US Apparel and Textile Industry Urges President Obama to Impose Remedy on Chinese Tires

On September 1, 2009, the National Council of Textile Organizations, the National Textile Association, the American Fiber Manufacturers Association, and the National Cotton Council signed a letter urging President Obama to impose the remedy recommended by the United States Trade Representative ("USTR") on Chinese imports of passenger and light truck tires.  The President is expected to decide what, if any, remedy to impose by September 17. 

President Obama’s decision in this case will be closely watched by the US apparel and textile industry and other US industries facing Chinese competition. It will send a signal about this Administration’s willingness to provide relief in future Section 421 cases and the potential value of the Section 421 remedy. A decision by the President to impose relief could encourage the US apparel and textile industry to file its own Section 421 petition.

Under Section 421 of the Trade Act of 1974, the International Trade Commission ("ITC") determines whether a product is being imported from China into the United States in increased quantities or under conditions that cause or threaten to cause market disruption to domestic producers of like or directly competitive products. This so-called safeguard remedy is unique to imports from China, and was enacted into law shortly after China acceded to the World Trade Organization as a means of protecting US producers who were concerned about possible surges in Chinese imports. Unlike an antidumping ("AD") or countervailing duty ("CVD") investigation, the domestic industry is not required to demonstrate that Chinese imports are being sold at unfair prices.

After receiving the ITC's report, the USTR must make a recommendation to the President concerning what action, if any, to take to prevent or remedy a market disruption. The President must then make a determination within 15 days of receiving the USTR’s recommendation on the appropriate action to prevent or remedy a market disruption. This import relief must take effect within 15 days of the President’s determination.

The President may, however, decline to provide relief on the grounds that the provision of relief is not in the national economic interest of the United States. The President may only make such a determination if he finds that the recommended action would have an adverse impact on the US economy that is clearly greater than the benefits of the action.

Steptoe is closely monitoring the tires case to the extent it may encourage the US industry to file a Section 421 safeguard investigation or a combination of an antidumping and countervailing duty investigation against Chinese textile and apparel producers. If you have any questions or would like to obtain a copy of prior alerts about steps that companies can take to prepare for a trade remedy case, please feel free to contact Eric Emerson or Tom Trendl.