Debate preview: High tariffs on China tires?

(chinadaily.com.cn)
Updated: 2009-08-24 13:24

Tuesday's China Daily will run a debate on whether the United States should impose high tariffs on tire imports from China. Joining the debate are Zhou Shijian, senior researcher at the Research Center of the Sino-US Relations at Tsinghua University, and Pat Cleary, senior vice president of Public Affairs in Fleishman-Hillard's Washington DC office. Pat Cleary served in senior government roles in both the Reagan and (George H) Bush Administrations.

The following is a brief introduction about their ideas:

Zhou Shijian:

China has been made a scapegoat amid rising protectionist sentiments in the US. It will be abuse of trade remedies for the US to impose high tariffs on tire imports from China. Chinese tire imports, which are actually declining since January, have caused no market disruption to US manufacturers. The real culprit is a sharp drop in car demand in the US due to the economic slump.

If President Barack Obama backs the tariff, China can apply to settle the dispute within the WTO framework. It can also adopt countermeasures by charging high tariffs on US airplanes, beans and high-tech products. But that’s a scenario we don’t want to see, for neither side will win such a trade war.

A decade ago, the US was so eager to persuade China to open its market and embrace free trade before its accession to the WTO. Now it’s time we reminded the Americans of the danger to unfairly block foreign products into their market.

The author is a senior researcher at the Research Center of the Sino-US Relations at Tsinghua University

Pat Cleary:

US President Barack Obama has less than a month to decide whether to restrict imports of tires from China. He can either side with the unions against China or side with China against the unions. Either way, he risks alienating a key ally at a crucial time of need.

His options could be:

1) Follow the ITC's recommendations. This obviously would greatly please his allies in organized labor but runs the risk of diminishing Obama on the world scale and angering China at a critical time in geopolitical terms.

2) Follow in President Bush's footsteps and reject the petition. This may please China but would infuriate organized labor.

3) Negotiate a deal with China. It is possible that the specter of tariffs may force the parties to negotiate as they have in the past to avert similar situations. It is possible the parties cap imports at the current level.

Weighing all these considerations, it is hard to believe that Obama will make a decision that will alienate either a strong domestic or a global ally. We can hope that back-channel diplomacy will prevail and a solution palatable to all sides can be found.