At the heart of the issue is the inability of the U.S. to cut product costs (and compete for its own consumer's wallets who buy more and more China-made goods) due to high cost of government taxes: corporation, individual and property taxes. So Ores. Obama's purpose of decreasing joblessness in America may backfire and actually increase unemployment in the U.S.
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Commentary by Steve DuBord, JBS.org
Communist China has filed a complaint with the World Trade Organization in response to President Barack Obama’s decision to impose new tariffs on Chinese tire imports, AP reported on September 14.
President Obama decided to approve tariffs on imported Chinese tires because the U.S. tire industry has lost over 5,000 jobs as it struggles to compete against the low-cost imports.
The United Steelworkers brought the issue of lost jobs before the U.S. International Trade Commission in April. The Commission decided that the cheap Chinese tires were overwhelming the U.S. market and recommended that the President impose tariffs to stem the tide.
Obama acted on the recommendation, raising tariffs on Chinese tires by 35 percent in the first year, 30 percent in the second year, and 25 percent in the third.
The White House pointed out that the President was acting under a provision that China had agreed to as part of its entry into the WTO. The provision allows the U.S. government to moderate the influx of Chinese imports so that U.S. industries have time to adjust and respond.
Beijing, however, does not interpret the agreement in the same way. China’s official Xinhua News Agency quoted the following statement from the Chinese government: “China believes that the above-mentioned measure by the U.S., which runs counter to relevant WTO rules, is a wrong practice abusing trade remedies.”
Not so, said the Office of the United States Trade Representative in Washington. “The United States’ actions on tires are entirely WTO consistent and, indeed, in keeping with an explicit component of the deal China agreed to when it joined the WTO and asked for time to phase in certain commitments to open its market,” spokeswoman Carol Guthrie said.
“The U.S. will be monitoring carefully China’s response to ensure that any such response is consistent with its WTO obligations.”
The next step in the formal complaint process is for China to begin a 60-day negotiation period with the United States to try to resolve the problem. If the negotiations are unsuccessful, then China may request that the WTO assign a panel to look into the matter and issue a ruling.
China’s concern may extend beyond the current tire troubles. Reuters noted on September 14 that “President Barack Obama's decision to restrict tire imports from China after union workers complained of a surge could lead to copycat cases in areas such as steel, clothing, paper, machinery and consumer goods, trade experts said.”
Representative Sander Levin (D-Mich.), the chairman of a key trade subcommittee in the House, believes Obama’s action could be a move toward "a new trade policy … that looks at the consequences of expanded trade.”
This may prompt other cases to be brought before the ITC, but Levin said, “It’s not correct to talk about a flood” of new cases: “There has to be market disruption. There has to be injury. There has to be an impact on jobs in this country” before the ITC will send a petition to the President.
Nonetheless, Beijing knows that a loss in the tire tariff battle could start things rolling against its inexpensive imports. The real issue is that the United States is only hurting itself by surrendering control of its trade policy to the WTO. Even if the WTO rules in America’s favor, that may not be the case next time.
So-called free-trade pacts with the WTO and the FTAA are the cause of hardship for America’s workers and the American economy, not a source of help. They allow cheap goods to flood into the country and America’s manufacturing base to be shipped abroad.
President Obama’s decision to impose tariffs is a step in the right direction, but ending U.S. participation in the WTO, FTAA, etc. is the only permanent solution, along with unburdening America’s companies from onerous regulations that don’t allow American companies to adequately compete with foreign manufacturers.
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