Chinese tires rolling across U.S.
By KERRI HOUSTON TOLOCZKO
Last week, the U.S. International Trade Commission ruled in favor of a petition presented earlier this year by the United Steelworkers. The petition requested that only 21 million tires from China be imported in the coming year — a little less than half the 46 million units that arrived in 2008.
On June 29, the ITC will decide on remedies to address the troubles that the U.S. tire industry has faced due to huge increases in Chinese tire imports over the last five years. These remedies will be presented to President Obama on July 9, and the White House will have to accept or reject them by early September.
President Obama’s decision is clearly important to the U.S. rubber and tire industry, but has deeper implications. During the 2008 campaign, the president committed to assisting domestic industries that have been turned upside down as a result of China’s economic cheating. His decision on tires will clearly communicate his vision for dealing with China and balancing its ownership of $763 billion in U.S. debt against the interests of domestic manufacturers and their employees.
The issue is simple and critically important to the U.S. manufacturing economy. It is important for the President and the rest of us to understand what is at stake — namely, jobs and consumer safety.
Since 2004, Chinese tire imports to the U.S. have increased 215 percent. U.S. domestic production is down 25 percdent and eight tire production facilities will be closed in 2008/2009 — bringing the total number of industry jobs lost to around 8,000. This number does not account for other jobs in retail sales and services either lost or diminished when tire plants close, and is more than just a statistic — it represents real people now struggling to support their families in an environment not friendly to job seekers.
As with so many other manufactured products from China, its tire industry is the recipient of government largesse in the areas of illegal subsidies, ignored environmental standards, exploited labor, and intentional undervaluation of its currency. Because it plays fast and loose with rules that U.S. manufacturers adhere to, its tire imports come at a false price and are cheaper — both in cost and quality.
Toxic Chinese toothpaste
In the past two years, there have been news stories about toxic Chinese toothpaste, dog food and toys. True to form, Chinese tires also have their own safety problems.
Starting in 2002, a U.S. tire importer contracted with a Chinese tire company to import tires that actually exceeded current safety guidelines. In 2005 and 2006, the importer received a number of complaints about tire separations. In August 2006, a van in Pennsylvania lost control when a tire tread and belt separated leaving two people dead and two seriously injured. Later that year an ambulance in New Mexico suffered a similar incident; fortunately there were no permanent injuries.
As lawsuits started flying, it was discovered that a great number of the 45,000 Chinese tires imported through this contract were missing an all-important gum strip that is placed between the steel belts to ensure that separation does not take place. Once again, a production shortcut by a Chinese manufacturer ended up hurting American consumers.
Not content with cheating economically and omitting safety features, Chinese tire manufacturers are also involved in industrial espionage. Earlier this year two employees of a Chinese-based tire manufacturer were caught at a Goodyear plant in Kansas photographing manufacturing machinery which allowed Goodyear’s Chinese competitor to fabricate a similar machine using stolen trade secrets. The two men are currently under federal indictment and are facing 150 years in federal prison.
Critics of the petition to limit the import of Chinese tires claim that imposing such quotas would set a precedent that may be used to control import quantities of other Chinese manufactured goods. However, China agreed to these exact trade rules when joining the World Trade Organization in 2001.
At a time when U.S. auto parts manufacturers are already suffering due to the problems at GM and Chrysler, this relief — which allows for increases in import number over the next several years - is needed more than ever.
X Kerri Houston Toloczko is a senior analyst with the Alliance for American Manufacturing and served as a Republican appointee to the U.S.-China Economic Security and Review Commission.