consumer tire petition injury narrative

Stewart and

Stewart 2100 M Street N.W., Suite 200 Tel: (202) 785-4185

Washington DC 20037 Fax: (202) 466-1286/87/88

VIA HAND DELIVERY

[email protected]

www.stewartlaw.com

44Pd ,N

'V^

Arne 3, 2014

t

Inv. Nos. A-570-016 and C-570-017

. )‘,?s,; 001

Investigation %

, 731-TA- and 701-TA-

1 Total Pages: SI L4 00

'''P Cl<c• 1).

/OA PUBLIC DOCUMENT

The Honorable Penny Pritzker

Secretary of Commerce

Attention: Import Administration

Central Records Unit, Room 1870

U.S. Department of Commerce

International Trade Administration

14th Street and Constitution Avenue, N.W.

Washington, D.C. 20230

VIA HAND DELIVERY

The Honorable Lisa R. Barton

Secretary

U.S. International Trade Commission

500 E Street, S.W.

Washington, DC 20436

Re: Petitions for the Imposition of Antidumping Duties and Countervailing Duties

on Certain Passenger Vehicle and Light Truck Tires from the People 's

Republic of China

Dear Secretary Pritzker and Secretary Barton:

On behalf of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,

Allied Industrial and Service Workers International Union, AFL-CIO, CLC ("USW" or

"petitioner"), we respectfully submit to the U.S. Department of Commerce ("the Department")

and the U.S. International Trade Commission ("the Commission") the enclosed petitions for the

imposition of antidumping duties and countervailing duties on U.S. imports of Certain Passenger

Vehicle and Light Truck ("PVLT") Tires from the People's Republic of China ("China"). The

FAMember, International Society of Primerus Law Firms

The Honorable Penny Pritzker

The Honorable Lisa Barton

June 3, 2014

USW is a recognized union which is representative of the domestic industry engaged in the

manufacture of PVLT tires in the United States, within the meaning of 19 U.S.C. § 1677(9)(D).

These petitions are organized as follows:

• Volume I — General Issues and Injury;

• Volume II— Antidumping Duty Petition; and

• Volume III — Countervailing Duty Petition.

Certification of Simultaneous Filing: Pursuant to section 351.202(c) of the Department's

regulations and section 207.10(a) of the Commission's regulations, we hereby certify that the

petitions and all required copies were filed simultaneously today with both the Department and

the Commission.

Certifications: We attach to this cover letter all appropriate certifications required by the

regulations. These include the requisite company and counsel certifications regarding the

completeness and accuracy of the information contained in the petitions.

If you have any questions regarding this petition, please contact the undersigned.

Trade Consultants:

Jessica Wang

David De Prest

STEWART AND STEWART

Terence P. Stewart, Esq.

Geert De Prest, Esq.

Elizabeth J. Drake, Esq.

Philip A. Butler, Esq.

Jennifer M. Smith, Esq.

Stephanie M. Bell, Esq.

Nicholas J. Birch, Esq.

STEWART AND STEWART

2100 M Street, NW, Suite 200


(202) 785-4185

Counsel for Petitioner

UNION CERTIFICATION

I, Tom Conway, International Vice President (Administration), currently employed by

the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and

Service Workers International Union, AFL-CIO, CLC ("USW), certify that I prepared or

otherwise supervised the preparation of the attached submission of Petitions for the Imposition of

Antidumping Duties and CountervailiniDuties on Certain Passenger Vehicle and Light Truck

Tires from the People's Republic of Ching filed on June 3. 2014 on behalf of the USW. I certify

that the public information and any business proprietary information of the USW contained in

this submission is accurate and complete to the best of my knowledge. I am aware that the

information contained in this submission may be subject to verification or corroboration (as

appropriate) by the U.S. Department of Commerce. I am also aware that U.S. law (including, but

not limited to, 18 U.S.C. 1001) imposes criminal sanctions on individuals who knowingly and

willfully make material false statements to the U.S. Government. In addition, I am aware that,

even if this submission may be withdrawn from the record of the AD/CVD proceeding, the U.S.

Department of Commerce may preserve this submission, including a business proprietary

submission, for purposes of determining the accuracy of this certification. I certify that a copy of

this signed certification will be filed with this submission to the U.S. Department of Commerce.

COUNSEL CERTIFICATION

I, Geert De Prest, with the Law Offices of Stewart and Stewart, counsel to the United

Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service

Workers International Union, AFL-CIO, CLC ("USW"), certify that I have read the attached

submission of Petitions for the Imposition of Antidumping Duties and Countervailing Duties on

Certain Passenger Vehicle and Light Truck Tires from the People's Republic of China filed on

June 3, 2014 on behalf of the USW. In my capacity as counsel of this submission, I certify that

the information contained in this submission is accurate and complete to the best of my

knowledge. I am aware that U.S. law (including, but not limited to, 18 U.S.C. 1001) imposes

criminal sanctions on individuals who knowingly and willfully make material false statements to

the U.S. Government. In addition, I am aware that, even if this submission may be withdrawn

from the record of the AD/CVD proceeding, the U.S. Department of Commerce may preserve

this submission, including a business proprietary submission, for purposes of determining the

accuracy of this certification. I certify that a copy of this signed certification will be filed with

this submission to the U.S. Department of Commerce.

CERTIFICATION OF COUNSEL

City of Washington

SS

District of Columbia

In accordance with section 207.3(a) of the Commission's rules, I, Elizabeth J. Drake, of

the Law Offices of Stewart and Stewart, counsel to Petitioner, the United Steel, Paper and

Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International

Union, AFL-CIO, CLC, certify that (1) I have read the attached submission, (2) based on the

information made available to me by Petitioner, I have no reason to believe that this submission

contains any material misrepresentation or omission of fact, and (3) the information contained in

this submission is accurate and complete to the best of my knowledge.

Dated: June lie 2014

c-JA--aokJ-‘ Elizabeth J. Drake

Sullwusibealopd sworn before me this '2- day of June 2014: %,0 so N G c

s ........ ki4Y

...0Cr 451<;• Z my 4

COMMISSION

EXPIRES z sJ\ 11/30/2016 41 )4)•.. • 4' •;.•

......

17/ OF sitimitito

NOTARY PUBLIC

Inv. Nos. A-570-016 and C-570-017

731-TA- and 701-TA-

BEFORE THE

INTERNATIONAL TRADE ADMINISTRATION

UNITED STATES DEPARTMENT OF COMMERCE

AND THE

UNITED STATES INTERNATIONAL TRADE COMMISSION

In the Matter of:

CERTAIN PASSENGER VEHICLE AND LIGHT

TRUCK TIRES FROM THE PEOPLE'S REPUBLIC

OF CHINA

VOLUME I:

GENERAL ISSUES AND INJURY

PETITIONS FOR THE IMPOSITION OF ANTIDUMPING DUTIES AND

COUNTERVAILING DUTIES ON BEHALF OF THE UNITED STEEL, PAPER AND

FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND

SERVICE WORKERS INTERNATIONAL UNION, AFL-CIO, CLC

Trade Consultants:

Jessica Wang

David De Prest

STEWART AND STEWART

June 3, 2014

Terence P. Stewart, Esq.

Geert De Prest, Esq.

Elizabeth J. Drake, Esq.

Philip A. Butler, Esq.

Jennifer M. Smith, Esq.

Stephanie M. Bell, Esq.

Nicholas J. Birch, Esq.

STEWART AND STEWART

2100 M Street, NW, Suite 200


(202) 785-4185

Counsel for Petitioner

VOLUME I — GENERAL ISSUES AND INJURY

TABLE OF CONTENTS

I. INTRODUCTION 1

II. GENERAL INFORMATION 2

A. The Petitioner (19 C.F.R. § 351.202(b)(1)) 2

B. The Domestic Like Product and the Domestic Industry (19 C.F.R. §§

207.11(b)(2)(i) and (ii), 351.202(b)(2)) 3

1. Physical Characteristics and Uses 4

2. Interchangeability 4

3. Channels of Distribution 5

4. Common Facilities, Processes, and Employees 5

5. Customer and Producer Perceptions 6

6. Price 6

C. Support for the Petitions (19 C.F.R. §351.202(b)(3)) 7

D. Other Forms of Relief (19 C.F.R. § 351.202(b)(4)) 10

E. Description of the Subject Merchandise (19 C.F.R. § 351.202(b)(5)) 11

F. Name of the Country of Manufacture of Subject Merchandise (19 C.F.R. §

351.202(b)(6)) 13

G. Foreign Producers and Exporters (19 C.F.R. § 351.202(b)(7)(ii)(A)) 13

H. Factual Information Relevant to Dumping (19 C.F.R. § 351.202(b)(7)(i)(B)

and (C)) 14

I. Subsidy Allegations and Supporting Factual Information (19 C.F.R. §

351.202(b)(7)(ii)(B) and (C)) 14

J. Volume and Value of Imports (19 C.F.R. § 351.202(b)(8)) 15

K. Importers (19 C.F.R. §§ 207.11(b)(2)(iii), 351.202(b)(9)) 15

L. Pricing Products (19 C.F.R. § 207.11(b)(2)(iv)) 15

M. Lost Sales and Revenues (19 C.F.R. § 207.11(b)(2)(v)) 16

HI. MATERIAL INJURY AND THREAT OF MATERIAL INJURY 16

A. Negligibility 18

B. Conditions of Competition 18

1. Demand 18

2. Supply 20

3. Substitutability 21

C. Volume of Subject Imports 28

D. Price Effects of Subject Imports 32

E. Impact of Subject Imports on the Domestic Industry 40

F. Threat of Material Injury 48

W. CONCLUSION 57

PETITIONS FOR THE IMPOSITION OF ANTIDUMPING AND

COUNTERVAILING DUTIES ON CERTAIN PASSENGER VEHICLE AND

LIGHT TRUCK TIRES FROM THE PEOPLE'S REPUBLIC OF CHINA


I. INTRODUCTION

These petitions are filed on behalf of the United Steel, Paper and Forestry,

Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International

Union, AFL-CIO, CLC ("USW"). These petitions seek the imposition of antidumping

and countervailing duties on imports of certain passenger vehicle and light truck tires

("PVLT tires") from the People's Republic of China ("China"), pursuant to sections 701

and 731 of the Tariff Act of 1930, as amended ("the Act"), 19 U.S.C. § 1671 et seq . The

USW is a recognized union which is representative of the domestic industry engaged in

the manufacture of PVLT tires in the United States, within the meaning of 19 U.S.C. §

1677(9)(D). Based on the information reasonably available to the petitioner and

contained herein, the petitioner believes that imports of PVLT tires from China are being

sold for less than their fair value, are benefitting from countervailable subsidies, and are

causing material injury, or threatening material injury, to the domestic industry producing

PVLT tires.

