Affected by the sharp decline in exports, China’s tire industry has experienced double-digit declines in the number of major economic indicators since the beginning of the year, and one-third of companies have suffered losses. However, at this time, on June 29th, the US International Trade Commission (ITC) suggested that China’s tires for passenger cars and light trucks should be levied 55% and 45% respectively for three consecutive years. With a special tariff of 35%, the proposal is waiting for approval by the Obama administration before September. This event was called Sino-American Tire Special Protection.

Once the proposal for additional tariffs is approved, China's tire exports will decline by about 12%. What's more serious is that since then Chinese tires have been exported to the United States or will become history.

Recently, this case worth 1.7 billion U.S. dollars in the Sino-U.S. tire special protection case has been passed down, and both China and the U.S. have caused an uproar. They are also regarded as the first case of Sino-U.S. trade friction in the Obama era.

According to industry figures, once the United States decides to impose special tariffs, or will allow the United States to implement special safeguard measures against China, the trend will increase, and more special safeguard investigations will follow, which will also cause other WTO members to imitate and contain Restrict exports of Chinese products. In 2009, when China's export declining trend was very severe, how to respond positively to the US special security investigation to ensure stable export growth was the “biggest thorn” faced by the government and enterprises.

The government, associations, and enterprises have a three-pronged approach

During the visit of representatives of the U.S. Trade Representative Office to China, the Chinese Ministry of Commerce held talks with the U.S. on the Sino-U.S. tire special security case.

Before President Barack Obama will announce the final verdict on September 17, China is doing its best to mediate. "In fact, two weeks before the official announcement of the final result, that is, early September, we will probably know the result. Therefore, we have only 8 months left to work hard." An informed source told this reporter disclose.

On June 29, the United States International Trade Commission (ITC) requested China to carry out special safeguard measures for tires imported from China (hereinafter referred to as "tire special protection case") on the ground of Chinese tires disturbing the US market. The special tariffs of 55%, 45% and 35% were imposed on trucks and light truck tires for three consecutive years. The proposal is waiting for approval by the Obama administration in September.

The Chinese government firmly opposes the special tariff proposal put forward by ITC. On the afternoon of July 17, the person in charge of the Fair Trade Bureau of the Ministry of Commerce stated on the report of the decision on the tire special security case issued by “ITC”: “Factual identification is wrong and lacks logic, and it is not sufficient as a basis for restricting Chinese tires.” He also hoped that the Office of the U.S. Trade Representative would propose to the U.S. President decision-making measures without taking measures.

"The warming of trade protectionism has brought difficulties to the recovery of the entire world economy. China is the main victim of trade protectionism in this crisis," said Yi Xiaozhun, vice minister of the Ministry of Commerce.

According to informed sources, the Chinese government will use a variety of diplomatic means to mediate and conduct in-depth consultations on tire events in the Sino-U.S. high-level forum to be held in August.

In this case of Sino-American tire special protection, the Chinese industry association also played an important role.

According to Zhao Wenquan, director of the Technical and Economic Committee of the China Rubber Industry Association, the reporter revealed that industry associations are actively preparing protests. “We are preparing a tire industry delegation to the United States. While participating in some activities in the United States, we have exchanged opinions with the relevant parties on the special case of tire protection. Currently, major companies are actively registering.”

He told reporters that in addition to writing directly to President Obama, they also communicated with the two major industry associations in the United States related to the tire industry. “One is the American Tire Industry Association. They have already expressed their opinions, supported China, and opposed punitive tariffs on Chinese tire products. Another one is contacting the American Tire Manufacturers Product Association. This association includes some tire raw material manufacturers. We hope to get their support."

In addition, the China Rubber Industry Association will also seek the understanding and support of some U.S. legislators and government officials. "Our direct lobbying in the United States is still difficult because we have less influence. So we plan to find some local lawyers in the United States or lobby companies to help us get government support. Of course, the cost will be quite high."

At the same time, the China Minmetals Chemicals Import & Export Chamber of Commerce issued a statement saying that the US ruling on China’s increase in consumer tire exports to disrupt the US market is unfounded and unrealistic. A large number of evidences fully prove that there is no direct competition relationship between Chinese-produced tires and similar American products. Imports of Chinese products have not caused damage to American industries, and restrictions on imports of Chinese products cannot solve problems faced by the U.S. industry.

In the face of the crisis, Chinese tire companies are full of worries.

The manager of the Sino-Tile Tire International Trade Department in Hangzhou told the reporter: “The US market is our largest single export market. If the United States implements special tire protection measures, we are unlikely to continue exporting to the United States in the future.” His voice Full of helplessness. "If it is true that day, we can only seek the markets of other countries."

In Su’s view, this move by the United States will “destroy” China's tire exportation. “Once the United States applies special protection for tires, other countries in the WTO organization can also use the same excuse to keep Chinese products out of the door. Our exports will be difficult.”

Regarding the allegations that U.S. workers were unemployed, at the hearing held at the end of June of the U.S. International Trade Association, VicDelorio, the representative of China's tire industry who was responding to the complaint and executive vice president of the American company of Shanghai Jiatong Tire Co., Ltd., said that the complaint was completely confusing. At the source, Chinese tires are being pulled into the US market because US tire manufacturers have adopted a product upgrade strategy and abandoned the low-end tire market with less profit. However, Chinese tires imported into the United States are mainly low-end products, and many of them are produced by U.S. companies.

Last week, representatives of 11 tire companies participated in the China Rubber Industry Association's consultation meeting on the special tyre protection cases in the United States held in Beijing. Chairman of Aeolus Co., Ltd. Cao Chaoyang stated at the meeting that the special protection of my consumer tires by the United States is a major issue related to the survival of the tire industry. “Tyre special protection has further worsened the international trade environment and will inevitably bring a huge impact on domestic tire trade. It will not only affect exports but will also intensify competition in the domestic tire industry.”

