Chapter 2 Chapter 01 Tire Special Protection Case Response: Why was it defeated by the United States

Imperialism is the highest stage of capitalism Now, monopoly has become a fact. ... Facts have proved that the differences between certain capitalist countries, such as the implementation of protectionism or free trade, can only cause some non-essential differences in the form or timing of monopoly organizations, while the concentration of production produces monopoly, It is the general and basic law of the development of capitalism at the present stage. (Lenin: "Imperialism is the Highest Stage of Capitalism" People's Publishing House, April 2001, 3rd Edition, p. 14) Chinese companies are just pawns that multinational companies can use. Now these international capitalists are quietly hiding during the hearing, allowing Chinese tire companies to charge forward and fight against American trade unions.

The Chinese side does not understand the lobbying system of the United States at all, and the entire process of organizing the defense, from hearings, speeches to witnesses, is wrong. Who is lobbying?What does the lobby have to do with Obama?Whose interests does the lobby represent? Retaliatory tariffs do more harm than good, and restricting imports of agricultural products and automobiles would be a meaningless sacrifice. This suggestion by the Rubber Industry Association is purely for self-interest. After the U.S.-China tire protection case occurred on September 12, 2009, most of the media’s analysis was about what would happen to our exports, how much our business would be impacted, etc., or purely from the political perspective of the United States. , thinking that tariffs are Obama's political bargaining chip, and expressing emotion about it.However, before we analyze, can we know ourselves and the enemy, and think about it in another way?

The final result of the special protection case for tires was that the China Rubber Industry Association suffered a crushing defeat, but none of us thought about how the United States went through a step-by-step decision-making process and finally decided to take measures against Chinese tires.It's like a lawsuit in the United States, and we lost a mess in the end, but we haven't figured out what the defense procedure in the United States is, let alone why the plaintiff wants to sue us.You don't even know why the plaintiff wants to sue you, let alone why you lost the lawsuit, so you jumped out to express your dissatisfaction, and even threatened them that you would not do business with them in the future.Isn't this ridiculous?

Let's look at the evidence from the US first: First, in the past four years, the market share of Chinese tires in the United States has jumped to the first place. From 2004 to 2008, the quantity of Chinese tire exports to the United States increased by 215%, and the value increased by 295%. In 2008, 46 million passenger car tires made in China were exported to the United States, with a value of more than 1.7 billion US dollars. Second, during the same period, U.S. tire production fell by 25%, and the share of U.S. domestic companies dropped from 63% to less than 50%. Third, during the same period, 4,400 people lost their jobs in the tire industry in the United States, and it is expected that the number of unemployed people will increase by 2,400 in 2009.

The United States concluded from this that China's exports have disrupted the U.S. market, causing a large number of American workers to lose their jobs, and the top exporters are Chinese tire companies.So, I'm going to sue you.Very simple and straightforward logic! And how did our Chinese side respond? On the afternoon of July 17, 2009, the head of the Fair Trade Bureau of the Ministry of Commerce issued a statement saying that the report of the US International Trade Council (ITC) was "wrong in factual determination and lacking in logic, which is not sufficient as a basis for restrictive measures against Chinese tires."American labor unions raised two facts: first, the U.S. tire market suddenly became chaotic within four years, and imported products took up a large number of market shares of local companies, and a large number of local factories closed and laid off employees; second, the largest share of imports was made by Chinese products , China's share soared from 5% to 17%.Hence the conclusion: Chinese exports are disrupting the US market.

However, we hastily issued a statement on the basis of facts and logic.This is in the arms of the American labor unions!To put it bluntly, our statement has no factual basis, let alone logical reasoning. Why do you say there is no factual basis?The Ministry of Commerce did not point out where the two facts put forward by the American labor union were misidentified. In fact, neither of the two facts was wrong. If there is a problem, it is a problem with the way American labor unions survey the data.In fact, we did not point out the real problem. If you read the report of the American labor union carefully, you will find that according to their statistics, the import volume of tires from the United States to China has still increased sharply in the past 8 months, while the export volume according to China’s statistics But it is declining.Therefore, if there is any problem with the facts here, the Ministry of Commerce should point it out in a targeted manner so that the other party can be convinced.However, the Ministry of Commerce did not do this, but only said in general that "the facts were wrongly determined". You can do this when you review anti-monopoly in China, but in the eyes of Americans, you are unreasonable!

