The results of China’s special insurance program for tires exported to the United States have recently resulted in President Obama’s decision to make it difficult for Chinese companies to accept: to impose a three-year punitive tariff on all imported cars and light truck tires from China. The tax rate is 35% for the first year, 30% for the second year and 25% for the third year. This decision caused a strong opposition in the Chinese tire industry.
Helpless:
Chinese wheel companies will exit the US market
"It's very depressing!" This is the first sentence of Sun Weiyuan, chairman of South China Tire Corp., when interviewed by reporters. It seems particularly helpless.
"The worst result we originally expected was only to impose a 20% punitive tariff. Who knows it is ultimately 35%." Sun Weiyuan said that this punitive tax rate has hit China's tire companies in the United States very hard, "35%. Even if gross profit cannot be reached, if we can't change this decision, we can only withdraw from the US market." Sun Weiyuan even said that after punitive tariff measures were imposed on the 26th of this month, it became the largest domestic tire company in the United States, South China. Tire production will be reduced by 1/3 immediately, so it is possible to lay off 1,600 people. "This day is imminent."
Fan Rende, president of the China Rubber Industry Association, revealed that US importers have now asked Chinese tire companies to stop supplying supplies to the United States. "The next week is very crucial." Sun Weiyuan told reporters frankly that the immediate focus is how to "price increase." Chinese tire companies must negotiate with the US importers to reset the product price system based on the price line that consumers can accept. For the tariff of 35%, “the next step is to discuss whether you can digest it with 20% of your commitment and 15% of the burden.â€
worry:
This is the first domino?
After China's accession to the WTO, the United States launched six special protection cases for Chinese products, of which two were not approved by the International Trade Commission and the Trade Representative Office, and the other four were rejected by Bush. The reason why the "tire special security case" is attracting people's attention is that because it is the largest case (2.2 billion U.S. dollars) of special protection cases in China so far, it also represents the trend of the U.S. Democratic Party's new government trade policy.
Chen Lipeng, director of the Guangdong Provincial Fair Trade Bureau, frankly stated that after the U.S.’s successful “limitationâ€, it was equivalent to having passed a set of procedures to determine how China’s tire exports “disturbed the U.S. market.†Other countries certainly “learned†from it, so this case may lead Come to other countries to follow suit. In fact, India has closely followed the United States and is conducting an investigation into the special protection of Chinese tires.
"The United States has opened a very bad head. If the EU, India, Brazil, and Malaysia all follow, then Chinese tire companies can only 'sleep hibernate' all of them." Sun Weiyuan said.
What's more serious is that the "tire special protection case" may spread to other industries. “Obama’s attitude is a signal in itself.†Chen Lipeng said that after Bush’s four-veto veto, the US’s tendency to abuse “special protection†was curbed, but this time Obama’s attitude made the US industry and the lawyers feel “originalâ€. Bao is also very useful, and in the future, special protection cases for Chinese products may proliferate.
Other advantages of the domestic export industry have issued warnings of "death and cold", and sensitive goods between China and the United States, such as steel and textiles, may be the next "special protection" victims.
hope:
All companies do not fight price war
Sun Weiyuan told reporters that South China Tire Co. has formulated a response plan, including adjustments to the US market strategy and vigorously explore new markets. However, he stressed that the key to the sound development of the Chinese tire industry in the future is that the foreign market can no longer fight price wars.
“Suppliers in other regions may not be able to fill up such a huge amount of production capacity in China.†Chen Lipeng told reporters that tire production is a “technological activity†after all. China’s supply accounts for a large share of the U.S. market. As long as Chinese companies unite, it’s not This means that only people can be killed, not to mention that Chinese tires are given back to 100,000 Americans. According to a study by a U.S. expert, if the United States maintains a job with special tire protection measures, 25 jobs will be lost as a result, and the U.S. will lose 25,000 jobs in total.
"In the process of reconstructing the U.S. price system, the key lies in the united actions of all export companies, and even the formation of a 'uniform price.'" Sun Weiyuan said that export enterprises urgently need to advance and retreat together. He was very worried that after the US market was blocked, Chinese companies swarmed to Europe, and European distributors rushed to slash prices. China's tire exports would be chaotic.
It is understood that 40% of China's tire production is exported, and another 1/3 of exports are exported to the US market. The special security case will affect the livelihood of 100,000 Chinese tire workers. At present, the demands of relevant parties for the introduction of policies to protect the Chinese tire industry as soon as possible are increasing.
Counterattack:
Experts recommend to the WTO to report to the United States
Recently, the Ministry of Commerce announced that it initiated anti-dumping and anti-subsidy filing review procedures for certain imported automotive products and broiler chicken products originating in the United States. This is seen by many analysts as a countermeasure against American special protection.
Mei Xinyu, an expert from China’s Ministry of Commerce’s Institute of Trade and Research, said that the amount of imports of two types of products launched by China’s “double counter†investigation against the United States was about US$2 billion, which is roughly equivalent to the amount of Chinese tires exported to the United States. He stressed that China's trade countermeasures are not to launch a full-scale trade war but to curb trade protectionism as soon as possible.
Chen Lipeng suggested that "China should resort to the WTO dispute settlement mechanism. Chinese companies can even sue the U.S. Department of Commerce and the Trade Commission to the U.S. court." He said that before the U.S. anti-dumping case against Chinese apple juice and furniture, it all had China. The company went to the U.S. conduct court to report to the US Department of Commerce and eventually won the lawsuit.
It is reported that the China Rubber Industry Association is currently considering using the WTO dispute settlement mechanism to "defend." However, some experts pointed out that the WTO litigation itself has to be delayed for two to three years, when the effective period of the special safeguard measures expires, it is of little significance for Chinese companies to go to the WTO to “appealâ€.
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