CRI Roundup 2009-09-19

Hello and welcome to this edition of CRI Roundup on China Radio International. I'm Kelda Yuen in Beijing.
In this edition, the US' decision to impose added duty on tires made in China has led to strong opposition from both the Chinese government and domestic tire makers and importers. It has also triggered concerns of protectionism amid the global economic recession.

Please stay with us.

Last weekend, US President Obama signed "a determination to apply an increased duty on all imports of passenger vehicle and light truck tyres from China for three years".

This means in addition to the existing duties of four percent, tariffs will surge a further 35 percent in the first year, 30 percent in the second and 25 percent in the third.

China made immediate responses to Washington's announcement of the new duty, blaming the US for sending a wrong signal to the world ahead of the upcoming Group of 20 nations meeting in Pittsburgh next week.

Yao Jian is China's Ministry of Commerce spokesman.

"Over the last five months, China has held negotiations with the US on this issue but the US still sticks to this decision. We feel disappointed over the disagreement. China strongly opposes the US decision, which is an abuse of protectionist measures as it has violated the WTO rule and also its relevant commitments made at the G-20 financial summit. China reserves the right to take responsive action to firmly protect the interests of its companies."

Yao added that the business situation for US tire producers has shown no apparent change after the entry of Chinese products.

In fact, tire products exported to the US from China declined 16 percent in the first half of this year, compared to the same period last year.

Meanwhile, the increased tariff has hit a nerve with China's rubber industry. Upon hearing the news, the China Rubber Industry Association joined by several companies, filed complaint letters to President Obama.

Angry tire exporters are also urging the Chinese government take necessary measures to safeguard their trade rights.

Fan Rende is chairman of the China Rubber Industry Association.

"Due to the unreasonably high tariffs of 35 percent starting from next year, Chinese tyre companies may not be able to export tyres to the US in the first year, which will cause these companies huge economic losses. The US sanctions are groundless so we should work out some strong anti-sanction measures. "

Chinese tyre makers have also urged the government to adopt mandatory retaliatory measures against US manufacturers of agricultural products and automobiles.

In response to the industry's call, Commerce Ministry Spokesman Yao Jian says the government will spare no effort to help tire manufacturers affected by the tariff. Meanwhile, China has asked for talks on the issue at the WTO and has launched a pair of anti-dumping investigations against U.S. poultry and autos.

"On Monday China put forward a formal request for consultations with the U.S. under the WTO dispute settlement mechanism on the U.S. special safeguard measures against Chinese tires. It means China is strongly against protectionist trade policies and the unreasoned decision by the U.S. government. On the other hand, China also hopes to solve the disputes with respect to WTO rules and through consultations with the United States. "

The US' decision to increase duties on Chinese-made tires has not only upset trading partners but also has the world in deep concern about a trade protectionist chain reaction that may slow the world's economic recovery.

Niels Dalman, a senior industry consultant in Switzerland, says the US has violated commitments made at the G20 financial summit in London.

"At the G20 meetings in Washington and London, it was agreed to avoid trade protectionism and uncoordinated global investment. The next G20 meeting will take place in Pittsburg this month. And it is important that the meeting should renew its commitments to open markets and commitments to phasing out protectionism."

Philip Levy, Resident Scholar at American Enterprises Institute says the decision was made amid domestic political pressure.

"The two-groups - there is a more protectionist labor interest group and there is a sort of pro-business internationalist group. When you are a president, you need to make a decision. I think it's a wrong decision. The US should not impose protectionism but there may be very strong political pressure on them to do it."

World Trade Organization chief Pascal Lamy said Wednesday that he is concerned about the latest move by the Obama administration to restrict import of Chinese-made tires. He stressed both the United States and China are members of the G20, and that the G20 has taken the stance that it should not have recourse to trade restrictive measures during the crisis. Lamy also warned the US move could increase the risk of what he calls "tit-for-tat spillover."

And that concludes this edition of CRI Roundup. If you have any comments or suggestions or would like to listen to any of our programs online, you can visit our Web site at Crienglish.com. I'm Kelda Yuen in Beijing. Thanks for listening. Stay tuned for more on China Radio International.