Kerri Toloczko: China protests action on its subsidized, unsafe tires

Alliance for American Manufacturing (AAM) Senior Analyst Kerri Toloczko weighs in on the surge of Chinese tires that has prompted a case before the U.S. International Trade Commission:

As the nation debates healthcare reform at a fever pitch, concerns about other hot button issues continue in DC, albeit less noticeably.

Take for instance the recent U.S. International Trade Commission’s finding that Chinese tire manufacturers used trade practices illegal under global and U.S./China bilateral agreements to flood our secondary tire market – often with substandard tires. As a result of this finding, the ITC recommended tariffs on Chinese tires at 55%, 45% and 35% respectively over the next three years.

In response, Zhong Shan, China’s Vice Chairman of Commerce, is in Washington this week to meet with State, Treasury, Commerce and the U.S. Trade Representative to explain that they did nothing wrong and they promise not to do it again.

It is news to no one that China used prohibited government subsidies and ignored agreed-upon environmental and labor standards to get a leg up on American tire manufacturers. Economic cheating is standard procedure for China. But what is not standard procedure – and what sent Zhong Shan on his whirlwind tour of Washington – is that the U.S. is finally taking steps to do something about it.

Early this month, The Wall Street Journal carried an editorial classifying the ITC’s finding as protectionist and economically unsound. In a game of “my economist is smarter than your economist,” the WSJ wrote that any action against cheap Chinese tires would hurt the economy and cause job loss.

Um, guys – what do you think that the more than 5,100 American tire manufacturing workers who have lost their jobs since China started dumping cheap tires here in 2004 would say to that? I didn’t go to economics school, but I’m not sure I understand how ensuring that a product is manufactured domestically causes domestic job loss.

We are bleeding jobs – 5.3 million manufacturing jobs lost since 2000, and unless the U.S. takes action against these substandard and falsely priced Chinese tires, we could add another 3,000 by the end of this year.

And everything isn’t always about numbers. What the WSJ did not address was faulty Chinese tires. Two people died, two had debilitating injuries, and many people had to steer through a blown tire because the Chinese purposely left off an important gum strip that keeps treads together simply because it saved money.

The U.S. International Trade Commission, and the U.S. Trade Representative exist to support the growth of trade, but also to ensure that our economic producers – who follow every rule that applies to them – are not harmed by non-domestic manufacturers who don’t.

There is also a political story here. During the 2008 campaign, then-candidate Obama promised that he would take steps to provide American manufacturers with a level playing field. In April at the G20 summit, he agreed with other members not to restrict trade before 2011. That the G20 meets again the week after he is required to approve or reject ITC recommendations is surely not lost on the White House. Ultimately, the President is going to have to pick a team.

We just had to buy two new tires for my son’s car. I grilled the manager of the tire store and nearly made him sign in blood that I was not buying Chinese tires. Wouldn’t you?

I hope Zhong Shan enjoys his visit to Washington and has a chance to tour our nation’s capital. We will, however, be left wondering if he perhaps casts a sideways glance at the tires as he hops into his limo and thinks, “Whew– they’re Goodyear.”

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