Thursday, January 21, 2010

WTO Panel formed for challenging the emergency tire restrictions

Back on September 11th 2009 there was a well publicized presidential proclamation adding additional duties to tires imported from China. When China joined the WTO back int 1997 they made an "accession agreement" which allowed countries to add additional duties to safeguard industries in the occurrence of a market disruption due to steep rises in imports.

The duties were for a small market of tires. The duties are graduated from year to year the highest being the first year as follows:
  1. 35% for the first year September 2009 to September 2010.
  2. 30% for the second year September 2010 to September 2011.
  3. 25% for the third year September 2011 to September 2012.
  4. No additional duties after September of 2012.
Its a relatively small number of tires.  It somehow raise allot of anger with Chinese. They immediately challenges the duties with the WTO DSB (DS399). They claim:
  1. The Chinese imports did not increase rapidly enough to warrant a market disruption.
  2. The imports were not in suffciant quantities to damage U.S. industries.
  3. The U.S. industries  are not materially injured
  4. Even if they are injured the rates are excessive to remedy the problem
  5. The measures are lasting too long to prevent what ever injury there might be.
The U.S. on the other hand says tire imports from China tripled in four years, the, production in the U.S. dropped 25%, and 14% of the workers in the industry has lost their job.  Seems like a pretty goods cause for a safeguard.

On September 26th China requested consultations, December 9th a panel, and today the panel was chosen.

Within another year they might have preliminary decision, which could be appealed, and maybe after three years we might actual a decision where they can retaliate. The decision will probably not be reached by the time the tariffs expire so this whole exercise seems moot to most observers.

This is probably the smallest but most publicized part of the trade war that is growing between China ind its trading partners.  The largest unreported part of the trade war is the explosion of antidumping and counervailing cases being filed in the U.S. and Europe. Another large isue coming to light is the allegations of Chinese government hacking into private companies and foreign government computers.

Could be difficult times for relations ahead.

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