Volume I of these petitions contains general information (e.g. , the identity of the

petitioner, the domestic industry, industry support, and the description of subject

merchandise) and information supporting allegations that the subject imports are causing

or threatening to cause material injury to the domestic PVLT tires industry. Volume II of

these petitions contains information reasonably available to the petitioner indicating that

PVLT tires from China are being sold in the United States at less than their fair value.

Volume III of these petitions contains information reasonably available to the petitioner

supporting allegations that PVLT tires from China benefit from countervailable subsidies.

II. GENERAL INFORMATION

A. The Petitioner (19 C.F.R. § 351.202(b)(1))

The petitioner is the United Steel, Paper and Forestry, Rubber, Manufacturing,

Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC

("USW"). The address and telephone number of the USW is:

United Steelworkers

Five Gateway Center

Pittsburgh, PA 15222

(412) 562-2400

As explained in more detail in Section II.C, infra, the USW represents workers employed

at domestic producers of PVLT tires, including the Cooper Tire & Rubber Company

("Cooper"), the Goodyear Tire & Rubber Company ("Goodyear"), Michelin North

America Inc. ("Michelin"), and the Yokohama Rubber Co., Ltd. ("Yokohama").

The USW is thus a recognized union which is representative of the domestic

industry engaged in the manufacture of PVLT tires in the United States. The U.S.

International Trade Commission has previously determined that the USW is a union that

is representative of the domestic PVLT tire industry, and it continues to be today. The

USW therefore qualifies as an interested party under 19 U.S.C. § 1677(9)(D). Moreover,

consistent with the statute, Congressional intent, and the agencies' prior practice, a union

'U.S. International Trade Commission, Certain Passenger Vehicle and Light Truck Tires

From China, Inv. No. TA-421-7, USITC Pub. 4085 (July 2009) ("Tires 421 Investigation") at 28

(noting the safeguard petition filed by the USW was filed by a union representative of the

domestic industry). While the China-specific safeguard investigation was governed by a different

statute than these petitions, a number of factual and other determinations made by the

Commission in that investigation are relevant to these petitions and thus cited herein.

1-2

that is representative of the domestic industry has the right to file petitions on behalf of

that industry under 19 U.SC. §§ 1671a(b)(1) and 1673a(b)(1).2 Congress has also

expressed its intent that unions be able to file petitions regardless of company

participation: "{W} orkers, as well as companies, may file and support petitions."3

B. The Domestic Like Product and the Domestic Industry (19 C.F.R. §§

207.11(b)(2)(i) and (ii), 351.202(b)(2))

There is a single domestic like product that is co-extensive with the product that is

the subject of these petitions: PVLT tires. A description of the subject merchandise is

provided in Section ILE, below. The names, addresses, and telephone numbers of all

known domestic producers of PVLT tires is attached at Exhibit I-1.

In its China-specific safeguard investigation on PVLT tires, the Commission

found that domestically produced PVLT tires are "like" PVLT tires from China.4 The

Commission further found that all domestically-produced PVLT tires formed a single

domestic like product, as the various sizes and types of tires, including tires produced for

the replacement and OEM markets, are part of a single continuum of products with no

clear dividing lines. s The Commission also found that all domestic producers of PVLT

tires, and their workers, constituted the domestic industry.6

The domestic like product in these investigations should also be defined as a

single like product, consisting of all PVLT tires, co-extensive with the scope.

Domestically produced PVLT tires are the product which is "like, or in the absence of

2 Id. See also Initiation of Antidumping Investigations; Color Television Receivers From the

Republic of Korea and Taiwan, 48 Fed. Reg. 23,879 (Dep't Commerce May 27, 1983).

3 Sen. Rep. 412, 103rd Cong., 2nd Sess., 35 (1994).

4 Tires 421 Investigation at 9.

5 Id.

61d. at 10.

1-3

like, most similar in characteristics and uses with," subject PVLT tires from China.7

Both the Commission and the Department of Commerce consider six factors in

determining how to define the domestic like product.8 As explained in more detail

below, each of these six factors supports a determination that there is a single domestic

like product that is co-extensive with the scope.

1. Physical Characteristics and Uses

All PVLT tires have the same physical characteristics and uses. The Commission

has explained that all PVLT tires "are produced largely from the same basic raw

materials (e.g., natural and synthetic rubber, carbon black, oils, etc.) and have the same

basic components (e.g., inner liner, body ply, sidewall beads, apex, belt package, tread,

and cushion gum)."9 The Commission also found that all pneumatic rubber tires,

whether for passenger vehicles or light trucks, "have the same basic components, as well

as the same basic function."1° The Commission also found that there were no clear

dividing lines between sizes or types of PVLT tires.11 Finally, all U.S. and Chinese

PVLT tires have the same use — to be mounted on the wheels of passenger vehicles and

light trucks.

2. Interchangeability

While PVLT tires must be of a specific size to fit an individual passenger vehicle

or light truck, tires with different features (load ratings, tread ware, traction, etc.) can fit

the same vehicle and be used interchangeably. Indeed, the direct marketing side-by-side

7 See 19 U.S.C. § 1677(10).

8 See, e.g. , Timken Co. v. United States, 913 F. Supp. 580, 584 (Ct. Inel Trade 1996).


1° Id. at 1-4.

1 1 Id. at 9 n.41.

1-4

to the same consumers of tires with different features for use on the same vehicles, as

evidenced in Exhibit 1-2, further confirms that all types of PVLT tires are

interchangeable.

3. Channels of Distribution

All sizes and types of PVLT tires are sold through the same channels of

distribution. In the China-specific safeguard investigation, the Commission found that

both domestic and Chinese PVLT tires were primarily sold to warehousing distributors,

who in turn sell to consuming contractors or end users.12 By definition, the same sizes

and types of tires are sold in both the OEM and replacement markets, as replacement tires

must meet the same specifications as the OEM tires they are replacing.

4. Common Facilities, Processes, and Employees

All types of PVLT tires share common production facilities, production processes,

and employees. In its China-specific safeguard investigation, the Commission explained

that the tires are made using the same production processes and equipment at the same

facilities and with the same workers:

An estimated 99 percent of tires are produced using a more

or less conventional process, which begins with the mixing

of specific chemicals (natural rubber, synthetic rubber,

carbon black, and other chemicals) to form various rubber

compounds (e.g., the tread is made from one compound,

the carcass from another, and the sidewalls from a third).

The compounds are then combined with the steel cord and

textiles when appropriate, and the whole is formed into a

specific shape (a "green" tire). The green tire is then

cooked (cured) under pressure at about 200 degrees

centigrade (which leads to a non-reversible chemical

change in the compound) to form the hard, resilient type of

rubber found in a finished tire. Depending on the

ingredients used in the various compounds, the finished tire

12 Id. at 9.

I-5

can provide different properties, including good rolling

resistance, superb grip, and so forth .... Virtually all

domestic producers that manufacture the subject tires

produce both passenger vehicle and light truck tires in the

same production facilities using the same production

equipment and production-related workers.13

This continues to be the case today. As the list of facilities making PVLT tires attached

at Exhibit 1-3 shows, of the 23 plants with the capacity to produce passenger vehicle

and/or light truck tires in the United States in January of 2014, 18 of the plants had the

capacity to produce both passenger vehicle and light truck tires.

5. Customer and Producer Perceptions

Customers and producers perceive all PVLT tires as similar products with the

same basic physical properties and essential function. While the tires vary in size

depending on the vehicle or light truck onto which they will be mounted, and while tires

may have various design features, the Commission has found that there are no clear

dividing lines between sizes or types of PVLT tires.14 In addition, while the Commission

found some evidence that there are three "tiers" in the domestic tire market based on

brand and price, it also found that there was no clear dividing line between the alleged

tiers and no consensus as to which types of tires fell into which tiers.15 For further

discussion of these alleged "tiers," please see Section below.

6. Price

PVLT tires are offered along a continuum of prices. While larger tires may in

general be more expensive than smaller tires due to the additional materials needed to

13 Tires 421 Investigation at 8 (citations omitted).

'41d. at 9 n.41.

'51d. at 21.

1-6

produce the tire, there are no clear dividing lines based on price. As the advertising

materials attached at Exhibit 1-2 show, tires of the same type and size are also available

in a range of prices. In addition, the Commission has previously found that while price

has been cited as a basis for different tiers in the tire market, there are no clear dividing

lines between any alleged price tiers and no consensus as to which types of tires fell into

which tiers.16

For all of these reasons, the domestic like product in these investigations should

be PVLT tires, a single domestic like product co-extensive with the scope.

