ranjit | Feb 19, 2018 | 0
Trade barriers, Trump and China
By David Shaw
Increased duty on imported Chinese tyres in the US continues to sustain the friction between the two governments. Now that Donald Trump is in the White House busy signing off executive orders that raise the world’s eyebrows, Chinese tyre makers are waiting with bated breath for the March 6 hearing on duties
On January 23, the United States Department of Commerce (DoC) published its final determinations in the anti-dumping duty (ADD) and countervailing duty (CVD) investigations into imports of truck and bus tyres from the People’s Republic of China. DoC found that these tyres are subsidised and are being dumped, and this is causing real or potential injury to domestic tyre makers. DoC reduced some of the anti-dumping margins, but increased the countervailing duties so that the overall duties increased to around 70% compared with around 40% in the preliminary determination.
The Chinese response was immediate and furious. They accused the DoC of using biased information and refusing to permit a fair hearing and flouting WTO rules by using flawed methodologies.
In terms of dumping activities, DoC was relatively lenient on one mandatory respondent, Prinx Chengshan, but imposed harsh penalties on the other, Double Coin Holding Ltd. Prinx is a privately-held company, while Double Coin is essentially State-owned. This has been a theme in previous investigations where state-owned enterprises are treated more harshly than private ones. Prinx saw its ADD penalties reduced to 9% from the preliminary rate of 20.87 announced on August 31 last year.
As found in the August preliminary determination, Double Coin was included in the China-wide category and the final dumping margin was unchanged from the preliminary rate of 22.57%. DoC was more severe in the subsidy investigation (countervailing duties) raising duties substantially from the preliminary determination on June 28. Mandatory respondents Double Coin Holdings Ltd. and Guizhou Tyre Co. Ltd, were assigned final CVD rates of 38.61% (previously 17.06%) and 65.46% (previously 23.38%) respectively. The China-wide rate was more than doubled to 52.04% from the preliminary finding of 20.22%.
The DoC said the ITC will give its final determination on March 6 for both dumping and subsidy claims, with orders issued on March 13, 2017.
We do not know if these increased duties were anything to do with the new US administration. Donald Trump had taken the office of President less than a week earlier and President Trump had spent his first days in office signing a series of executive orders that many saw as being intensely protectionist. Trump has further upset many of the United States’ friends around the world with his nationalistic rhetoric, not to mention his extraordinary views on Climate change, the US voting system and the number of people who attended his inauguration.
Ahead of the hearing and final determination, I spoke to Counsel for the Chinese tyre makers and he said that these decisions usually are not politically-motivated. We’d arranged a phone interview for the day after the hearing, but he cancelled at short notice. I notice that others from the same law firm also cancelled interviews.
Start of a trade war?
I can understand it. The reaction from China has been furious. This is very unusual in China where showing strong emotions – especially anger – in a business environment is seen as a major social faux-pas. Officials from the Ministry of Commerce and others appear to interpret the move as the first shots in a trade war.
Furthermore, I listened to speeches at the Davis World Economic Forum. The presentation from China’s President Xi Jinping and from the owner and founder of Alibaba, Jack Ma, sounded intelligent, thoughtful and statesman-like. The stream of lies, anger and negativity coming out of the modern White House do not seem that way to me at all.
To meet deadlines, I have to write this ahead of India’s Union Budget on February 1. Many of us expect to see India impose import duties on imported Chinese truck and bus tyres. Probably de-monetisation will make this policy more effective than it would have been if individuals could still The Chinese response was immediate and furious.
They accused the DoC of using biased information and refusing to permit a fair hearing and flouting WTO rules by using flawed methodologies.make large cash payments.
Discussions form a year or so back at the EU mean the EU is again considering the issue of tariffs on imported Chinese tyres. It is hard to tell, when one is standing in the middle of a storm, whether it is going to get worse, or better.
However, we must hope for the best while preparing for the worst.
Start of a new world?
In some ways, this opens a wider political point that the world is changing. In the tyre industry, Europe maintains a lead in technology and in the legislative environment. Europe is also probably the global leader in retail and marketing thinking. The US has a small lead in online sales thanks to the many experiments by tyre majors to sell online and get the tyres fitted at their affiliates. The US put on hold the idea of labels, but I think that is now dead. I cannot see a climate-change denier such as Trump reinstating a scheme that helps consumers to use less fuel.
China is now the leading volume supplier and from what I hear there is considerable OE activity among the leading tyre makers in the region. This will drive technological improvements in all Chinese-developed tyres. China is also leading some of the technical discussions on using RFID tags in tyres and the government there is seeking more advanced manufacturing and tracking systems.
Because these tyre makers export to many different countries, they are becoming increasingly aware of the different markets out there.
In India, volumes are still relatively low, but India is becoming a world centre of truck and bus tyre manufacture using the latest technologies.