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U.S.-China Tire Action

U.S.-China Tire Action. Dispute DS399: Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tires from China. Introduction Dispute Background Disputed Details China ’ s Claims. U.S. Rebuttal/Panel Findings Appellate Body Economic and Trade-Related Outcomes

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U.S.-China Tire Action

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  1. U.S.-China Tire Action Dispute DS399: Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tires from China

  2. Introduction • Dispute Background • Disputed Details • China’s Claims • U.S. Rebuttal/Panel Findings • Appellate Body • Economic and Trade-Related Outcomes • Political Outcomes

  3. Dispute Settlement Background Complainant (China) Respondent (United States) There was market disruption as a result of the increasing imports of tires from China causing injury to the domestic industry. • Chinese declare 7 specific claims based off of paragraph 19 of the Accession Protocol, and GATT 1994

  4. GATT 1994 and Chinese Accession Protocol China’s Claims based off Following: GATT 1994 Article I:1 Most-Favored Nation Treatment: In regards to duties and tariffs “any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.” 16. Transitional Product-Specific Safeguard Mechanisms (Chinese Accession Protocol) 1. “In cases where products of Chinese origin are being imported into the territory of any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products, the WTO Member so affected may request consultations with China with a view to seeking a mutually satisfactory solution” 3. If WTO member does not act upon consultations within 60 days the affected shall be free 4. Focus on “Market Disruption” and “material injury” to domestic markets 6. Because the restrictions are being imposed beyond the “extent necessary to prevent or remedy” any alleged market disruption

  5. China’s Claims against US(5 Main Issues) • The US failed to evaluate properly whether imports from China were in such increased quantities. • The US statue implementing the causation standard of paragraph 16 into US laws was inconsistent with paragraphs 16.1 and 16.4 of the protocol • The US failed to evaluate properly whether imports from China were a“significant cause”as required by 16.1 and 16.4 • The US safeguard measure went beyond the“extent necessary” making it inconsistent with 16.3 • The US safeguard measure for a 3 year period went beyond “such a period of time” that was necessary.

  6. U.S. Rebuttal/Panel Findings • With regards to the increase in subject imports, the panel disagreed with China and found that these imports were increasing rapidly both absolutely and relatively • The panel also rejected China’s assertion that the United States’ ”contributes significantly” definition was at odds with the statute • China’s claims that the USITC failed to demonstrate that the subject imports were a cause of market disruption based on 3 principle arguments were all rejected by the panel. • The panel also found that China had failed to establish a prima facie in relation to both remedy claims. • The panel also found that China’s claims under the GATT 1994 were dependent on its claims under paragraph 16 of the protocol. They were therefore unsuccessful.

  7. Appellate Body Two Main Findings • Panel upholds USTIC evaluation of of Paragraph 16.4 “increasingly Rapid” clause • “Significant Cause”of material injury • Upholds USTIC did not err in assessment of domestic competition • Upholds causal relationship b/w increasing imports and decreasing sales • Upholds panel findings against China’s failure to find reasonable injury due to other factors • Panel did not act inconsistently in regards to the DSU responsibilities • Upholds Panel Report that USTIC did establish that Chinese imports were causing material damage

  8. Economic and Trade-Related Outcomes • Supposed to help American tire production • "The tariffs didn't have any material impact on our North American business,"  - Keith Price, Goodyear Tire • Reduced Chinese tire imports • Production moved to Thailand, Indonesia & other countries • Prices increased in domestic wholesale market • American tire producers moved away from cheap tires • Retailers used the increase in Chinese tires to time their own price increases

  9. Economic and Trade-Related Outcomes

  10. Political Outcomes • Part of growing trade war? • US accuses China of providing illegal subsidies to its automobile and automobile parts exporters • China filed a dispute against US anti-dumping and countervailing measures on 24 product categories • Other examples: • U.S. Commerce Department set anti-dumping duties of up to $193% on Steel Wheels from China • China announced investigation of U.S. renewable energy subsidies two weeks after U.S. investigated Chinese solar panel subsidies

  11. Political Outcomes • US government accused of being influenced by the United Steelworkers • Represent 350,000 auto workers • Increased rhetoric between presidential candidates • More trade disputes based on political interests and not best economic outcome

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