C. Support for the Petitions (19 C.F.R. § 351.202(b)(3))

Under the statute, the petitioner and any other domestic producers or workers

supporting a petition must account for more than 25 percent of the production of the

domestic like product and more than 50 percent of those expressing a position on the

petition.17 Industry support may be measured on the basis of volume or value, and,

where production data is unavailable, the Department of Commerce may refer to

alternative data that is indicative of production levels.18

As far as the petitioner is aware, there is no publicly available information on the

volume or value of PVLT tires production in the United States. There is, however,

publicly available information regarding the production capacities of PVLT tire

producers in the United States. This information, which is current as of January 2014, is

attached at Exhibit 1-3. The petitioner believes that this capacity data is indicative of

production levels. In its China-specific safeguard investigation on PVLT tires from

1 6 Id.

17 19 U.S.C. §§ 1671a(c)(4)(A); 1673a(c)(4)(A).

18 19 C.F.R. § 351.203(e)(1).

1-7

China, the Commission found that the domestic PVLT tires industry operated at capacity

utilization rates ranging from 85.8 to 96.3 percent from 2004 through 2008.19 The

Department has previously relied on capacity as an alternative source of data indicative

of production volumes."

To determine the amount of production (or, in this case, capacity) accounted for

by the USW, the Department of Commerce's regulations require the Department to

"consider the positions of workers and management regarding the petition to be of equal

weight."21 The regulations direct the Department to assign a single weight to the

positions of workers and management according to the production "of the firm in which

the workers and management are employed."22

This regulation is consistent with the Statement of Administrative Action

accompanying the Uruguay Round Agreements Act:

The Administration intends that labor have equal voice

with management in supporting or opposing the initiation

of an investigation. Commerce's implementing regulations

will make clear that in considering the views of labor,

Commerce will count labor support or opposition as being

equal to the production of the domestic like product of the

firms in which the workers are employed. 23

Commerce further explained its practice in the promulgation of the rule regarding worker

support:

19 Tires 421 Investigation at Table III-1.

29 Office of AD/CVD Enforcement, Countervailing Duty Investigation Initiation Checklist,

Certain Steel Grating from the People 's Republic of China (June 22, 2009), at Attachment II, 6.

See also Office of AD/CVD Enforcement, Initiation Checklist, Countervailing Duty Petition on

Certain New Pneumatic Off-the-Road Tires from the People 's Republic of China (July 30, 2007)

at Attachment II, Exhibit A n.2.

21 19 C.F.R. § 351.203(e)(3).

22

23 Statement of Administrative Action ("SAA"), H.R. Doc. No. 103-316, Vol. I (1994) at 862.

1-8

Thus, for example, if a union expressed support for a

petition, the Department would consider that support to be

equal to the production of all of the firms that employ

workers belonging to the union. On the other hand, if

management and workers at a particular firm expressed

opposite views with respect to the petition, the production

of that firm would be treated as representing neither

support for, nor opposition to, the petition. 24

In accordance with this regulation, the Department's consistent practice is to

count the production of firms in which petitioning union members are employed as

supporting petitions when the management of the firm in question takes no position on

the petition. 25 The USW represents workers at four firms that produce PVLT tires in the

United States: Cooper, Goodyear, Michelin, and Yokohama.26 Those four firms have a

daily production capacity of 430.3 thousand PVLT tires per day, a volume equal to 78.6

percent of the domestic industry's total daily production capacity.

24 Antidumping Duties; Countervailing Duties, 61 Fed. Reg. 7307, 7314 (Dep't Commerce

Feb. 27, 1996).

25 See, e.g. , Import Administration, Office of AD/CVD Enforcement, Countervailing Duty

Investigation Initiation Checklist, Drill Pipe from the People 's Republic of China (Jan. 20, 2010)

at Attachment II, n.14. See also Office of AD/CVD Enforcement, Initiation Checklist,

Lightweight Thermal Paper from the People 's Republic of China (Oct. 2007) at Attachment II, 8

n.12; Office of AD/CVD Enforcement, Initiation Checklist, Countervailing Duty Petition on

Certain New Pneumatic Off-the-Road Tires from the People 's Republic of China (July 30, 2007)

at Attachment II, Exhibit An. 1.

26 See Exhibit 1-3.

1-9

Daily PVLT Tire Production Capacity27

Firms Represented by USW Thousand PVLT Tires/Day

- Cooper 97

- Goodyear 1 3 8

- Michelin 1 68 . 5

- Yokohama 26 . 8

Subtotal USW Firms 43 0 . 3

Other Domestic Producers 1 1 6 . 9

Total 547 .2

Support Calculation 78 .6%

Thus, the public information reasonably available to the petitioner demonstrates

that the petitioner accounts for over 25 percent of domestic production and 100 percent of

the production of producers or workers who have expressed a position on the petitions.

The petitioner thus exceeds both industry support thresholds in the statute.28

Should the management of one or more domestic PVLT tire producer oppose

these petitions, we attach at Exhibit 1-5 information indicating such opposition should be

disregarded consistent with 19 U.S.C. §§ 1671a(c)(4)(B) and 1673a(c)(4)(B).

D. Other Forms of Relief (19 C.F.R. § 351.202(b)(4))

The petitioner has not filed for relief from imports of the subject merchandise

under section 337 of the Act (19 U.S.C. § 1337), sections 201 or 301 of the Trade Act of

1974 (19 U.S.C. §§ 2251 and 2411), or section 232 of the Trade Expansion Act of 1962

(19 U.S.C. § 1862).

A petition for China-specific safeguard relief from imports of the subject

merchandise was filed by the USW on April 20, 2009.29 The Commission determined

that PVLT tires from China were being imported in such increased quantities or under

27 See Exhibit 1-4.

28 19 U.S.C. §§ 1671a(c)(4)(A); 1673a(c)(4)(A).


I-10

such conditions as to cause market disruption to the domestic industry, and it

recommended that a remedy be imposed.3° On September 11, 2009, President Obama

issued a proclamation imposing three years of duties on imported PVLT tires from China;

a duty of 35 percent effective from September 26, 2009 to September 25, 2010, a duty of

30 percent from September 26, 2010 to September 25, 2011, and a duty of 25 percent

from September 26, 2011 through September 25, 2012.31 The safeguard duty has now

expired.

E. Description of the Subject Merchandise (19 C.F.R. § 351.202(b)(5))

The scope of these investigations is certain passenger vehicle and light truck tires.

Passenger vehicle and light truck tires are new pneumatic tires, of rubber, with a

passenger vehicle or light truck size designation. Passenger vehicle and light truck tires

are suitable for use on motor cars, including but not limited to sedans, station wagons,

sport utility vehicles, minivans, and vans, and for use on on-the-highway light trucks.

Tires covered by these investigations may be tube-type, tubeless, radial, or non-radial,

and they may be intended for sale to original equipment manufacturers or the

replacement market.

Subject tires have, at the time of importation, the symbol "DOT" on the sidewall,

certifying that the tire conforms to applicable motor vehicle safety standards. Subject

tires may also have the following prefixes or suffix in their tire size designation, which

also appears on the sidewall of the tire:

Prefix designations:

30 1d. at 3 and 30.

31 Proclamation 8414 of September 1 1, 2009, To Address Market Disruption From Imports of

Certain Passenger Vehicle and Light Truck Tires From the People 's Republic of China, 74 Fed.

Reg. 47,861 (Sept. 17, 2009).

P — Identifies a car intended primarily for service on passenger cars;

LT — Identifies a tire intended primarily for service on light trucks

Suffix letter designations:

LT — Identifies light truck tires for service on trucks, buses, trailers, and

multipurpose passenger vehicles used in nominal highway service.

All tires with a "P" or "LT" prefix, and all tires with an "LT" suffix, in their size

designations are covered by these petitions regardless of their intended use.

In addition, the lack of such prefix or suffix designations in a tire's size

designation does not indicate that the tire is outside of the scope of these petitions, as

there are many tire size designations that lack such prefixes and suffixes that are

nonetheless passenger vehicle and light truck tires. A full list of the tire size designations

that indicate the tire is a subject passenger vehicle or light truck tire is published in

the Tire and Rim Association Year Book and updated annually. A copy of these sections

from the 2014 edition of the Tire and Rim Association Year Book is attached at Exhibit

1-6. Any tire of any size designation listed in the passenger car section or light truck

section of the Tire and Rim Association Year Book, as updated annually, is covered by

the scope of these petitions, regardless of the tire's intended use, limited only by the

specific exceptions set out below.

Specifically excluded from the scope of these investigations are the following

types of tires: (1) racing car tires, defined as tires with a "ZR" appearing in the size

designation; (2) new pneumatic tires, of rubber, of a size designation not listed in the

passenger car section or light truck section of the Tire and Rim Association Yearbook;

(3) pneumatic tires, of rubber, that are not new, including recycled and retreaded tires;

and (4) non-pneumatic tires, such as solid rubber tires.

The products covered by the petitions are currently classified under the following

HTSUS subheadings: 4011.10.10, 4011.10.50, 4011.20.10.05, and 4011.20.50.10. For

ease of reference, we attached at Exhibit 1-7 the relevant excerpts from the 2014 edition

of the Harmonized Tariff Schedule. While HTSUS subheadings are provided for

convenience and for customs purposes, the written description of the subject merchandise

is dispositive. Petitioner notes that, during the period of safeguard relief, there were large

increases in imports under two basket categories for other tires not elsewhere classified:

4011.99.45 and 4011.99.85.32 To the extent that tires that meet the scope description are

imported under these or other HTS categories not listed above, they are intended to be

covered.

The requested scope of investigations is attached at Exhibit 1-8.

F. Name of the Country of Manufacture of Subject Merchandise (19

C.F.R. § 351.202(b)(6))

The name of the country in which subject merchandise is manufactured is the

People's Republic of China.