How did the president of the American labor union lobby against this point?His original words were: "The basic facts in this case cannot be denied or erased." Translated into Chinese, it means: The basic facts in this case cannot be denied or erased.The core of this sentence is two words, the first is "can't", and the corresponding word is often "not allowed".Therefore, his words give people the impression that Chinese companies and the government are unreasonable. Arguments are based on emotional "tolerance" rather than rational "can't".The second is "by", by whom?It is the Chinese government, Chinese tire companies, and American importers whose interests are aligned with them.The U.S. trade unions exaggerate in front of the media, and China’s defense is useless. People no longer believe what we say. They believe that what we say is driven by interests, and this interest is related to the United States. The interests of the common people are in conflict.What else can we say?The more you explain, the more passive you become.Since it is determined that we are driven by interests, American journalists will naturally be biased against us, so no matter what we say, they will not report it.We have been given such a big hat by others, but we don't know who we are looking for when we look for witnesses and organize lobbying organizations?Either manufacture tires in China, or sell Chinese tires in the United States. For example, the China Rubber Industry Association is looking for the American Importers Association.This is not the right thing to do, what is it?

In terms of facts, we have not given a strong counterattack, so what about logic?Let us simplify the words of the American trade unions: first, imported products account for more market share than local companies; second, imported products from China are more than those from other countries.The conclusion: Too many imports from China have led to massive closures and layoffs of local factories.In fact, there is a logical problem here, and these two facts cannot lead to this conclusion.Both of these are facts, yes, but the conclusion that can be drawn here can only be: the import of tires from China is very large, which should have a certain impact on the US market.But if you think about it carefully, the share of Chinese products is only 17%, which is less than 1/3 of that of domestic manufacturers in the United States. Moreover, Chinese tire manufacturers are highly dispersed, and no one is dominant.Moreover, Chinese tire manufacturers do not have their own sales network, which is actually still in the hands of Americans.Although it is true that factories in the United States are closed, it has nothing to do with Chinese tire manufacturers.

In fact, the U.S. tire market can be divided into two segments: the OEM market and the replacement market.The latter can be further subdivided into three markets: the high-end market composed of first-class cutting-edge brands (also known as the "first-tier echelon market"), and the mid-end market composed of secondary brands (also known as the "second-tier echelon market"). ), and a low-end market (also known as the "three-tier market") composed of many other lesser-known brands.Most domestic manufacturers in the United States (though not all) gave up the third-tier echelon market before China exported the products involved in the case to the United States, and sought to obtain higher profits in the first-tier echelon market and the second-tier echelon market.

So who exactly shut down the domestic factories in the United States?It is the capitalists, not the trade unions representing the laborers!It is the capitalists in the United States who decided to close the factories in the United States and move the factories to China, so as to occupy the high-end market in the United States and take advantage of the cheap labor in China.By the end of 2006, there were 19 foreign-funded tire companies in China, with a total of 36 factories.On the basis of the national tire output reaching 318 million in 2005, tire companies launched a new round of investment boom.According to the forecast of authoritative organizations, in 2010, the total demand of China's tire market can only reach 300 million units, and signs of overcapacity in China's tire market have already appeared. In 2008, my country's tire exports accounted for 63.8% of the total output, and accounted for 42.8% in the first five months of 2009. It is one of the industries most dependent on foreign markets.

