WTO Panel Rules in Favor of U.S. in China Tire Dispute
The World Trade Organization panel examining “U.S. - Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tires from China” (DS399), has issued a report stating that in imposing the transitional safeguards measure on September 26, 2009 on imports of subject tires from China, the U.S. did not fail to comply with its WTO obligations.1
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U.S. Imposed 25-35% Additional Duties on China Tires in 2009, for 3 Year Period
On September 11, 2009, President Obama decided to impose additional duties on imports of certain tires from China for a three year period, including additional 35% ad valorem duties for the first year, 30% in the second year, and 25% in the third year, under Section 4212 of the 1974 Trade Act. It was the first Section 421 import relief to be implemented. Obama's decision followed a July 2009 report from the International Trade Commission stating that the subject tires are being imported into the U.S. in such increased quantities or under such conditions as to cause market disruption to the domestic producers of like or directly competitive products.
China Alleged Additional Duties Were Inconsistent with GATT 1994
China disputed the U.S. imposition of additional duties on its products, alleging that the additional duties were inconsistent with the General Agreement on Tariffs and Trade 1994 and that these measures were not been properly justified pursuant to the WTO Agreement on Safeguards or the WTO Protocol of Accession.
1 Obligations under Paragraph 16 of the Protocol and Articles I:1 and II:1 of the GATT 1994
2 Section 421 investigations are a transitional safeguard tool to address import surges of Chinese products that cause or threaten market disruption. The procedure was negotiated as part of China's accession to the World Trade Organization, and is in effect until December 11, 2013. Section 421 safeguards can be used to provide relief against any type of import from China, including textiles and apparel.
(See ITT’s Online Archives or 09/17/09 news, 09091705, for BP summary announcing President Obama’s decision to impose Section 421 Duties on Chinese tires.
See ITT’s Online Archives or 06/19/09 news, 09061940, for BP summary of the ITC’s Section 421 determination.
See ITT's Online Archives or 09/17/09 news, 09091710, for BP summary of China's response to the imposition of Section 421 duties.)