U.S. Jobs vs Chinese Dumping of Imports: Obama Sides with U.S. [finally]

United Steel Workers Petition the White House for Tariffs

Officials with the united steel workers union filed grievance with the white house urging President Obama to enact tariff barriers against Chinese made tires

  • cap imports at their 2005 levels @21 million units
  • it calls for 1/2 of the 2008 import levels @ 46 million units valued @ $1.7 billion
  • quota would cap after 3 years
  • quota would have a 5% per annum increase in imports

Union believe the upsurge in Chinese products is directly responsible for the slow down at American factories. i.e. Goodyear tire and rubber co. United Steel Workers represents 15,000 workers and 13 plants nationwide.

This is actually backed up by congressional findings:

American manufacturing is struggling with the negative effects of unfair trade practices. Some 40,000 factories have closed just in the last decade. We’ve lost more than four million manufacturing jobs in this millennium. The Economic Policy Institute found that 2.3 million of these jobs are linked to the increased trade deficit with the People’s Republic of China.

The Case Against China

For China to make its products cheap, they employ:

  • their government subsidizes all of its export industry so that the prices are ridiculously cheap. they dictate prices for all exports and simply cut them a check for the loss each year.
  • currency manipulation to keep the yuan drastically artificially low [ China has a 10% growth rate over the past 15 years] [ compare the U.S. which grows at 2.5% ]
  • import quotas imposed on good originating in the U.S. [ yes that means China does not allow more than a specified number on any imports coming from the U.S. ]
  • no U.S. company may manufacture items in China without a local company owning 51% of the company [ especially car manufacturers ]
  • imposes suppressed wage laws to keep both the wages drastically low, and therefore the cost of living very low

The U.S. employs no protectionist measures against china. Under president Bush any restriction suggestions were summarily ignored. Obama’s track record so far is not in favor of a Union backed tariff. He removed his bid to revamp NAFTA. He joined he G-20 summit in moving to avoid any protectionism actions.

Here is a bit of the hearing held by the U.S. International Trade Commission

Our first congressional witness is the Honorable Arlen Specter, United States Senator, Pennsylvania.

I have been before this Commission on many occasions during my tenure in the United States
Senate, but never at a time when jobs in the United States have been under such a heavy threat and so many jobs have been lost. We now are looking at a decline in the past two years of more than four million jobs.

And there are many factors at work significantly beyond the control of anyone, but in the
proceeding today we are dealing with some 15,000 jobs of the United Steelworkers on the production of tires, and we are revisiting issues which have confronted the United States in our relationship with China which are very complicated.

When the application was made by China for admission to the WTO, the World Trade Organization, a very complex matter, and I was one of 15 United States Senators who opposed the entry of China because of my concern about fair dealing which we were confronted with, with a long history of currency manipulation, a long history of subsidizing goods, a long history of dumping goods and a long history of not playing by the rules of international law illustrated by the grave difficulties we’re having now on the global warming issues.

So there was a provision inserted, as you distinguished Commissioners well know, which provided that products of reference to China being imported into the United States in such increased quantities or under such conditions to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products would be restrained by
action of the International Trade Commission.

This language sets the standards. It’s in the disjunctive, one of two factors: Increased quantity or — either/or — under such conditions to cause or threaten to cause market disruption. It doesn’t have to actually cause the market disruption. It can threaten the market disruption.

I would submit to this distinguished Commission that the fact is that there has been very serious market disruption as demonstrated by the facts, and these are the facts:

  • Imports of consumer tires from China have surged 215 percent from 2004 to 2008. China is the largest single exporter of consumer tires to the United States market.
  • Second, Chinese consumer tires are priced well below imports from other countries. The average cost of Chinese tires is less than $40; others over $55.

Consumer production has declined in the United States by approximately 25 percent over the
surge period, and since 2004 more than 4,400 domestic workers have lost their jobs due to tire plant closures, and there is a projection by the end of 2009 that more than 2,400 jobs will be lost.

The relief sought by this petition is I think modest under the circumstances. The import
quota ought to be set at 21 million consumer tires per year, which is the 2005 level with an adjustment of five percent in each of the succeeding years.

The Commission has acted in a very responsive way to the prior applications which have been filed, and on four occasions the Commission has granted relief under this section on a variety of circumstances.

On all four of those occasions President George W. Bush saw it differently, but I believe that
now if the Commission acts and grants this petition that there will be a different response, and there will be a different response from the President of the United States largely because we have such a disastrous economic situation and the job losses are so chilling. Also we have a President who has a somewhat different philosophical approach to these issues.

Leo Gerard, the president of the United Steelworkers, is here today very concerned about
15,000 jobs which are left and the prospects of losing 2,400 more jobs on top of the 4,400 which have been lost, so it is a different era, distinguished Commissioners, where the United Steelworkers come to you as sort of a last refuge.

As you can see the Senator was completely logical with his reasoning not to allow China in the WTO. It came at the expense of our own country’s economy.

The Union Wins

Late Friday, Sept 12th, 2009, the White House placed a three-year additional tariff on China-made tires, starting at 35%, and then scaling down to 30% the second year and 25% in the third. The duties are on top of the already standard 4% tariff but do not compound.

The new duties kick in on Sept. 26, according to the president’s order.

“The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case,” said White House spokesman Robert Gibbs.

The decision was lighter than the International Trade Commission’s recommended 55%/45%/35% scheme, but high enough to please the United Steelworkers, which brought the anti-dumping complaint back in April.

“For far too long, workers across this country have been victimized by bad trade policies and government inaction. Today, President Obama made clear that he will enforce America’s trade laws and stand with American workers,” USW President Leo Gerard said.

“The President sent the message that we expect others to live by the rules, just as we do.”

As a side note, the trade unions heavily donated and supported President Obama’s campaign for the seat. Except for Goldman Sachs, no heavy industry donated to his campaign. If you recall the UAW got the lion share of the sweet heart deal with the G.M. bankruptcy. We feel that was a clear sign of payback for their support of President Obama.

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Ex law school student. I was kicked out for revealing I had a heart actually beating inside. I used to be in a modern dance company. I'm working on my 7 miracles to be proclaimed a saint by the pope. #1 is really hard, but once i get over that hump the other 6 will be a cinch.

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