G. Foreign Producers and Exporters (19 C.F.R. § 351.202(b)(7)(i)(A) and

MAD

The names and addresses of companies believed to sell the subject merchandise at

less than fair value, and believed to benefit from countervailable subsidies, that export the

subject merchandise to the United States from China are provided at Exhibit 1-9. The

proportion of exports to the United States that each person accounted for in the most

32 Relevant import statistics are provided at page 1-53.

1-13

recent 12-month period is not publicly available to the petitioner. While there is some

volume reported in the Automated Manifest System, a significant portion of the volume

of exports enters as undisclosed and thus is not identified with any individual foreign

producer or exporter.

In its China-specific safeguard investigation, the Commission determined that the

largest Chinese producers of subject tires were: GITI Tire Investment Co., Ltd., Triangle

Group Co., Ltd., Hangzhou Zhongce Rubber Co., Ltd., Shandong Linglong Rubber Co.,

Ltd., Double Coin Holdings Co., Ltd., Aeolus Tyre Co., Ltd., Qingdao Doublestar

Industrial Co., Ltd., Qingdao Yellow Sea Rubber Co., Ltd., and Guangzhou Pearl River

Rubber Tyre Ltd.33

H. Factual Information Relevant to Dumping (19 C.F.R. §

351.202(b)(7)(i)(B) and (C))

Factual information regarding U.S. prices of subject merchandise is provided in

Volume ll of these petitions. The Department of Commerce has found China to be a

non-market economy. Factual information relevant to the calculation of normal value

under the Department's non-market economy methodology is also provided in Volume II

of these petitions.

I. Subsidy Allegations and Supporting Factual Information (19 C.F.R. §

351.202(b)(7)(ii)(B) and (C))

Subsidy allegations and supporting factual information reasonably available to

petitioner to support these allegations are provided in Volume III of these petitions.

33 Tires 421 Investigation at IV- 1 — IV-2.

I-14

J. Volume and Value of Imports (19 C.F.R. § 351.202(b)(8))

The volume and value of the subject merchandise imported during the most recent

three-year period and other recent periods (2011 through March of 2014) is below.

Imports of PVLT Tires from China34

201 1 2012 2013 Q1 2103 Q1 2014

Customs

Value $968 ,099,864 $ 1 ,266,068 ,467 $2,077 ,678, 896 $437,749,975 $5 1 0,43 5 ,378

Number

of Tires

24'566

'033 3 1 ,484 , 889 50,832 ,749 1 0,269,594 1 2,793 , 1 05

K. Importers (19 C.F.R. §§ 207.11(b)(2)(iii), 351.202(b)(9))

The names, addresses, and other reasonably available contact information for

companies that the petitioner believes import the subject merchandise are attached at

Exhibit I-10.

L. Pricing Products (19 C.F.R. § 207.11(b)(2)(iv))

The petitioner requests the Commission seek pricing information on the following

products:

Product 1. Subject tires, tire size 205/55R16, 89-94 load index, any speed rating.

Product 2. Subject tires, tire size P215/55R17, 93-98 load index, any speed rating.

Product 3. Subject tires, tire size 225/60R16, 97-98 load index, any speed rating.

Product 4. Subject tires, tire size P235/75R15, 104-110 load index, any speed

rating.

Product 5. Subject tires, tire size LT245/75R16, 111-116 load index, any speed

rating.

Product 6. Subject tires, tire size LT265/75R16, 112-116 load index, any speed

rating.

34 USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10, 4011.10.50,

4011.20.10.05, and 4011.20.50.10.

Publicly available information indicates these are among the most popular, and thus

highest volume, tire sizes in the U.S. market, including both the OEM and replacement

markets.35 Consistent with its prior practice, the Commission should seek prices on an

F.O.B. basis to unrelated customers.

M. Lost Sales and Revenues (19 C.F.R. § 207.11(b)(2)(v))

The petitioner represents workers in the PVLT tires industry and thus is not in a

position to provide lost sales and revenue allegations. However, as explained in more

detail below, the domestic PVLT tires industry has lost shipments and market share as

imports of PVLT tires have increased and undersold domestic producers. Thus, the

petitioner has a reasonable basis to believe that significant lost sales and revenues have in

fact occurred during the three years preceding the filing of these petitions.

III. MATERIAL INJURY AND THREAT OF MATERIAL INJURY

This section provides information reasonably available to the petitioner indicating

that the domestic industry is suffering material injury, or threat of material injury, by

reason of subject PVLT tire imports from China.36 In a preliminary determination, the

Commission determines whether there is a "reasonable indication" that an industry in the

United States is materially injured, or threatened with material injury, by reason of

subject imports.37 The statute defines "material injury" as "harm which is not

inconsequential, immaterial, or unimportant."38 In making its injury determination, the

35 Information on popular tire sizes is attached at Exhibit I-11.

36 This section thus complies with the petition requirements set out at 19 C.F.R. §

351.202(b)(10).

37 19 U.S.C. §§ 1671b(a)(1); 1673b(a)(1).

38 19 U.S.C. § 1677(7)(A).

1-16

Commission considers the volume of imports, their effect on prices of the domestic like

product, and their impact on producers of the domestic like product.39 While the statute

does not define "by reason of' — the causal link that must exist between subject imports

and material injury — the Commission determines that injury is by reason of subject

imports where subject imports are "more than a minimal or tangential cause of injury"

and where there is a sufficient causal (not merely temporal) nexus between subject

imports and material injury.40

The Commission considers all relevant factors that bear on the state of the

domestic industry within the context of the business cycle and the industry's conditions

of competition; no single factor is dispositive in the Commission's determination.41

While the Commission must examine factors other than subject imports (such as changes

in demand and trends in non-subject imports) to ensure that it is not attributing injury

from these other factors to subject imports,42 the Commission need not isolate the injury

caused by subject imports from other factors, weigh the injury from subject imports

against the injury from other factors, or determine that subject imports are the principal

cause of injury — the existence of injury caused by other factors does not, in and of itself,

require the Commission to make a negative injury determination.43

39 19 U.S.C. § 1677(7)(B)(i).

4° U. S. International Trade Commission, Certain Aluminum Extrusions from China, Inv. Nos.

701-TA-475 and 731-TA-1177 (Final), USITC Pub. 4229 (May 2011) at 15.

41 19 U.S.C. § 1677(7)(C)(iii).

42 SAA, H.R. Rep. 103-316, Vol. I (1994) at 851-52; S. Rep. 96-249 at 75 (1979); H.R. Rep.

96-317 at 47 (1979).

43 U. S. International Trade Commission, Certain Aluminum Extrusions from China, Inv. Nos.

701-TA-475 and 731-TA-1177 (Final), USITC Pub. 4229 (May 2011) at 16.

I-17

This section is organized as follows. Section 'ILA provides information

demonstrating that imported PVLT tires from China are not negligible. Section III.B

describes the conditions of competition in the market for PVLT tires. Section III.0

provides information on the volume of subject imports, and section IILD provides

information on the price effects of subject imports. Section TILE contains evidence that

subject imports are having significant adverse effects on the domestic industry. Section

IMF addresses the threat of material injury by reason of subject imports.

A. Negligibility

Imports from a country are considered negligible if they account for less than

three percent of the volume of all merchandise imported into the United States during the

most recent 12-month period for which data is available immediately preceding the filing

of the petition. 44 The most recent 12-month period for which import data is currently

available as of the filing of these petitions is the period of April 2013 through March

2014. That data is attached at Exhibit 1-12. Imports from China accounted for 31.41

percent of U.S. PVLT tire import volume during the period, and thus they were not

negligible.

B. Conditions of Competition

1. Demand

Demand for PVLT tires by OEM producers depends on the number of new

vehicles and light trucks produced in the United States.45 Demand in the replacement

market depends on the number of vehicles and light trucks that need replacement tires,

which will depend on the number of vehicles and light trucks on the road, miles driven,

44 19 U.S.C. § 1677(24)(A)(i).

45 Tires 421 Investigation at V-9.

I-18

and economic conditions that influence consumers' decisions as to when to purchase

replacement tires.46

U.S. vehicle and light truck production rose in 2012 and 2013, for a total increase

of more than 25 percent from 8.7 million units in 2011 to 10.9 million units in 2013.47

As the number of vehicles produced rose, so did the number of tires shipped to the OEM

market. Tires shipped to the replacement market dipped in 2012, but they rose in 2013

and were higher than they had been in 2011. Total shipment data for passenger vehicle

and light truck tires from two publicly available sources are below. These include

shipments of domestically-produced tires as well as imports. Both data sources show a

total increase in apparent consumption of about 5 percent from 2011 to 2013. Industry

sources predict that demand will only grow by about 4.2 million tires, or one percent, in

2014.48

Total Tires Shipped in the U.S., All Sources

Millions of tires

RMA data49 2011 2012 2013 % Change

2.4% PV Replacement 1 94.4 1 90.9 1 99 . 1

PV OEM 35 .7 40 43 .6 22 . 1%

LT Replacement 28 . 6 28 . 1 . 28 .4 -0 .7%

LT OEM 4.2 4.3 4 .4 4 . 8%

Total 262 .9 263 .3 275 .5 4 . 8%

46m

47 Sean McAlinden and Yen Chen, "CAR's U.S. Vehicle Sales, Production, & Employment

Outlook — First Quarter — January 2014," Center for Automotive Research, attached at Exhibit I-

13.

48 Bob Ulrich, "The signposts up ahead? Tire sales," Modern Tire Dealer (Jan. 2014) at 30,

attached at Exhibit 1-14.

49 Attached at Exhibit 1-15.

I-19

MTD data5° 201 1 2012 2013 % Change

2 .6% PV Replacement 1 96 . 5 1 92 20 1 .6

PV OEM 3 6 40.5 44 22 .2%

LT Replacement 28 .6 28 .3 28 . 3 - 1 . 0%

LT OEM 4 . 1 4 .2 4 .4 7 . 3%

Total 265 .2 265 278 .3 4. 9%

2. Supply

The Commission previously found that domestic producers of PVLT tires have

the ability to respond to changes in demand with moderate changes in the quantity of

shipments, based on available excess capacity and some ability to produce alternate

products; though supply responsiveness was found to be somewhat constrained by the

domestic industry's limited ability to shift from alternate markets and somewhat limited

inventories.51 Based on publicly available information, it appears that U.S. tire producers

would continue to have a moderate if not higher degree of supply responsiveness today.

