Only the President can impose a restriction on imports to the United States without a finding of wrongdoing by a foreign producer or exporter. The United Steelworkers of America have asked the President, pursuant to Section 421 of the U.S. trade law (the “special safeguard” for China), to restrict the importation of low grade commercial tires. By law, the President must decide whether to grant or deny the union’s request by September 17. See Attack On China Rolls On New Tires, posted on August 13.
The safeguard law provides for consultations intended to lead to settlements of disputes arising under Section 421. It also specifies a period for consultations that, in this case, expired on August 17. Prior to August 17, some meetings of Chinese and American officials were reported, but there have been no public reports of what was discussed, nor at what level. The law calls for consultations only after the United States International Trade Commission (“ITC”) has found a harmful surge of Chinese product and has recommended a remedy, a period that began on June 18.
President Obama will make his decision after reviewing the ITC’s recommendation, the recommendation of the Trade Policy Staff Committee (“TPSC”) chaired by the United States Trade Representative ("USTR") and in this case including the Departments of State, Treasury, Labor, and Commerce, his National Security Council, the Office of Management and Budget, the National Economic Council, and Council of Economic Advisers. He will weigh the interests of the union, the industry, the national economy, and foreign relations with China and other trade partners.
In a safeguard process it is appropriate for parties to seek consultations with all offices of government involved. It now appears that China, albeit after the statutory deadline, has been pursuing such consultations. During the week of August 24, MOFCOM Deputy Minister Zhong Shan reportedly met with the Secretary of Commerce (Gary Locke), the National Security Council’s Senior Director for Asia (Jeffrey Bader), the Deputy National Security Adviser for International Economic Affairs (Michael Froman), the Deputy United States Trade Representative (Demetrios Marantis), and the Acting Under Secretary for International Trade (Michelle O’Neill). All of these officials will have something to say to the President. It is appropriate and prudent for a senior Chinese official to have spoken with them.
The 60-day window for consultations in the statute (running from the time of the ITC’s finding of injury) is not strict. It would have been better to have had consultations at such high levels sooner (and perhaps there were, albeit unreported), but it remains important that they have been taking place.
There has been no mention of senior level consultations with the TPSC members. The USTR by law will advise the President, on behalf of the TPSC, on September 2. China should have been consulting with the Departments of Treasury, Labor, and State, in addition to Commerce and USTR itself. Maybe such consultations have taken place. None has been reported.
Even more important than the meetings themselves is the content of the meetings. Of this subject there have been no reports. China should not have been pursuing the line taken publicly, however, in the legal briefs submitted to the TPSC and at the public hearing convened by USTR on August 7. There, the Chinese side called for acceptance of the tire manufacturers’ express offshoring of jobs to China, a position amplified by two of the companies themselves, Toyo Tires and Cooper Tire and Rubber Company, in eleventh hour submissions (after remaining silent throughout the ITC proceedings in the spring and the TPSC proceedings, through the August 7 hearing, in the summer). This line ignores the President’s political debt to the unions, his political commitments to keep jobs in the United States, and his political priorities focused, at this very moment, on health care reform that requires vigorous union support. There are more creative, legally-based considerations available (see Attack On China Rolls On New Tires, posted on August 13) that would seem essential for Chinese interests to succeed.