The problem that American labor unions are targeting is local unemployment and layoffs, but it is actually multinational companies, namely these American capitalists, that actually cause the unemployment of American workers.However, Chinese companies did not analyze these issues when defending themselves. No matter how big a Chinese company is, its market share is not as large as that of a multinational company. The other six links of the industrial chain including product design, raw material procurement, warehousing and transportation, order processing, wholesale and retail are also in the hands of others.Therefore, Chinese companies are just a pawn that multinational companies can use, but these international capitalists quietly hid during the hearing, letting Chinese tire companies go forward and fight against the American trade unions. A comparison makes it clear that among the four major tire companies in the United States, only Cooper stood up and said no. Why?Curtis Schneekloth, director of investor relations at Cooper Tire Company, made it very clear: "The reason why we stood up first (among the U.S. tire companies) is because we are in a special position. We do not have production bases in low-cost countries other than China. Our competitors (Goodyear, Michelin, Bridgestone) have production bases in low-cost countries other than China.” Snickers also revealed that Cooper’s The original plan to close the factory in the United States will be carried out as planned (in December 2008, the company announced that it would close a tire production plant in Georgia, USA), and the factory is expected to close in the first quarter of 2010. At present, the company has 4 factories in the United States. factories.At present, Cooper Tire has two joint ventures in China. Cooper Chengshan (Shandong) Tire Co., Ltd. has an annual output of more than 10 million tires, supplying domestic and foreign markets; the other is Cooper Kenda (Kunshan) Tire Co., Ltd. The company, located in Kunshan City, Jiangsu Province, was established in early 2007 as a joint venture between Cooper Tire & Rubber Company of the United States and Kenda Tire of Taiwan, with an annual output of more than 3 million car tires, all of which are exported to the North American market, and currently occupy the market share of similar products in the United States 15%. After arguing for a long time, the most ridiculous thing is that we didn't figure out who was suing us from the beginning to the end.Who is messing with us?How did our media report it?Our media are saying that it is the United Steelworkers union that proposed the special protection investigation.Don't readers feel that Monk Zhang Er is confused?What does the United Steel Workers have to do with the tire industry?Isn't it just looking for trouble? That's where it gets ridiculous.The full name of this union is not the United Steelworkers at all, but "The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union".If translated literally, it would be the "International Federation of Workers in the Steel, Paper and Forestry, Rubber, Manufacturing, Energy and Other Associated Industries and Service Industries".In fact, this is not only a labor union in the United States, but also unions in Canada and the Caribbean. In addition to the several industries included in the name, it also covers non-ferrous metal smelting, public utilities, container industry, pharmaceutical industry and even call centers. and other service industries.Therefore, this trade union is equivalent in scale to the "All China Federation of Trade Unions" in the United States. As for the power of this trade union, it is even more incredible. In the 2006 U.S. congressional mid-term elections, the political appeal of this trade union was to let U.S. Congressman Tom?Delay (Tom Delay) stepped down, and in April, the congressman himself announced his withdrawal from the election.More importantly, this group is pro-Democratic. In May 2008, Obama was competing with Hillary Clinton for the Democratic presidential nomination, and the election battle was tightly fought in North Carolina and Indiana.The union, through their North Carolina Democratic Senator John Edwards, publicly announced its support for Obama, and Obama beat Hillary in both states. In this context, how do American labor unions handle the tire protection case?They are very proficient in American law, when China joined WT.According to this agreement and the Sino-US Relations Act of 2000, a provision was added to the US Trade Act of 1974, namely Article 421.This clause gives the U.S. International Trade Commission an important authorization: If the U.S. International Trade Commission finds that Chinese manufacturers have caused or threatened to cause U.S. manufacturers of the same product to fall into market chaos or disorderly competition, it has the right to provide U.S. manufacturers with relief.The specific operation is that the US International Trade Commission intervenes in the investigation and finally makes a ruling, and then submits a draft of specific relief measures to the President of the United States based on this ruling. The American trade union followed Article 421 of the 1974 Trade Act of the United States and filed an application with the International Trade Commission to review China's tire imports.In fact, this was originally a conflict between American labor and capital.Jing Pai, which ranks fourth among the four major U.S. tire manufacturers, can also account for 15% of the U.S. market. They all have factories in China, and more than half of the production capacity of these factories is exported to the U.S. market.However, China’s tires exported to the United States accounted for only 17% of the total. In other words, most of the shares were owned by the four major tire manufacturers in the United States. controlled by US companies.How did American workers lose their jobs?Because the