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Chinese tire imports: an exporter's viewpoint

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Tire Group International Inc., a tire exporter based in Miami, Fla., has its own perspective on the United States International Trade Commission's proposal to impose heavy tariffs on Chinese consumer tire imports.

Here are the company's abridged views, as they appeared in a written statement sent out today, Aug. 12, 2009.

"TGI continues to fight the ruling by the ITC on Chinese tire imports. After meeting with several state representatives, senators, and in phone conversations with the assistant secretary of import administration, TGI has been able to shed light on the effect this ruling will have on re-exporters such as themselves.

"Companies such as TGI have already been adversely affected early this year with the ITC’s ruling to impose anti-dumping and countervailing duties on Chinese OTR, agriculture and industrial tires. This, along with not providing a duty drawback procedure to allow exporters to claim these duties, has put U.S.A. tire exporters at a competitive disadvantage with companies whose operations are outside of the U.S.A.

“TGI’s OTR, agriculture and industrial business alone is down over 65% year to date, forcing numerous layoffs in warehouse and sales personnel. The new petition from the ITC will further weaken the American tire exporter.”

The ITC’s petition is largely flawed in its premises and logic, for the following nine reasons, according to TGI.

1. “The petition attributes reduction in domestic tire production/sales and closure of domestic tire factories to increases in the number of tires imported from China. The petition ignores that a major market of the domestic manufactures is in original equipment for the automobile industry.

“As everyone knows, that industry has suffered incredible shrinkage in the past few years with two of the major auto manufacturers filing for bankruptcy. The auto manufactures have drastically reduced equipment (including tires) purchases, have temporarily closed factories and reduced production of automobiles. Their need for tires has decreased substantially. These automobile manufacturers only use a small number of tires imported from China as OEM equipment.

“Regardless of the amount of tires imported from China, the domestic tire manufacturers would have experienced very significant reductions in sales which would clearly result in reduced labor needs.”

2. “The petition claims a loss of approximately 10% in domestic, union jobs associated with domestic manufacturers. The petition ignores that unemployment in all sectors has climbed to 8+% and is (as) high as 10% in some states.”

3. “In discussing domestic tire factory closures, the petition does not differentiate between factories that manufactured industrial tires as opposed to consumer tires.”

4. “Likewise, the petition does not take into consideration that some factories would have closed regardless of the number of imported tires due to age and antiquity or increased efficiency of other factories owned by those companies that manufacture tire domestically.”

5. “Similarly, the petition ignores the global decline in demand for tires….”

6. “The petition fails to recognize that the number of domestically manufactured tires is 3.5 times greater than the number of Chinese imports.”

7. “The petition makes the bold statement that if Chinese tire imports are restricted, jobs in the tire manufacturing industry will return to (the) U.S. Given the global economy and that many tire factories exist in India, Mexico, Thailand, and Vietnam where labor costs are considerably lower than they are in the U.S., the likelihood of jobs retuning here is slight. Buyers will seek more low-cost supply from producers in these other countries.”

8. “The petition fails to consider the adverse impact on jobs in businesses which rely on tires imported from China. For example, importers, exporters, distributors, dealers, custom brokers, NVOs and dock workers will all be adversely affected if the remedy is granted. Many of these businesses are already suffering due to the imposition of anti-dumping duties on OTR, agriculture and industrial tires manufactured in China.

9. “A tariff on Chinese manufactured tires would result in significant higher cost for consumer tires in the U.S. This would be detrimental to the U.S. economy. As the petition demonstrates, domestically manufactured tires tend to be more costly. In this struggling economy, such a result would be ill conceived.”

“To further demonstrate how illogical the petition is,” says TGI, “it even calls for all light truck bias and ST trailer bias tires, which are practically no longer produced in the U.S.A., to be subject to the tariff.”

TGI says it “will continue to make its voice heard,” and encourages all its colleagues in the industry to do the same.

For more information on TGI, visit www.tiregroup.com.

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