As detailed below, domestic shipments have fallen significantly since 2011 due to

displacement by Chinese imports, indicating that there is significant excess capacity and

potentially significant inventories, both of which would support a finding of a moderate

or greater supply responsiveness.

The Commission has also previously found that Chinese producers of PVLT tires

have the ability to respond to changes in demand with moderate changes in the quantity

of shipments, based on available excess capacity, some ability to produce alternate

products, and the ability to divert shipments.52 However, the Commission found that the

5° Attached at Exhibit 1-16.

5 1 Tires 421 Investigation at V-7.

52 1d. at V-8 .

1-20

Chinese industry's supply responsiveness was somewhat limited by reportedly low

inventories.53

The trend in imports from China since 2011 demonstrates that Chinese producers

have the ability to respond to changes in demand with large, not just moderate, changes

in supply.

Imports of PVLT Tires from China54

201 1 2012 2013 Q1 2103 Q1 2014

Customs

Value $968 ,099,864 $ 1 ,266,068 ,467 $2 ,077,678,896 $437,749,975 $5 1 0,43 5 ,378

Number

of Tires

24'566

'033 3 1 ,484, 8 89 50 , 832 ,749 1 0,269,594 1 2,793 , 1 05

From 2011 to 2012, annual U.S. imports of PVLT tires from China rose rapidly,

increasing by nearly 7 million tires, or 28 percent. The increase accelerated sharply after

the safeguard relief expired in September of 2012. In 2013, annual imports jumped by

another 19 million tires, or 61.5 percent. As a result, in the space of just three years from

2011 to 2013, Chinese producers more than doubled their annual exports of PVLT tires to

the United States. The rapid increase has continued in 2014, with first quarter imports up

by 2.5 million tires, or 25 percent, compared to the first quarter of 2013. The supply

from China is thus significant and rising rapidly.

3. Substitutability

The Commission has previously determined that U.S. and Chinese PVLT tires are

highly substitutable.55 As explained in more detail below, that continues to be the case

today.

53 Id.


4011.20.10.05, and 4011.20.50.10.

1-21

Domestic and imported Chinese PVLT tires have the same physical

characteristics and uses. The Commission has explained that domestic and Chinese

PVLT tires are produced from the same basic raw materials and have the same basic

components.56 The Commission also found that domestic and Chinese tires are

"substantially identical in inherent or intrinsic characteristics" and have the same basic

function."

Both domestic and imported Chinese PVLT tires are subject to the same motor

vehicle safety, performance, and marking standards promulgated by the U.S. Department

of Transportation. 58 In addition, domestic and Chinese tires must meet the same Uniform

Tire Quality Grade Standards ("UTQGS"), which are established by the National

Highway Traffic Safety Administation.59 The grades provide consumers with

information on the tread wear, traction, and temperature capabilities of tires, with each

tire graded on all three factors. A copy of the most recent UTQGS ratings, attached at

Exhibit 1-18, shows that both brands made in the U.S., such as Goodyear and

Bridgestone, and brands made in China, such as GT Radial (made by GITI Tire) and

Triangle (made by the Triangle Group), are offered in a wide range of overlapping grades

on all three factors.

55 Tires 421 Investigation at 23 and V-12.

56 Id. at 8.

571d. at 9 and 1-4.

58 See NHTSA, "Importation and Certification Facts," attached at Exhibit 1-17. See also 49

C.F.R. § 571.119.

59 49 C.F.R. § 575.104.

1-22

In addition, as the table below shows, for some of the most popular replacement

tire size ranges, both domestic and Chinese tires are available in overlapping load speed

ranges, treadwear grades, traction grades, and temperature grades.

Physical Characteristics of Chinese and Domestic Tires in Popular Sizes6°

Size Origin

Load Speed Treadwea r

Grades Traction Grades

Temperature

G rades

Lowest H ighest Lowest H igh est Lowest H ighest Lowest H ighest

205/55R16 Ch i na 911 9 1V 340 640 A AA B A

U .S . 89H 9 1Y 40 820 B AA B A

P235/75R15 Ch i na 105S 109T 500 700 A A B B

U .S . 1055 108T 300 800 A A B A

225/60R16 Ch i na 98H 98H 400 400 A A A A

U .S . 981 98V 400 800 A A B A

2 15/60R16 Ch i na 95T 95V 400 640 A A B A

U .S . 94V 95V 260 820 A A B A

P2 15/60R16 Ch i na 941 951 640 760 A A B B

U .S . 945 94V 340 800 B A B A

P265/70R17 Ch i na 1 135 113 S 500 500 A A B B

U .S . 1 13S 1 13T 340 800 B A B A

195/65R15 Ch i na 91T 91H 400 480 A A A A

U .S. 9 1T 95H 400 740 A A B A

195/60R15 Ch i na 88H 88H 400 400 A A A A

U .S . 87S 88V 260 740 A AA B A

Thus, both domestic and Chinese PVLT tires are available in a range of sizes

and with various designs and features (longer or shorter tread wear, better road grip or

handling, etc.). Indeed, as the examples in Exhibit 1-19 show, in some cases the exact

same tire, made by the same company, and marketed under the same brand, is advertised

as being produced in both China and the United States.

Given this high degree of physical similarity along a continuous range of tire sizes

and types, consumers and producers perceive U.S. and Chinese tires as being highly

6° Copies of the advertising materials for these tires are attached at Exhibit 1-2.

1-23

interchangeable. In the China-specific safeguard investigation on PVLT tires, a majority

of producers, importers, and purchasers stated that domestic and Chinese tires were

"always" used interchangeably, while at least 80 percent reported they were either

"always" or "frequently" used interchangeably.6I

When these interchangeable tires compete in the marketplace, they compete on

price. While most purchasers reported that quality was the top factor in their purchasing

decisions for PVLT tires, price was the second most-frequently cited top factor and by far

the most frequently cited second most important factor.62 Moreover, 93 percent of

purchasers reported that Chinese and U.S. tires were comparable in terms of meeting

industry quality standards, 86 percent reported they were comparable in terms of

exceeding industry quality standards, and 71 percent reported they were comparable in

product consistency.63 Thus, when choosing between tires of comparable quality,

purchasing decisions come down to price. In the China-specific safeguard investigation,

25 out of 31 purchasers reported that price was a "very important" factor in their

purchasing decisions.64

U.S. and Chinese PVLT tires compete head-to-head on price and are sold through

the same channels of distribution. In the China-specific safeguard investigation, the

Commission found that both domestic and Chinese PVLT tires were primarily sold to

warehousing distributors, who in turn sell to consuming contractors or end users.65 In

2008, 82.3 percent of domestically produced tires were sold to the replacement market

61 Tires 421 Investigation at V-15.

621d at Table V-4.

63 Id. at Table V-8.


65 Id. at 9.

1-24

and 17.7 percent were sold to original equipment manufacturers.66 These tires

overlapped with imports from China, 95 percent of which were sold into the replacement

market and 5 percent of which were sold to original equipment manufacturers.67

While the Commission has previously found that there is evidence of three "tiers"

in the domestic tire market based on brand and price, it rejected arguments that

competition between U.S. and Chinese tires was attenuated by these tiers. While tires

vary in size depending on the vehicle or light truck onto which they will be mounted, and

while tires may have various design features, the Commission has found that there are no

clear dividing lines between sizes or types of PVLT tires.68 The Commission found that

"both domestic producers and importers ship a relatively full range of passenger vehicle

and light truck tires."69 In addition, the Commission found that there was no clear

dividing line between the alleged "tiers" in the market." Indeed, there was not even any

consensus among producers and purchasers regarding how to define each tier and what

types of tires fell into which tiers.71

Moreover, even if such "tiers" did exist, the Commission found that shipments of

both domestically produced and imported Chinese tires fell into each of the three alleged

"tiers."72 Direct head-to-head competition between U.S. and Chinese tires throughout the

domestic market continues to be the case today.


671d

68 id. at 9 n.41.

69 Id. at 8.

70 1d. at 27.

71 Id.

72 Id.

1-25

U.S. and Chinese tires continue to be sold side-by-side from the same suppliers to

the same customers. A ranking of the top 25 commercial tire dealers in 2013 lists a

variety of brands being sold through each, including in many cases both brands made in

the U.S. and brands made in China.73 Tires made in China and marketed through these

dealers include Aeolus and Double Coin. As shown in Exhibit 1-2, for the most popular

replacement tire sizes, one site that permits consumers to determine the origin of the tire

offers both U.S. and Chinese tires side by side, confirming their head-to-head

competition. Another large tire distributor, Del-Nat, states that it sells tires made both in

the U.S. and overseas under its private label, and it lists manufacturing codes for both

U.S. producers (Cooper, Yokohama) and Chinese producers (CMA and GTC) in its tire

catalog.74

U.S. and Chinese tires also still compete head-to-head in the OEM market.

Attached at Exhibit 1-10 is the list of known importers of PVLT tires from China. A

number of vehicle and light truck OEMs, including Chrysler, General Motors, Hyundai,

Nissan, and Volkswagen, have directly imported tires from China since 2011.

In addition, Chinese and U.S. tires are present in these same channels of

distribution throughout the country, and both serve a national market. As the import data

attached at Exhibit 1-22 shows, subject imports from China entered through 38 different

port districts in 2013, including districts in the Northeast, Midwest, Southeast, Central

Southwest, Mountains, and Pacific Coast.

