Safeguard Duties on Chinese Tires Set to Expire at Midnight Tonight
Safeguards imposing additional duties on passenger vehicle and light truck tires from China will expire at the close of Sept. 25, ending an additional 25 percent tariff imposed on the merchandise. Neither the President nor the original petitioner in the safeguard investigation, the United Steelworkers (USW) labor union, requested an extension of the safeguards. If the safeguards had been extended, China could have retaliated under its World Trade Organization agreements.
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The Section 421 safeguards were imposed in 2009 by President Obama following a determination by the International Trade Commission that tires were being imported in such increased quantities as to result in injury to U.S. industry. The additional duties, which were imposed on top of existing tariffs on the tires, were set at 35 percent for the first year, 30 percent for the second year, and 25 percent for this final year. The action was the first section 421 import relief ever implemented. China subsequently challenged the safeguards at the WTO, where a Panel and Appellate Body found in favor of the U.S. (See ITT’s Online Archives 09091410 for summary of imposition of the Section 421 safeguards, and 11090621 for summary of WTO Appellate Body finding.)
The safeguards could have been extended beyond their Sept. 26 expiration on the basis of either (1) a petition from industry received by the ITC 6 to 9 months before expiration of the safeguards, or (2) a request from the President. Both methods would have required another ITC investigation and affirmative determination of injury, so a Presidential request would have needed to be early enough to allow the ITC to hold a hearing and send its final determination to the President 60 days before expiration of the safeguards. An ITC spokeswoman said it received neither type of request.
USW, which originally requested the safeguards, notified the Obama Administration in March that it would not submit a request for extension of the safeguards due to the threat of Chinese retaliation. “Under an unacceptable, but existing provision of international trade law, compensation for a fourth year of relief might have had to be paid to China,” USW said. USW was presumably referring to a provision in China’s WTO Accession Protocol that allows China to “suspend the application of substantially equivalent concessions or obligations under the GATT 1994 to the trade of the WTO member applying the measure, if such measure remains in effect more than three years.”
According to a U.S. Trade Representative spokeswoman, the safeguards have served their purpose. Domestic tire production has increased, new investments in plants and equipment have been made, and more than one thousand U.S. tire workers are working again because of it, she said. “That remedy has now been in place for three years, and the USW -- the initial petitioners in the case -- decided not to seek an extension of that remedy, in large part because its initial goals have been achieved.”
Importers Only Need to Classify Chinese Tires in HTS Chapter 40 Beginning Sept. 26
Importers of Chinese tires subject to the safeguard duties previously had to enter their merchandise under two Harmonized Tariff Schedule subheadings -- the relevant subheading in chapter 40 of the HTS, and the special safeguard subheading in chapter 99, said a CBP spokesman. Beginning Sept. 26, importers of merchandise previously subject to the duties will only have to classify the merchandise in chapter 40, he said. After expiration of the safeguard, importers of merchandise entering under HTS subheadings 4011.10.10 and 4011.20.10 will no longer have to also classify it under subheading 9903.40.05, and importers of merchandise entering under subheadings 4011.10.50 and 4011.20.50 will no longer have to also classify the merchandise under subheading 9903.40.10.