Blog

Leo W. Gerard

By Leo W. Gerard
International President

Barack Obama proved Friday he’s got grit. He enforced trade laws.

These are special trade safeguard rules, called “Section 421,”  that the Chinese had agreed to obey to gain entrance to the World Trade Organization (WTO). They are, however, laws that had gone unenforced by the U.S. in the past.

President Obama used these safeguard rules to imposed tariffs on tires manufactured in China and imported into the U.S., following a recommendation by the International Trade Commission, an independent, bi-partisan group. The action made Obama the first president to execute sanctions under “Section 421.”

The International Trade Commission recommended sanctions under “Section 421” four times before Obama took office. Nothing was done. The result was closed American factories, lost American manufacturing jobs, diminished American dreams.

Not this time though. Not this president. Obama showed he’s made of tougher stuff. By placing tariffs on imported Chinese tires, President Obama put himself in the line of fire for the jobs of U.S. workers, for the preservation of U.S. manufacturing and, ultimately, for the stabilization of the U.S. economy.

Don’t kid yourself. This is a battle. For the U.S. to maintain a viable economy, it must sustain a strong manufacturing base. It must make products of value that can be sold here and overseas – not just swap paper, some of it bogus on Wall Street.

The U.S. economy is under attack by countries engaging in unfair trade. In the past decade, we’ve lost 40,000 manufacturing facilities. In just the 21 months since the Great Recession began, more than 2 million manufacturing workers have lost their jobs, making their unemployment rate 11.8 percent, significantly higher than the 9.7 percent rate for the average worker.

That’s what the Chinese tire case was all about. My union, the United Steelworkers (USW) filed it in April. We demanded penalties against China because it has smothered the U.S. market with tires. In 2004, its share of the U.S market was 4.7 percent. Four years later, it was 16.7 percent. In that time, the number of tires it sold rose from 14.6 million to 46 million. As a result, four U.S. tire manufacturing plants closed and 5,100 workers lost their jobs. Another three plants will close before year’s end, throwing 3,000 more U.S. workers on the street.

We filed for relief under “Section 421” for two reasons. One is that it provides quicker relief than other trade remedies. The other is that China consented to its provisions. When China wanted to get into the World Trade Organization in 2000, it secured U.S. support by agreeing to abide by Section 421 until 2013. Section 421 was designed to protect the U.S. economy by providing ways to combat unfair and damaging surges of particular Chinese imports.

In the past, corporations had asked for Section 421 tariffs. And we had joined them. This time, not one tire company joined us, though, to be clear, Goodyear was openly neutral. By contrast, Ohio-based Cooper, fought us. As did a collection of rag-tag import firms, one of which had nearly gone bankrupt after importing defective Chinese tires that had to be recalled after a series of crashes.

 Cooper, in testimony to the International Trade Commission, reported that all of the tires it makes at its Chinese plant, under its licensing agreement with the Chinese, must be exported until May, 2012. So it has a clear financial interest in preventing tariffs on imported tires to the U.S. The tire import companies have the same interest. For them, it’s about the money they make today, no matter how or where it’s made. They’ve got no allegiance to the U.S. and don’t care what happens to America’s future manufacturing capability or financial stability.

President Obama, by contrast, is a patriot who sees the big picture and takes the long view. U.S. Sen. Sherrod Brown of Ohio was right when he said after the tire tariffs were announced:

“Today the President courageously stood up and enforced fair trade rules that will save jobs and help our communities. Since China joined the World Trade Organization, American workers have not been assured that the government would defend them against unfair trade. With this “Section 421” decision, President Obama has taken the side of American workers and manufacturers.

“Rigorous trade enforcement is a major piece of our manufacturing and global competitiveness strategy. If American workers and manufacturers are going to compete in the global market, they need to have a government that uses trade enforcement tools, including the Section 421 safeguard.”

American workers and American manufacturers can compete – when trade is fair. It’s unfair when countries don’t enforce their own labor regulations, including their own minimum wage laws. It’s unfair when U.S. companies abide by strict environmental regulations and those in other countries openly pollute air and water. It’s unfair when other countries allow their firms to steal trade secrets, when other countries demand that firms export all of their products for a certain number of years and when other countries manipulate the value of their currencies.

If trade laws aren’t enforced, America will lose virtually all manufacturing and become nothing but a dumping ground – a place where the rest of the world sells the stuff it makes. Fewer and fewer citizens in that America would be able to buy stuff after the factories close and all the jobs that they support disappear.

In announcing the tire trade sanctions — tariffs of 35 percent for a year beginning Sept. 26, 30 percent for a year after that, and 25 percent in the final year — U.S. Trade Representative Ron Kirk said, “Enforcing trade laws is key to maintaining an open and free trading system.”

Unfair trade isn’t free.

President Obama is bold enough to draw that line of distinction for America.

Posted September 13, 2009 at 1:34 pm, in From the USW International President

Tags: china, Cooper Tire, fair trade, free trade, Goodyear, International Trade Commission, ITC, manufacturing jobs, minimum wage laws, President Barack Obama, recession, Ron Kirk, Section 421, Sen. Sherrod Brown, tariffs, Tires, trade, U.S. Trade Representative, unemployment, United Steelworkers, USW, Wall Street, World Trade Organization, WTO