Finally, PVLT tires are offered along a continuum of prices. While larger tires

may in general be more expensive than smaller tires due to the additional materials

73 The list is attached at Exhibit 1-20.

74 Excerpts from Del-Nat's website are attached at Exhibit 1-21.

1-26

needed to produce the tire, and tires with different features may be priced differently,

there are no clear dividing lines based on price. As the data below show, tires of the

same type and size from both China and the U.S. are available in a range of prices,

further demonstrating a lack of market segmentation based on price. While Chinese

prices are lower on average due to aggressive underselling, both Chinese and U.S. tires

are available at a range of price points.

Price Ranges for Chinese and Domestic Tires in Popular Sizes75

205155R1 6 P2 1 5/60R1 6

U. S . China U.S . China

$ 1 88 . 00

$ 1 57 . 00

$ 1 47 . 00 $ 1 52 .00

$ 142 .00 $ 1 50 .00

$ 1 3 5 .00 $ 1 28 .00

$ 1 3 1 . 00 $ 1 1 7 .00

$ 1 27 . 00 $ 1 1 0 .00

$ 1 25 .00 $ 1 09 .00

$ 1 20 . 00 $ 1 09 .00

$ 1 1 1 . 00 $ 1 03 .00

$ 1 0 1 . 00 $97 .00

$9 1 .00 $95 .00

$89 .00 $93 .00

$87 .00 $93 .00

$86 .00 $9 1 .00

$85 .00 $90 .00

$84.00 $89.00 $89 .00

$79 .00 $86 .00

$74.00 $83 .00

$69 .00 $73 .00

$59. 00 $59 . 00

For all of these reasons, domestic and Chinese PVLT tires continue to be highly

substitutable and they continue to compete head-to-head across the entire domestic

75 Copies of the advertising materials for these tires are attached at Exhibit 1-2.

1-27

market for PVLT tires. Due to this high degree of substitutability, that competition is

based largely on price.

C. Volume of Subject Imports

The volume of subject imports from China is significant. From 2011 to 2013, the

U.S. imported nearly 25 to 51 million PVLT tires a year from China, valued from $968

million to over $2 billion a year. China exported more tires to the U.S. than any other

country throughout the period, and by 2013 it exported more than twice as many tires as

the next largest source. 76

Imports of PVLT Tires from China and the Rest of the World77

Customs

Value,

$mn

201 1 2012 2013 Q1 20 13 Q1 2014

China $968 $ 1 ,266 $2 ,078 $43 8 $5 1 0

Other $7,440 $7,932 $7,65 8 $ 1 ,86 1 $ 1 ,778

World $8 ,408 $9, 1 98 $9,736 $2,298 $2 ,288

China % 1 1 . 5 1% 1 3 . 76% 2 1 .34% 1 9 .05% 22 .3 1 %

Number

of Tires 201 1 2012 2013 Q1 2103 Q1 2014

China 24,566,033 3 1 ,484, 889 50, 832,749 1 0,269,594 1 2 ,793 , 1 05

Other 1 1 5 ,043 ,3 55 1 1 5 ,290,939 1 1 5 ,959,945 27,609,3 82 28 , 1 8 1 ,504

World 1 39,609,3 8 8 1 46,775,828 1 66,792,694 37,878 ,976 40,974,609

China % 1 7 .60% 2 1 .45% 30 .48% 27 . 1 1% 3 1 .22%

The volume of subject imports also increased substantially from 2011 to 2013,

whether viewed by volume or value. By value, annual U.S. imports of PVLT tires from

China rose by $298 million, or 31 percent, from 2011 to 2012. The rate of increase more

than doubled in 2013, after the safeguard duties on PVLT tires from China expired in

76 Though China was the top source by volume in all three years, it was not the top source by

value until 2013.

77USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10, 4011.10.50,

4011.20.10.05, and 4011.20.50.10. Values may not add due to rounding.

I-28

September of 2012. In 2013, annual imports leapt by $812 million, or 64 percent. As a

result, in the space of just three years from 2011 to 2013, Chinese producers more than

doubled the value of their annual exports of PVLT tires to the United States. The rapid

increase has continued in 2014, with first quarter imports up by $73 million, or 16.6

percent, compared to the first quarter of 2013.

In terms of volume, annual U.S. imports of PVLT tires from China rose by nearly

7 million tires, or 28 percent, from 2011 to 2012. Imports increased even more rapidly in

2013, after the safeguard duties on imports of PVLT tires expired. In 2013, annual

imports jumped by another 19 million tires, or 61.5 percent. As a result, Chinese

producers more than doubled their annual exports of PVLT tires to the United States from

2011 to 2013. The rapid increase has continued in 2014, with first quarter imports up by

2.5 million tires, or 24.6 percent, compared to the first quarter of 2013.

China also accounted for a growing share of U.S. imports over the period.

Imports from China reached 21.3 percent of all imports by value and 30.5 percent by

volume in 2013; nearly twice China's import market share in 2011. Imports from China

continued to grow in the first quarter of 2014, hitting 22.3 percent of imports by value

and 31.2 percent by volume.

Imports of PVLT tires have also increased relative to domestic production and

relative to domestic consumption. The tables below derive estimated domestic shipments

by subtracting import volume from reports of total shipments in the U.S. market from all

sources, i. e . , apparent consumption, from two industry sources.

Volume of Imports and Domestic Shipments, based on RMA Data78

Million Tires 201 1 2012 2013

Total Consumption 262 . 9 263 . 3 275 . 5

China Imports 24. 57 3 1 .48 50 . 83

Non-Subject Imports 1 1 5 . 04 1 1 5 .29 1 1 5 . 96

Domestic Shipments 1 23 .29 1 1 6 . 53 1 08 . 7 1

Market Share 201 1 2012 2013

China Imports 9 .35% 1 1 .96% 1 8 .45%

Non-Subject Imports 43 .76% 43 .79% 42 .09%

Domestic Shipments 46 .90% 44.26% 39 .46%

China % Dom. Ship 1 9 .93% 27 .0 1% 46 .76%

Volume of Imports and Domestic Shipments, based on MTD Data79

Million Tires 201 1 2012 2013

Total Consumption 265 .20 265 .00 278 .30

China Imports 24. 57 3 1 .48 50 . 83

Non-Subject Imports 1 1 5 .04 1 1 5 .29 1 1 5 .96

Domestic Shipments 1 25 . 59 1 1 8 .22 1 1 1 . 5 1

Market Share 201 1 2012 2013

China Imports 9 .26% 1 1 . 8 8% 1 8 .27%

Non-Subject Imports 43 .38% 43 . 5 1% 4 1 . 67%

Domestic Shipments 47 .36% 44 .6 1% 40 . 07%

China % Dom. Ship 1 9 .56% 26 .63% 45 . 59%

As imports of PVLT tires from China grew each year, they steadily gained market

share entirely at the expense of U.S. producers. From 2011 to 2013, China increased its

annual exports to the U.S. by more than 26 million tires, while domestic producers'

78 RMA consumption data is in Exhibit 1-15. Chinese and non-subject imports are from

USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10, 4011.10.50,

4011.20.10.05, and 4011.20.50.10. Domestic shipments are the difference between consumption

and imports.

79 MTD consumption data is in Exhibit 1-16. Chinese and non-subject imports are from

USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10, 4011.10.50,

4011.20.10.05, and 4011.20.50.10. Domestic shipments are the difference between consumption

and imports.

1-30

shipments fell by more than 14 million tires. Non-subject imports remained essentially

flat. As a result, imports from China doubled their share of the U.S. market, growing

from 9 to 18 percent of apparent consumption from 2011 to 2013. At the same time, U.S.

producers steadily lost market share, shrinking from 47 to 40 percent of the market.

Thus, while China gained nine percentage points of market share, domestic producers lost

seven percentage points of market share.

Imports from China also increased relative to domestic shipments. While U.S.

producers shipped about five tires for each tire shipped by China in 2011, that ratio fell to

about 3.7 tires in 2012, and it fell again to barely over two U.S. tires for each tire from

China in 2013. In short, the ratio of Chinese to domestic tires more than doubled as

imports from China surged and domestic shipments fell.

Total consumption data does not appear to be publicly available for the first

quarter of 2014. However, industry sources predict that demand for PVLT tires will only

increase by 4.2 million tires, or 1.5 percent, in 2014 compared to 2013.80 Meanwhile,

imports from China have already grown by 24.6 percent in the first quarter of 2014

compared to the first quarter of 2013. Thus, imports from China are likely growing

sixteen times more rapidly than demand, meaning China is continuing to gain more

market share at the expense of domestic producers in 2014.

In sum, whether viewed by volume or value, and whether on an absolute or

relative basis, the data support a fmding that the volume of subject imports from China is

significant. In a flat to slow-growing U.S. market, Chinese imports increased

significantly each year, permitting China to double its imports and market share from

8° Bob Ulrich, "The signposts up ahead? Tire sales," Modern Tire Dealer (Jan. 2014) at 30,


1-31

2011 to 2013. That growth continues in 2014. Subject tires took this market share

directly from domestic producers, as each lost domestic shipment and lost percentage

point of domestic market share corresponded with an even larger gain by Chinese

imports.

D. Price Effects of Subject Imports

In evaluating the price effects of subject imports, the statute directs the

Commission to consider whether: 1) there has been significant price underselling by the

imported merchandise; and 2) the effect of imports of such merchandise otherwise

depresses prices to a significant degree or prevents price increases, which otherwise

would have occurred, to a significant degree.8I

As explained in more detail above, PVLT tires from the U.S. and China are highly

substitutable, and they compete primarily on price across the U.S. market. Publicly

available information indicates that the growing tide of imports from China has had, and

is having, significant adverse price effects on the domestic PVLT tire industry.

