Monday, September 10, 2012

Where's the Love for the President's Signature Trade Enforcement Achievement?

As you may recall, President Obama has repeatedly lauded his 2009 decision to impose prohibitive tariffs on Chinese tires under Section 421 of US trade law as the poster child for his big trade enforcement initiative.  For example, in his 2012 State of the Union Address, Obama bragged about how the duties saved "over a thousand jobs" and were a shining example of how the he stands up for the American worker (or something).  And just last week the President reiterated this theme in his speech to the DNC when he spoke of how his administration "stood up to China on behalf of our workers."

Those super-awesome tire tariffs, however, expire in a few weeks, and, while I'm certainly thrilled to see them go, their expiry leaves me wondering one simple question:

If the President's tire tariffs were as awesome as he says they were, why hasn't anyone - in the industry, unions or the Obama administration - fought to have them extended?
Under US law (19 USC Sec. 2451), any import protection measures imposed under Section 421 will apply "to the extent and for such period as the President considers necessary to prevent or remedy the market disruption."  And President Obama's September 2009 proclamation announcing the tire tariffs established that they would apply for three years from the date they were first imposed (September 26, 2009):
4. Pursuant to section 421(a) of the Trade Act (19 U.S.C. 2451(a)), I have determined to provide import relief with respect to new pneumatic tires, of rubber, from China, of a kind used on motor cars (except racing cars) and on-the-highway light trucks, vans, and sport utility vehicles, provided for in subheadings 4011.10.10, 4011.10.50, 4011.20.10, and 4011.20.50 of the HTS.

5. Such import relief shall take the form of an additional duty on imports of the products described in paragraph 4, imposed for a period of 3 years. For the first year, the additional duty shall be in the amount of 35 percent ad valorem above the column 1 general rate of duty. For the second year, the additional duty shall be in the amount of 30 percent ad valorem above the column 1 general rate of duty, and in the third year, the additional duty shall be in the amount of 25 percent ad valorem above the column 1 general rate of duty.
However, US law also allows any Section 421 measures to be extended upon the request of the affected domestic industry (including the union members who filed the original complaint) or... yes... the President himself:
(o) Extension of action

(1) Upon request of the President, or upon petition on behalf of the industry concerned filed with the Commission not earlier than the date which is 9 months, and not later than the date which is 6 months, before the date any relief provided under subsection (k) of this section is to terminate, the Commission shall investigate to determine whether action under this section continues to be necessary to prevent or remedy market disruption.

(2) The Commission shall publish notice of the commencement of any proceeding under this subsection in the Federal Register and shall, within a reasonable time thereafter, hold a public hearing at which the Commission shall afford interested parties and consumers an opportunity to be present, to present evidence, and to respond to the presentations of other parties and consumers, and otherwise to be heard.

(3) The Commission shall transmit to the President a report on its investigation and determination under this subsection not later than 60 days before the action under subsection (m) of this section is to terminate.

(4) The President, after receiving an affirmative determination from the Commission under paragraph (3), may extend the effective period of any action under this section if the President determines that the action continues to be necessary to prevent or remedy the market disruption.
Yet neither the unions nor the President ever requested that the tire tariffs be extended, and the deadline for a petition (i.e., 6-9 months before September 25, 2012) has clearly passed.  Such silence is pretty surprising when you consider that the Section 421 case is the centerpiece of an Obama administration trade enforcement strategy that has taken center stage during the 2012 presidential campaign.

So what's going on here?  If those tariffs are as great as the President has repeatedly claimed and have saved so many American jobs, wouldn't he have fought tooth-and-nail to prevent them from expiring in a few weeks?  He clearly has the legal authority to do so, and, as we all know, once the duties expire, it's very likely that Chinese exporters will regain much of the market share that they lost to other imports during 2009-2012.  And, let's face it, it's not like the US economy is just humming along these days.  Moreover, the United States doesn't lose its right to impose import protection under Section 421 ("the China-specific safeguard") until  December 2013 (12 years after China acceded to the WTO), so the President could have extended those "job-saving" tariffs for another 15 months (at the very least).

The President's silence is thus quite notable, and perhaps some enterprising journalist can ask him about it the next time that he brags about "standing up to China" on the campaign trail.  Could it be that maybe those tariffs weren't nearly as great as the President has repeatedly claimed, and that several independent reports have shown that they imposed massive harms on the American economy for very, very little gain?  And does the President perhaps want to avoid a very-public spotlight on these inconvenient facts during an election season?

(Yes, all of those questions are sarcastic and rhetorical, but it would nevertheless be wonderful to see someone raise them with the Obama campaign.)

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