China's Tire Makers Not Deflated By Dumping Duties

14/07/2008 12:00 - 790 Views

HONG KONG -The U.S. Commerce Department on Tuesday set final anti-dumping duties of up to 210% on millions of Chinese-made off-road tires for big trucks and other commercial/industrial vehicles. However, Chinese tire manufacturers are expected to see limited impact from the ruling amid a global shortage of such tires.

The Commerce Department found that the Chinese tires were being sold in the United States at unfairly low prices and announced final anti- dumping duties of up to 210.48%, as well as countervailing duties of up to 14%. "After a thorough investigation, the Department of Commerce has found that Chinese exporters of off-the-road tires have received government subsidies and sold at below the cost of production in the United States," said Assistant Commerce Secretary David Spooner.

The U.S. International Trade Commission could reduce the duties set by the Commerce Department if it determined that the off-road tire imports have not materially harmed U.S. producers. A final judgment is expected to be made in August.

The Sino-American tire dispute began last year when Titan Tire, a Des Moines, Iowa-based company that makes off-road tires for agricultural, construction and industrial vehicles, together with the United Steelworkers union, filed two cases asking for import relief. Titan's complaints were seconded by the Nashville, Tennessee-based U.S. subsidiary of Japan's Bridgestone (other-otc: BRDCY - news - people ), the world's largest tire and rubber company.

The Commerce Department responded in December by setting preliminary countervailing duties for Chinese tire exporters ranging from 2.38% to 6.59% to match the subsidies it estimated they have received.

Although China protested the ruling, characterizing it as discrimination against its products, Chinese tire manufacturers did not see a drastic drop in their business. Chinese-fabricated off-road tires make up about four-fifths of U.S. imports, which amounted to about 12.4 million in 2005 and rose to nearly 15.0 million in 2006. After the Commerce Department imposed its initial preliminary anti-dumping duties, in 2007, imports declined only slightly, to 13.7 million that year.

In addition, the final duties announced Tuesday were in many cases lower than the preliminary levels. Xuzhou Xugong Tyre Co., whose preliminary duty of 51.81% was knocked down to zero, saw the biggest change. More than 40 other Chinese tire makers and exporters received a final anti-dumping duty of 9.48%, down from a preliminary rate of 24.75%. But an unspecified number of Chinese suppliers will still face a 210.48% anti-dumping duty and an additional 5.62 % countervailing duty on their exports.

The outlook for off-road tire manufacturers is propitious because there is a global shortage of giant tires up to 12 feet in diameter amid the boom in commodities and mining. Tire makers are speeding up their production of off-road tires to meet the rising demand. Bridgestone has decided to build a new plant at Kitakyushu, in Japan's Fukuoka prefecture. It aims to boost its output of large and ultralarge radial tires by 40% by 2012.

 

Vivian Wai-yin Kwok
07.09.08, 5:06 AM ET

Source: www.forbes.com

 
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