Don’t Impose Quotas on Chinese Tires
2009-06-18 Source：internet
Summarize：The International Trade Commission is set to rule whether Chinese automotive tire imports are costing American jobs by forcing U.S. manufacturers to exit the industry. That’s the allegation by t ...
The International Trade Commission is set to rule whether Chinese automotive tire imports are costing American jobs by forcing U.S. manufacturers to exit the industry. That’s the allegation by the United Steel Workers. As a remedy, the union is seeking a quota on Chinese tires imported into the U.S. that would cut imports by more than half.
As Chen Deming, China’s minister of commerce, warned recently in the Wall Street Journal, recent trends in the U.S. are worrisome.
“American industries have petitioned the U.S. government for anti-dumping investigations and for investigations under the World Trade Organization’s ‘special safeguard provision,’ which could restrict imports of Chinese products. This will seriously test China-U.S. economic and trade relations,” Chen said.
No one disputes that there has been an increase in imported Chinese-made tires. According to government data, U.S. consumers bought $1.7 billion worth of Chinese-made tires in 2008, up from $453 million in 2004. But to understand what underpins the increase and why the union complaint is far off the mark, it is necessary to dissect the U.S. tire market.
The market is segmented into three tiers. The top tier is occupied by marquee brands like Michelin, Bridgestone and Goodyear. The second tier includes secondary brands that either used to be major brands in the U.S. (such as Firestone, BF Goodrich, Uniroyal, General) or foreign brands that are major brands in their country of origin but have not yet become a major brand here (such as Continental, Pirelli and Yokohama).
The third tier includes brands that address the needs of many Americans, the mass-market segment, by focusing on value. These consumers do not have vast amounts of disposable income and are price conscious. In tier three, the profits are less than on tiers one and two. Most, if not all, of the tire imports that are the subject of the ITC investigation are sold in the third tier and don’t compete directly with tires in the other tiers.
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