In the China-specific safeguard investigation, the Commission found "nearly

universal underselling" by Chinese tires. 82 Indeed, the Commission found underselling

in 119 of the 120 instances where prices could be compared, and the average margin of

underselling was 18.9 percent.83 In 2012, industry sources began to cite concerns that

aggressive underselling and price depression would worsen once the safeguard duties on

PVLT tires from China expired in September of 2012. Since the expiration of the duties,

prices for tires have fallen across the board as more Chinese tires have entered the U.S.

81 19 U.S.C. § 1677(7)(C)(ii).


83 Id. at V-35.

1-32

market and domestic producers have been forced to also lower their prices in order to

compete.

• In its 2012 Annual Report, Hankook tire, a Korean-based company, noted its

concern that, "the race for market dominance is forecast to intensify due to

such issues as the abolition by the US government of protective trade practices

against goods made in China .../)84

• In December of 2012, three months after the safeguard duties expired, a tire

dealer industry publication reported that the expiration of the safeguard duties

led to price concessions from manufacturers to dealers, and this "has

significantly lowered the cost of tires in the value segment — in some cases by

as much as 18%." 85

• The report further explained that expiration of the duties (along with lower

raw materials costs) "has reduced the cost of tires to dealers as these factors

have seemingly caused manufacturers to become more aggressive with price

.... dealers reported that the average cost of a value tire dropped

approximately 10% in October."8'

• Prices for tires in the U.S. market continued to fall in the spring of 2013. A

majority of tire dealers reported more competitive pricing from their suppliers

in March of 2013, with prices dropping both for premium brands and in the

"value spectrum." 87

• A majority of tire dealers continued to characterize manufacturer pricing as

aggressive in July of 2013, as prices for top-selling branded tires and "opening

price point tires" continued to fall. 88

• An article examining the first year of import data after the removal of the

tariffs explained: "The removal of the tariffs also put downward pressure on

pricing in the passenger/light truck end of the market."89

84 Hankook 2012 Annual Report at 49, attached at Exhibit 1-23.

85j0 Healy and Nick Mitchell, "Dealers remain cautious about operating trends going

forward," Modern Tire Dealer (Dec. 18, 2012), attached at Exhibit 1-24.

861d

87j0 Healy and Nick Mitchell, "Service sales are seen as bright spot in an otherwise soft

market," Modern Tire Dealer (May 21, 2013), attached at Exhibit 1-25.

88 Id.

89 "Editorial: Tariffs hampered U.S. passenger, LT production," RubberNews. com (Apr. 7,

2014), attached at Exhibit 1-26.

1-33

• In November of 2013, the President of Yokohama, a domestic producer, stated

that the expiration of the safeguard duties was a long-term concern for the

company. He stated: "Chinese brands are coming into the U.S. market and the

price level is coming down. Cheap tires are coming in and the Tier Two and

Tier Three brands are reducing their prices to compete with the Chinese

product. Then the Tier Two and Tier One have to adjust also.""

• At the end of 2013, domestic tire manufacturers interviewed by an industry

publication "tend to agree that 2013 ended up being a difficult year for the

industry, most notably because of the adjustments that had to be made with

the removal of tariffs on Chinese-made passenger and light truck tires and

low-price product coming in."91

• According to a foreign producer that exports to the U.S., those producers that

did reduce prices to maintain volume in the face of rising Chinese imports did

so "at a cost and that cost was price and profit .... Expectation of price levels

and profit, even though we knew it was going to drop, it was even more

severe than expectations for 2013.92

• One domestic producer, Yokohama, noted its expectations that in 2014 there

would be "increased competition." The Yokohama representative noted:

"There are many low-cost imports, which are impacting everyone in the

market."93

An April 2014 article based on an interview with the president of tire distributor

Del-Nat emphasized how broadly increase Chinese imports had affected the market:

The best advantage Chinese-made tires have to offer is still

price ... with that advantage comes the ability to impact the

market as a whole through price fluctuation. Following the

expiration of the elevated tariffs on Chinese-made

consumer tires in September 2012, prices of Chinese tires

decrease substantially, contributing — along with reduced

raw material prices — to devaluation on tires across the

board."

9° Bob Bissler, "Yokohama plants roots in U.S. soil," Modern Tire Dealer (Nov. 4, 2013),


91 Jennifer Karpus, "Tire makers are optimistic despite economic concerns,"

RubberNews. com (Jan. 30, 2014), attached at Exhibit 1-28.

92 Id.

93 m

" William Schertz, "Del-Nat expanding its Chinese tire offerings," TireBusiness. com (Apr.

28, 2014), attached at Exhibit 1-29.

1-34

The president of Del-Nat explained: "... other manufacturers had to adjust their pricing.

The pricing on the Chinese tires is certainly a strong factor in the market ...."95

Publicly available price data further indicate that there is widespread underselling

by Chinese PVLT tires. As noted above, Commission found "nearly universal"

underselling by Chinese tires in the China-specific safeguard investigation. While the

Commission reviews wholesale, F.O.B. prices to unrelated parties in its investigations,

these prices are not publicly available to the petitioner. However, an analysis of publicly

available retail tire prices for some of the most popular replacement tire sizes reveals that

such massive underselling likely continues, with margins of underselling ranging from

11.90 percent to 40.28 percent, depending on the tire size. These prices are for tires

identified by the advertiser as having China or the U.S. as a country of origin.

Underselling by Chinese PVLT Tires96

Passenger Vehicle Tires

Size

Average

Chinese

Price

Average

U.S . Price

Underselling

Margin

205/55R1 6 $93 . 80 $ 1 06.47 - 1 1 .90%

P23 5/75R1 5 $9 1 .50 $ 1 1 0 . 30 - 1 7 .04%

225/60R1 6 $65 . 00 $ 1 0 1 .2 1 -3 5 . 78%

2 1 5160R1 6 $68 .00 $ 1 05 .22 -3 5 .3 7%

P2 1 5/60R1 6 $86 .33 $ 1 06 . 1 3 - 1 8 .65%

P265/70R1 7 $ 129. 00 $ 1 55 .23 - 1 6 . 90%

1 95/65R1 5 $53 . 50 $84 .00 -36 . 3 1%

1 95160R1 5 $49 . 00 $ 82 .06 -40 .28%

95

96 The advertisements that are the sources for these prices are attached at Exhibit 1-2. The

prices are for tires that are advertised as being available at a certain price either with a U.S. or

Chinese origin. In cases where the same tire is advertised as being available at the same price

from both the U.S. and China, the price of the tire is included as an observation for both

countries.

1-35

Light Truck Tires

Size

Average

Chinese

Price

Average

U.S. Price

Underselling

Margin

LT245/75R1 6 $ 1 3 8 . 00 $ 1 86. 8 5 -26. 1 4%

LT265175R1 6 $ 148 .67 $ 1 90.03 -2 1 .77%

LT23 5/85R1 6 $ 1 26 . 50 $ 1 78 . 90 -29 .29%

LT225/75R1 6 $ 1 28 . 50 $ 1 67 . 53 -23 .3 0%

3 1 x 1 0 . 50R1 5 $ 1 1 9.00 $ 1 59 . 8 8 -25 . 57%

LT2 1 5/85R1 6 $ 1 1 9 .00 $ 1 85 .77 -3 5 . 94%

LT245/75R1 7 $ 1 6 1 . 00 $ 1 95 .42 - 1 7 .6 1%

LT285/70R1 7 $ 1 87 . 00 $242 .63 -22 . 93%

Underselling is also apparent in the retail prices advertised for tires with brands

closely associated with either U.S. or Chinese producers. While some of the tires with

these brands may also be produced in other countries, the countries of origin of the tires

are not publicly available. The comparisons provide further indication of underselling by

Chinese imports.

Underselling by Chinese PVLT Tire Brands97

Passenger Vehicle Tires

Size

Average

Chinese

Price

Average

U.S. Price

Underselling

Margin

205/55R1 6 $48 . 99 $86 . 99 -43 . 68%

P23 5/75R1 5 $86 .49 $ 1 02 .99 - 1 6. 02%

P225/60R1 6 $60.49 $ 1 02 .60 -4 1 .04%

P2 1 5/60R1 6 $6 1 . 99 $96 .3 9 -3 5 .69%

P265/70R1 7 $ 1 29 . 00 $ 1 52 . 80 - 1 5 .58%

97 The advertisements that are the sources for these prices are attached at Exhibit 1-30.

1-36

Light Truck Tires

Size

Average

Chinese

Price

Average

U.S. Price

Underselling

Margin

LT245/75R1 6 $ 1 3 8 .00 $ 1 80 .79 -23 . 67%

LT265/75R1 6 $ 126 . 99 $ 1 57 . 99 - 1 9 .62%

LT265/70R1 7 $ 1 3 6 .49 $2 1 6 . 3 7 -36 . 92%

LT235/85R1 6 $ 1 1 0 .32 $ 1 84. 62 -40 .24%

LT225/75R1 6 $95 .49 $ 1 7 1 .49 -44 . 32%

LT285/75R1 6 $ 1 67 .49 $223 .4 1 -25 .03%

3 1x 1 0 . 50R1 5 $ 1 1 9 . 00 $ 1 68 . 1 0 -29 .2 1%

LT2 1 5/85R1 6 $ 1 1 9. 00 $ 1 8 1 . 59 -34.47%

LT245/75R1 7 $ 1 6 1 .00 $ 1 98 .49 - 1 8 . 89%

LT285/70R17 $ 1 87 .00 $267 . 85 -3 0 . 1 8%

Publicly available data also indicate there is likely price depression by reason of

imports of PVLT tires, particularly in the period since the safeguard relief expired. This

price depression appears to be accelerating in the most recent period, and in the interim

period it has affected prices in each of the ten-digit HTS categories in which PVLT tires

from China enter the U.S. market.

