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Why Did the ITC End Its Investigation of OTR Tires From China?

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The International Trade Commission said assertions made by Titan Tire Corp. and the United Steelworkers about off-the-road tires imported from China weren’t supported by the data on the record.

In a recently published 175-page report explaining its 6-0 vote on Feb. 19 to end the investigation of OTR imports from China, but continue the study of OTR imports from India and Sri Lanka, the ITC explained its decisions. (Read the entire report here.)

China

In its report, the ITC said data didn’t support claims by Titan and the USW that imports of mounted OTR tires from China were significant enough to disrupt the domestic market.

The burden is to show that imports from each country account for more than 3% of the total market. The ITC collected import data from seven importers who bring mounted OTR tires into the U.S. marketplace, and the data didn’t meet the 3% threshold. The ITC said the numbers were “well below the 3% negligibility threshold.” Titan and the USW pushed the ITC to look to the future, and said the numbers were substantially understated.

“Petitioners further state that, even if the commission were to determine that imports from China are negligible for purposes of present injury, they should not be found negligible for purposes of threat, since there is potential that such imports will imminently exceed the negligibility threshold.”

But the ITC determined otherwise. “With respect to negligibility for purposes of threat, we find that the record in the preliminary phase of these investigations provides clear and convincing evidence that subject imports from China are not likely to surpass the 3% negligibility threshold in the imminent future.

“While petitioners assert that the industry in China has been rapidly increasing its exports to the United States, resulting in an increase in subject imports on both an absolute and a relative basis, this is unsupported by the import data on the record.

“Although the volume of subject imports from China increased between 2012 and 2014, these imports were … lower in 2015 than in 2014. This decline hardly suggests that subject imports from China are likely to ‘imminently’ exceed the negligibility threshold.” (The specific rate of decline from 2015 and other proprietary numbers provided by manufacturers and importers are removed from the public documents.)

India and Sri Lanka

As for the investigations that continue — of OTR tires imported from India and Sri Lanka — the ITC addressed these two key factors as part of its preliminary investigation: volume and pricing.

Volume:

“We find that the volume of cumulated subject imports and the increase in that volume are significant both in absolute terms and relative to consumption in the United States.”

Pricing:

As part of its initial look, the ITC collected pricing information on 12 different products and received data from five U.S. producers and 18 importers. “Cumulated subject imports undersold the domestic industry in 67 out of 88 comparisons by margins ranging from 0.1% to 51%, with an average margin of underselling of 25.6%.”

The ITC determined the underselling “to be significant” in making its preliminary determination.

“We do not find that subject imports depressed U.S. producers’ prices to a significant degree. The pricing data indicate that both domestic prices and subject import prices declined over the period of investigation. However, these price declines occurred at the same time as substantial declines in the prices for natural rubber and synthetic rubber, both raw materials used in the production of OTR tires. Moreover, they occurred during a time when apparent U.S. consumption of OTR tires was declining. On the current record, we are unable to conclude that the decline in prices for the domestic like product has been as a result of subject imports rather than other factors.

“We also odo not find that subject imports prevented price increases for the domestic like product that otherwise would have occurred to a significant degree, because it is unlikely that the domestic industry would have been in a position to raise prices given the underlying conditions of competition.

“While the cumulated subject imports were underselling the domestic like product, they were also gaining market share at the domestic industry’s expense at a time when demand was declining.

“Additionally, information on the record from some U.S. purchasers indicates that they shifted purchases from the domestic like product to subject imports because of lower prices for subject imports, while some purchasers reported that U.S. producers had reduced prices in order to compete with lower-priced subject imports.

“Given the significant underselling by subject imports, the increase in the market share of subject imports at the expense of the domestic industry, and the reports by U.S. purchasers of some domestic industry lost sales and price concessions, we find that subject imports had significant price effects on the domestic industry.”

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