Tyre makers seek tax relief amid US tariffs

PUBLISHED : Friday, 18 September, 2009, 12:00am
UPDATED : Friday, 18 September, 2009, 12:00am

The China Rubber Industry Association has pressed Beijing for taxation relief and other remedies following the United States' decision to impose heavy tariffs on Chinese-made tyres.

The association, which counts about 800 companies among its members, called for policymakers to raise value-added tax rebates to as much as 15 per cent from 9 per cent now and slash import tariff for rubber to 7 per cent from 20 per cent.

Anticipating an imminent crisis in the mainland's tyre industry, the industry body said the government should restrict approval for new production projects and encourage domestic consumption.

In a statement yesterday, it warned that the punitive tariff would force about 30 Chinese tyre makers to suspend production or even go under and put about 100,000 workers out of work.

Over the weekend President Barack Obama said the US domestic market had been disrupted by Chinese imports and announced 'safeguard' actions by raising import tariffs on the products to as much as 35 per cent on September 26 from 3.4 to 4 per cent now.

The move, the first safeguard action since China gained World Trade Organisation membership in 2001, incensed Beijing and prompted it to seek WTO arbitration.

Some Chinese tyre makers said they would pass the extra cost on to US retailers by raising factory-gate prices by at least one-third, the China Daily reported.

Giti Tire China, which exports as much as US$800 million worth of tyres to the US annually, would break into new markets such as Europe, Southeast Asia and Africa to spread risks, executive director Shen Weijia reportedly said.

Obama's decision, however, won the applause of about 5,000 workers in the American tyre industry.

However, the US Tire Industry Association said Obama's decision would be 'a job killer' instead of 'a job saver'. It cited Rutgers University research that the punitive tariff would cost 25,000 jobs in the US.

The association was concerned that higher tariffs would hurt supplies of low-cost Chinese tyres and cause American consumers to delay or defer replacing their tyres when necessary.

'Thus, it creates a potential safety hazard on America's roads,' it said.