World Trade Organization Upholds American Tariffs on Tires From China

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World Trade Organization Upholds American Tariffs on Tires From China​

WASHINGTON — The World Trade Organization on Monday upheld the Obama administration’s decision last year to impose tariffs of up to 35 percent on tires from China, rejecting a complaint by Beijing that the punitive duties violated international agreements The decision, which the United States trade representative called “a major victory,” came on the same day that differences on trade and currency between the world’s two largest economies were highlighted on two other fronts.

A federal agency found on Monday that ineffective enforcement by the Chinese authorities had contributed to widespread trademark, copyright and patent infringement in China.

Also on Monday, two senators, Sherrod Brown, Democrat of Ohio, and Olympia J. Snowe, Republican of Maine, proposed amending the tax bill in the Senate to include a measure that would let the United States impose higher duties on some Chinese imports in retaliation what most economists agree is an undervalued currency.

The developments came on the eve of two days of talks here between Wang Qishan, China’s vice premier for economic affairs, and the United States commerce secretary, Gary Locke, and the trade representative, Ron Kirk. Those talks are expected to include enforcement of intellectual property rights but not currency valuations, which in the United States is the purview of the Treasury Department.

Mr. Kirk applauded the ruling in the tire case, saying it “demonstrates that the Obama administration is strongly committed to using and defending our trade remedy laws to address harm to our workers and industries.”

The tariffs were a significant victory for the United Steelworkers, which had requested the tariffs, contending that a surge in imports had threatened domestic manufacturing.

“Since the tariffs have been in effect, U.S. domestic tire production has increased, tire producers have made new capital investments, and new jobs have been created for American tire workers,” the union’s president, Leo W. Gerard, said in a statement after the W.T.O. ruling was issued in Geneva.

The imposition of the tariffs was the first time that the United States invoked a special safeguard provision that was part of its agreement to support China’s entry into the W.T.O. in 2001.

Under that provision, United States companies or workers harmed by imports from China can ask the government for protection simply by demonstrating that American producers have suffered a “market disruption” or have experienced a surge in imports from China. In more traditional antidumping cases, the government would have to determine that a trading partner was competing unfairly or selling its products at less than their true cost.

The United States International Trade Commission, a quasi-judicial independent agency, had recommended that the Obama administration impose the tariffs for three years.

According to the steelworkers’ union, a surge in imports from China resulted in sharp declines in capacity, production, shipments and employment by American tire producers between 2004 and 2008.

Domestic tire capacity declined to 186.4 million tires, from 226.8 million, during that period, while production dropped to 160.3 million tires, from 218.4 million.

The United States already had a 4 percent tariff on Chinese tires. The new duties involved an additional tariff of 35 percent for one year, reduced to 30 percent in the second year and 25 percent in the third.

Three days after the administration announced its decision, the Chinese government brought a complaint to the W.T.O., calling the duties “a serious case of trade protectionism, which China resolutely opposes.”

A three-member W.T.O. panel found that the United States “did not fail to comply with its obligations” under world trade agreements. China can appeal the panel’s findings to the W.T.O.’s appellate body within 60 days.

The Obama administration said the tariffs had helped domestic producers increase production, preserve jobs and consider new investments. But the Tire Industry Association, a trade group that seeks to end the tariffs, has questioned the tariff’s effectiveness and called for it to be lifted.

On the matter of intellectual property, the trade commission released a report Monday finding that violations of intellectual property rights “remains a central concern in the U.S.-China bilateral trade relationship.”

The report noted that the federal Customs and Border Protection agency seized $204.7 million worth of counterfeit and pirated goods that originated in China in the 2009 fiscal year. Footwear made up nearly half of that amount, followed by handbags, wallets and backpacks; consumer electronics; and apparel.

The report also covered a move by China to promote “indigenous innovation” through policies and regulations that United States companies view as potentially discriminatory.

Senator Max Baucus, a Montana Democrat and chairman of the Senate Finance Committee, which oversees trade, urged China to address the report’s findings during the bilateral talks scheduled for Tuesday and Wednesday here, part of a forum known as the United States-China Joint Commission on Commerce and Trade.

A second report, due in May, will try to quantify the impact of intellectual property violations and “indigenous innovation” policies on American jobs and workers.