Two trade cases to test Obama's presidential campaign promises
September 10, 2009
By Mark Drajem
Washington - Candidate Barack Obama pledged to stand up for American workers by cracking down on imports from China.
President Obama has promised to fight protectionism and trade barriers. His administration must decide which path to take, in two of the biggest US trade cases against China.
US Steel and the United Steelworkers Union are behind a complaint on imported pipe. The union, an Obama political ally, is also pushing for curbs on Chinese vehicle tyres.
"These are decisions that can't be avoided, so they'll be perceived as setting the tone for what the Obama administration trade policy is," said Timothy Keeler, a former chief of staff for the US trade representative's office.
Keeler represents Giti Tire, the largest Chinese maker of tyres, in the trade case.
The decisions may help shape the future of commercial relations between the US and China. These countries traded goods worth more than $400 billion (R3 trillion) last year, making China the second-largest US trading partner after Canada. China is also the largest foreign holder of US debt, with $776.4bn.
The US International Trade Commission has ruled against Chinese importers in both cases. Because the complaints were brought under different provisions of trade law, the Commerce Department has the final say over tariffs on the pipe, used in oil and gas drilling, and Obama will make the call on tyres.
In a ruling scheduled to be released yesterday, the department was due to decide whether to place duties on $2.8bn in steel pipe imports from China to compensate for subsidies that Chinese firms get.
The case is the largest so-called countervailing duty and dumping case filed against China, according to Daniel Porter, a lawyer for Winston & Strawn in Washington, which represents Chinese producers in the case.
Obama must decide by next Thursday on a petition by the steel workers to cap or put tariffs on imports of $1.7bn of tyres from China.
It is a test of whether Obama will make good on a campaign pledge to reverse course from former president George W Bush and apply the so-called safeguard measures.
Bush turned down all four requests he got to impose duties or quotas on Chinese imports, saying the costs of protection would dwarf the benefits.
"The one thing that is on the line here is the president's credibility," said Scott Paul, the executive director of the Alliance for American Manufacturing, a coalition of steel firms such as US Steel and the steelworkers union.
In June he warned, in an interview with the New York Times, about "sending any protectionist signals out there".
China has made the same argument about the economic dangers of protectionism in the pending cases.
Liu Dan Yang, the deputy director-general of China's ministry of commerce, and nine other officials pressed the US commission at an April 22 meeting to turn down the tyre and steel petitions.
Chen Rongkai, the spokesman for the Ministry of Commerce, said that a ruling against Chinese parties in either case might hurt the two nations' trade ties. - Bloomberg
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