infrastructure system and for the application of Buy America requirements to ensure that our tax dollars are used to put American workers to work at a time when capacity utilization is at an unprecedented low.  Thomas J. Gibson, President of the American Iron & Steel Institute, testified that capacity utilization is at just 47.1%, compared to 91% a year ago.

The manufacturing sector continues to play a critical role in our economy with roughly 12 million workers.  The question moving forward is whether Congress and the Administration will find the political will to address these issues and ensure that American workers continue to produce steel and other manufactured items.

##