capitalists of the four major tire manufacturers shut down their American factories and went to China to take advantage of China's cheap land and labor, and then sell them to the American market after production.Therefore, the American trade unions became angry and used the agreement signed with the United States when China entered the WTO to sue these American capitalists who pretended to be Chinese manufacturers.Of course, due to legal procedures, they cannot directly sue the American capitalists.And they think that the reason why American capitalists moved to China is because China provided unfair conditions to American capitalists, such as cheap land, labor, etc., so they simply sued all Chinese tire export companies.But now the three largest tire companies in the United States are all at a loss and keep silent. Instead, Chinese companies are confronting the American trade unions through the Rubber Industry Association and the Ministry of Commerce with great fanfare. Readers understand now?This lawsuit is different from previous trade disputes.First, it is not the foreign manufacturers that have troubled Chinese companies this time, but the trade unions; second, this time it is not a trade dispute such as technical barriers, but a lawsuit caused by a labor conflict in the United States; The focus of Chinese companies is not on our dumping, subsidies, or intellectual property issues, but on the growth of Chinese exports in this industry so fast that it has affected the US market order. So, what should be the focus of our fight?It should be refuted legally first.Because the basis of the entire US action is to be able to confirm that Chinese companies have really disrupted the US tire market, but if you think about it carefully, how can you confirm this?What is Market Disorder?Looking at the US "Trade Act of 1974", the definition of American is also very vague.Their judgment depends on two conditions: first, the growth rate of imports is astonishing; second, and most critical, this is a "significant cause" that poses substantial damage or threat to the domestic industry.The key here is what is called "significant cause".The U.S. trade law stipulates two conditions for this: first, it constitutes a substantial injury to the domestic industry; second, this cause does not necessarily have to be more serious than other causes. Simply put, the U.S. labor unions must prove that Chinese imports of tires have seriously hurt the U.S. tire industry.But as I said earlier, imports are not the key, because imports have not changed the competitive landscape in the US market.More importantly, a considerable part of the imported tires from China are manufactured by the four major U.S. tire manufacturers in their factories in China, and even if they are made in China, the remaining six links in the industrial chain are basically in the hands of American companies.Therefore, the most critical conclusion is "no significant harm", so China's import of tires does not constitute a "significant cause", and the entire lawsuit and even subsequent actions are illegal. However, how did our Rubber Industry Association and the Ministry of Commerce defend it?What did our representative Xu Wenying repeatedly emphasize? "It's not that the export of Chinese tires affects the employment of American tire workers, but that the global economic downturn has caused some American tire companies to close down." Then what?Why not extend it further to legal issues?As we all know, the global economic downturn began in 2008, and the evidence presented by the American labor union is that from 2004 to 2008, Chinese tire imports affected the US market. This answer is simply wrong. A more deadly mistake was our representative directly criticizing the ITC.This is both legal ignorance and political error.As I said earlier, the U.S. labor union followed Article 421 of the 1974 Trade Act and filed an application with the International Trade Commission to review China's tire imports.In the final analysis, this is stipulated in the agreement signed by the predecessor of the Ministry of Commerce - the Ministry of Foreign Trade and Economic Cooperation with the United States.You are now constantly criticizing the USITC.You should know that this department was authorized by the U.S. Congress in 1916. There is a special agency under it to collect and analyze trade data for reference in decision-making by the White House and Congress.Not only China's trade issues, the US Congress has delegated the investigative power to all foreign trade issues to this department.Criticizing the US International Trade Commission during the defense process is like applying to the Ministry of Commerce for antitrust review, but openly criticizing the competent department under the Ministry of Commerce. Do you still want to get it approved?On the other hand, criticism of the USITC also lacks political consideration.You should know that most of the members who voted in favor of the US International Trade Commission are Democrats, and its current chairman, Shara L. Aranoff, is a thorough Democrat from the Senate Finance Committee.It is not advisable to criticize senior colleagues in the presence of a Democratic president. In fact, it is no wonder that Xu Wenying did not study law, international trade or international politics, but the rubber industry.It is not difficult to understand some of her views and behaviors.During the question-and-answer session, Xu Wenying's language difficulties began to be exposed.When Timothy Mills, representative of the U.S. Department of the Treasury, raised the first question on behalf of the jury, Xu Wenying found that she could not fully understand his question, so she had to ask the "examiner" to repeat the question.In the end, the Chinese side who accompanied the witnesses entrusted lawyer Spooner to answer questions from the US Treasury Department and most of the subsequent questions.Therefore, even