At the meeting, the domestic tire companies made solemn protests on the relief measures proposed by the US International Trade Commission for tire special protection cases, and expressed their firm opposition to the formulation of special tariffs by the United States. Enterprises and associations strongly urge the Chinese government to adopt more active and effective measures to prevent the US International Trade Commission's unreasonable recommendations from being approved for implementation. At the same time, they strongly urge the US government to fully consider the actual situation of the case and not rashly decide.

Trade war is a double-edged sword

Industry insiders point out that the United States appears to have held a strong hand, but the interdependence of trade between China and the United States is already high, which makes it impossible for either party to win in a trade war.

Zhao Wenquan, director of the Technical and Economic Committee of the China Rubber Industry Association, believes that the United States does not have low-end tire products and can only rely on imports. If China homes, and Brazil, South Korea, Thailand, these countries' products, the United States consumers will face a process of re-familiarity, understanding. At the same time, more than 100,000 people who are dealers and distributors of Chinese tires in the United States will also face unemployment. It is the U.S. government that needs to consider how their employment problems are resolved.

The United States Tire Industry Association (TIA), which represents the interests of various sectors in the US tire industry, including production, sales, maintenance, and recycling, last week, in an open letter to the US President Barack Obama, stressed that the tire special security case will bring four major U.S. Among the unfavorable consequences, the three most important ones are:

First, it will cause tire prices to rise. U.S. consumers face fewer choices. Taking into account the current economic environment, it is equivalent to applying “special penalties” to U.S. consumers. Second, it will lead to chaos in the US tire market. Due to the inability to purchase affordable tires, US consumers may postpone the necessary replacement of tires, which will bring “potentially terrible consequences” to road safety in the United States.

A report by the well-known think tank of the United States, the Chito Institute, warned that if Obama agrees with the sanctions, the outside world will understand that this is the direct will of the President of the United States. Therefore, the "attack actions and consequences will be far-reaching," and lead to " "Explosive trade friction" is possible.

In the current circumstances, the United States should first take measures to correct the improper practices in this case with obvious protectionist colors. As the first case of the Sino-American trade friction in the Obama era, the ultimate result of the tire special security case will undoubtedly become the touchstone to test Obama’s commitment to oppose trade protectionism, and it is also a barometer to observe Obama’s real trade policy with China.

In this special security case, Chinese companies are undoubtedly injured.

Ms. Yang from the China Minmetals Chemicals Import & Export Chamber of Commerce’s Legal Department said to the reporter that although China’s tire companies have also had precedents to win anti-dumping lawsuits internationally, the amount of tire special security cases is huge and there is no ready-made experience to learn. Corporate defense is also difficult.

“In addition, the speed of complaints and investigations is very fast, and the application of special safeguards to special safeguard measures will not exceed six months. Once ITC determines that market disruption is established, the President of the United States can quickly adopt import restrictions. In this case, Chinese companies It's easy to be caught off guard,” said Zhang Tao, a partner at Beijing Jiarundao and the law firm. “Anti-dumping investigations and anti-subsidy investigations generally range from 12 months to 18 months from filing to anti-dumping measures. ."

Fan Rende, president of the China Rubber Industry Association, said: "This year, the major economic indicators of China's tire industry have fallen at a double-digit rate year-on-year, with one-third of companies losing money. At this time, once the quota reduction plan is implemented, China's tire exports will be reduced. It will decline by about 12%, which will reduce the growth rate of the rubber industry by 5 to 6 percentage points."

According to Zhao Wenquan, director of the Technology and Economic Committee of the Rubber Industry Association, the Sino-US tire special security case will have a chain reaction. "The other member states of the WTO will follow the example of the United States. The EU can even directly adopt the same tariff measure. As a result, Chinese companies can only seek new markets, including countries in the third world, but Brazil, India and other countries also Anti-dumping measures have been proposed for Chinese products, and it is difficult for Chinese companies to open up markets in these countries."

Reflections and Suggestions from Special Protection Cases

According to the statistics from the China Rubber Industry Association, China's tire exports fell sharply during the first half of this year, with a drop of 26-29% from January to April and about 16% from May to June. The export situation is not optimistic.

In the environment of further deterioration of the international trade environment, the development of China's tire companies is full of uncertainties. In response to the question of how Chinese tire companies should respond, Zhao Wenquan said: "We must study market dynamics and formulate new export strategies."

At the same time, Chinese tire companies should also make reflections. “Do we have low-cost strategies that disrupt the behavior of the market? Is there room for improvement in our quality, cost, management, and process advantages?” Zhao Wenquan said.

Li Shengmao, an analyst in the investment industry of China Investment Advisors, put forward his suggestions from the three aspects of “market, product, and industry integration”.

First, Chinese tire companies should actively develop marketing networks. The current export structure is relatively monotonous. Once the United States market has a problem, our losses will be great. Secondly, we will upgrade our technology, raise our technological level, and strive to open up the domestic high-end market. “Our own brand tire products are half as cheap as joint ventures, and the cost advantage is obvious. If the technology is improved further, it will have the strength to compete with the joint venture brand.” In addition, if the market has been occupied only at a low price, the technical level has been Very low, it is easy to be deducted by the developed countries hat dumping products, but also vulnerable to foreign sanctions.

The most important thing is that the integration of the Chinese tire industry is imminent. Li Shengmao believes that tire companies are now small and miscellaneous, and the general technical level is not high. In the future, they should be integrated into a group of scale, and obtain the strength to compete with the joint venture brands.

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