on the second most important issue - political issues, Xu Wenying didn't get to the point.Xu Wenying may not think that it is a key point in judging the special protection case—whether the implementation of special protection measures can increase employment in the United States. The last point of Xu Wenying's defense was added temporarily.She said that in the current economic depression and rising unemployment, if the price of Chinese tires is raised, it will only make American consumers postpone replacing tires, thereby increasing safety hazards on highways.This level of response is really amazing.What is even more incomprehensible is that she even mentioned in the hearing that the Chinese government encourages the export of products from joint venture tire companies. Isn't this an excuse for the United States to engage in unfair trade with China?It seems that Vice President Xu, who has a background in the rubber industry, does have a very unique view on what should be said and what should not be said in the hearing. If you were Obama and saw the above debate, what would you decide?On the one hand, the representative of the affirmative party is the largest labor union in the United States. It submitted a review to the competent trade department and said that it is related to the employment of tens of thousands of Americans. This union publicly supported you during the general election that year; the result of the review by the trade department is conclusive At the same time, more than 50,000 members of labor unions sent letters to the White House and Congress asking you to sign, and a large number of members of Congress also sent letters hoping you would sign, and American public opinion is also one-sided Right here. On the other hand, after criticizing the U.S. trade unions, the anti-delegates criticized the trade department, and most of the six members of this department belong to the Democratic Party like you.During the defense process, either you don’t explain it, and directly label you as “factually wrong and illogical”; or the explanation makes no sense at all, and you will be threatened at every turn. Tens of thousands of people in your country will lose their jobs.In the end, you find that it is not the Chinese government, or Chinese companies, or American traders who sell Chinese products.Even among the four major U.S. tire manufacturers with factories in China, only the fourth one stood up to oppose it. So, without any suspense, Obama stood on the positive side. After the adoption of the tire protection case, Fan Rende, chairman of the China Rubber Industry Association, told the media: "We hope to take measures against the United States in terms of agricultural products and automobile imports." Why?Why do you drag the agricultural products and the auto industry into this?Have you discussed it with the peasant brothers across the country, the people who plan to buy a car across the country, and even the Federation of Automobile Industries? Retaliatory tariffs cannot be imposed on just any industry.The U.S. retaliates against us. They have this capital, so they don’t need Chinese tires. Anyway, the U.S. has a large number of idle production lines. Even imported tires can be imported from other countries.In fact, in recent years, Thailand and other countries' exports to the United States have also increased significantly. Who will let Thailand produce rubber?Therefore, the punitive tariffs imposed on China will not significantly increase domestic prices in the United States, and such retaliation will not lead to domestic consumers paying the bill. Can China do this?If you don't buy American soybeans, Chinese people can't add oil to their cooking. Do you ask people all over the country to change their eating habits?As a result of our retaliatory tariffs, it is the people across the country who will finally pay the bill. At most, the United States will grow less soybeans next year. Anyway, the price has been pushed up, which just offsets the loss caused by the decline in sales, so American grain traders can still rest easy.But what about China?If the price of pork rises a bit, public dissatisfaction will boil over. How much do you dare to increase the tariffs on American agricultural products? What about the automotive industry?Just kidding, how much tongue wasted by the Chinese auto industry to abolish the high tax rate on complete vehicles?Are you going to go back up now?The result of doing so is also obvious. Foreign manufacturers make good parts, even assemble all the main parts, but do not make them into complete vehicles, and then export them to domestic joint venture factories at zero tax rate. In this way, what the joint venture factories can do will always be the best. Simple assembly.Americans do not want to put the core technology of automobiles, that is, the production of core components, in China. Once you impose punitive tariffs, they will not do so.If the tax is levied together with parts and components, we don’t care about the ruling of the WTO. What about so many people in China who plan to buy cars?You must know that China's auto industry is highly dependent on original key components, so that the final high tariffs will have to be paid by the common people.Doesn't this ruin the whole stimulus package? The conclusion is very simple. The chief representative of the tire special protection case not only did not feel ashamed of the failure of the negotiations, but made unreasonable suggestions based on his own interests, completely ignoring the safety of consumers and enterprises in the two industries mentioned, and further damaging the national interest.More importantly, this time the tire special protection case not only failed, but also caused endless troubles.The last chapter of this book will discuss how the failure of this special protection case will bring about a series of international trade sanctions.