Average Unit Values of PVLT Tire Imports, 2011 -01 201498

HTS

Number 201 1 2012 2013

Q1

2013

Q1

2014 1 1 to 13 13 to 14

40 1 1 1 0 1 0 1 0 $25 . 88 $23 .66 $23 . 93 $24. 1 8 $22 . 65 -7 . 54% -6. 34%

40 1 1 1 0 1 020 $27 .46 $28 . 1 8 $27 . 50 $28 . 56 $26 .27 0 . 1 5% -8 . 05%

40 1 1 1 0 1 03 0 $33 .98 $33 .40 $32 . 80 $34. 56 $3 1 .32 -3 .49% -9 .3 8%

40 1 1 1 0 1 040 $40 .30 $40 .63 $39.3 1 $4 1 .04 $37 .49 -2 .46% -8 . 66%

40 1 1 1 0 1 050 $43 .04 $44. 87 $42.99 $44 .99 $40 .52 -0 . 1 1% -9 .92%

40 1 1 1 0 1 060 $40 .42 $42 . 12 $44.43 $45 . 09 $42 . 59 9 .92% -5 . 53%

40 1 1 1 0 1 070 $47 . 1 8 $47 . 1 9 $59 .03 $58 .53 $52 .26 25 . 1 2% - 1 0 .7 1%

40 1 1 1 05000 $ 1 3 .70 $ 1 5 .43 $ 1 9. 1 9 $20 .66 $ 1 9 . 72 40 . 1 2% -4 .52%

40 1 1 20 1 005 $62 .32 $68 . 1 7 $64 .76 $69 . 34 $62 . 33 3 .92% - 1 0. 1 1%

40 1 1 2050 1 0 $62 .5 1 $67 . 1 5 $73 . 57 $74.40 $57 . 8 1 1 7 .69% -22 .29%


4011.20.10.05, and 4011.20.50.10. Values are customs values.

I-37

From 2011 to 2013, the average unit value per tire in most categories increased; however,

for four categories, the average unit value of imports from China fell in absolute terms

from 2011 to 2013. Price depression became more widespread in the most recent period.

In the first quarter of 2014, the average unit values of PVLT tires imported from China

were lower than they had been in the first quarter of 2013 in every single HTS category,

sometimes by substantial amounts.

The price depression accelerated after the removal of safeguard duties in

September of 2012. While in some cases average unit values remained stable shortly

after removal of relief, by the third quarter of 2013, values were below 2012 third quarter

levels for six out of ten products (including the five highest volume products, which

accounted for 83 percent of imports from China in 2013). Average unit values have

continued to fall since that time, with first quarter 2014 values below the third quarter

2013 value for seven out of ten products, again including the five highest volume

products.

Quarterly Average Unit Values of

Five Highest Volume Tire HTS Categories from China99

$50

.. '1'0. .... 00

•

acm• ,,,,, ,.,, ,,,,, c,,, t.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . at

$75

$45 $70

$40

$35

$30

$25

032012 042012 01 2013 022013 Q32013 Q42013 01 2014

PV 14" Rim 04 CM

$65

$60

$55

$50

PV 15" Rim ,==, PV 16" Rim PV 17" Rim IT Radial

In addition to underselling and price depression, the domestic industry may have

suffered price suppression by reason of Chinese PVLT tire imports. Unfortunately,

domestic producers do not publicly disclose their sales revenue and costs of goods sold

on a detailed enough basis to determine the precise extent of the cost-price squeeze the

industry may have suffered over the period. '°°

In sum, publicly available data indicates that there is widespread underselling by

Chinese PVLT tires, including in some of the most popular tire sizes and by significant

margins. In addition, average unit values for imports from China indicate there has also

been price depression over the period, particularly as import volumes continued to rise


4011.20.10.05, and 4011.20.50.10. Values are customs values. Volume by HTS subheading is


100 For further discussion of this issue, see Section III.E, below.

1-39

after the termination of safeguard relief. These data are consistent with industry

statements indicating that domestic tire prices have been falling due to the increase in

Chinese tire imports, and that the pricing pressure is affecting the whole range of tires on

the market.

E. Impact of Subject Imports on the Domestic Industry

Rapidly rising imports of PVLT tires from China have had significant adverse

impacts on the domestic PVLT Tire industry.

As imports have gown, the domestic industry has lost shipment volume and

market share. The steady losses have coincided exactly with the steady increases in

imports from China.

Volume of Imports and Domestic Shipments, based on RMA Data '°'

Million Tires 201 1 2012 2013 1 1 to 13

China Imports 24.57 3 1 .48 50 . 83 + 1 06 . 88%

Domestic Shipments 1 23 .29 1 1 6 . 53 1 08 . 7 1 - 1 1 . 8 3%

China Share 9 .36% 1 1 .97% 1 8 .40% +9 .04%

Domestic Share 46 .90% 44.26% 3 9 .46% -7 .44%

Volume of Imports and Domestic Shipments, based on MTD Datal°2

Million Tires 201 1 2012 2013 1 1 to 13

China Imports 24.57 3 1 .48 50 . 83 + 1 06 . 88%

Domestic Shipments 1 25 . 59 1 1 8 .22 1 1 1 .5 1 - 1 1 .2 1 %

China Share 9 .26% 1 1 . 8 8% 1 8 .27% +9 .0 1%

Domestic Share 47 . 36% 44 .6 1% 40 .07% -7 .29%

As imports of PVLT tires from China grew each year, they steadily gained market

share entirely at the expense of U.S. producers. From 2011 to 2013, China increased its

'Chinese and non-subject imports are from USITC Trade DataWeb, U.S. Imports for

Consumption, for HTS 4011.10.10, 4011.10.50, 4011.20.10.05, and 4011.20.50.10. Domestic

shipments are the difference between RMA consumption data in Exhibit 1-15 and total imports.

IO2 Chinese and non-subject imports are from USITC Trade DataWeb, U.S. Imports for

Consumption, for HTS 4011.10.10, 4011.10.50, 4011.20.10.05, and 4011.20.50.10. Domestic

shipments are the difference between MTh consumption data in Exhibit 1-16 and total imports.

1-40

annual exports to the U.S. by more than 26 million tires, while domestic producers lost 14

million tire shipments. While China's shipments more than doubled, U.S. shipments fell

by 11 percent.

As a result, imports from China doubled their share of the U.S. market, growing

from 9 to 18 percent of apparent consumption from 2011 to 2013. At the same time, U.S.

producers steadily lost market share, shrinking from 47 to 40 percent of the market.

Thus, while China gained nine percentage points of market share, domestic producers lost

seven percentage points of market share.

For every tire shipment and percentage point of domestic market share lost by

U.S. producers during the period, Chinese producers gained all of the lost shipments and

share and more.

While there is no publicly available data on the value of U.S. producers'

shipments from U.S. plants during the period, as noted above media reports indicate that

prices from many suppliers were driven down, particularly in 2013 and 2014, as imports

from China rose and entered at falling prices. Thus, it is likely that the value of domestic

shipments declined as quickly, if not more quickly, than domestic shipment volumes.

Members of the domestic industry explained that these negative impacts were the

direct result of rising imports, particularly from China. In its 2013 Annual Report,

Cooper Tire & Rubber Co. noted that its reduced volume of sales in North America in

2013 "is a result of increased competition from imports."103 Similarly, the Chief

Operating Officer of Yokohama explained as follows in a 2014 interview: "The total

demand for consumer tires was up vs. 2012, but the market share for the U.S. industry as

103 Cooper Tire & Rubber Co. 2013 Form 10-K at 22, attached at Exhibit 1-32.

1-41

a whole was down due to the continued influx of Chinese imports."104 Another article

explained that the "increases in imports [from China] came at a time when overall U.S.

tire replacement shipments were slumping, meaning imports' share grew at the expense

of domestic production."105

The fact that rising imports of Chinese tires directly replaced domestic shipments

was further confirmed by the fact that in the fall of 2012, after the safeguard duties ended,

"more than 20% of the dealers reported a change in their top-selling tire brand to a

Chinese model."106 In the spring of 2013, a number of private brand companies were

reported to be "turning increasingly to Chinese tire company-owned brands," and new

sourcing agreements with Chinese producers were entered into by distributors including

Tire Alliance Groupe, Independent Tire Dealers Group, TBC Corp., Horizon Tire Corp.,

and Del-Nat Tire Corp.1°7

The growth in Chinese shipments at the expense of U.S. producers was also

evident in the growing presence of Chinese brands and suppliers in the U.S. market. One

2013 article estimate that roughly 150 of the 350 or so tire brands available to U.S.

consumers were owned by Chinese tire makers or trading companies or were private

brands made entirely or predominantly in China.108 In 2013, a large Chinese producer,

Aeolus, announced plans to launch its own brand of passenger car and light truck tires in

'° Review and 2014 Outlook with Takayuki Hamaya, Yokohama Tire Corporation's

Chief Operating Officer" (Jan. 13, 2014), attached at Exhibit 1-33.

108 Bruce Davis, "Chinese post-tariff tire imports surging," TireBusiness. com (Jan. 22, 2013),


1°6 John Healy and Nick Mitchell, "Dealers remain cautious about operating trends going

forward," Modern Tire Dealer (Dec. 18, 2012), attached at Exhibit 1-24.

1°7/d.

108 Bruce Davis, "Post-tariffs surge in Chinese tires, brands," TireBusiness.com (May 15,


1-42

the U.S.1°9 Another Chinese producer, Double Coin Holdings Ltd., also announced plans

to launch new PVLT tire products in the U.S. in 2013.110

Out of roughly 150 tire company exhibitors at a 2012 event for the industry, more

than 50 were Chinese companies, including a dozen or so new companies that had not

previously been participating in the market.111 By the time of the same exhibition in the

fall of 2013, more than 90 Chinese tire companies participated.112 There were "plenty of

new passenger car and light truck tires from China" at the exhibition, and "almost every

type of tire was available" from the Chinese companies at the show.113 The article about

the 2013 exhibition concludes: "The Chinese companies are making their move." 114

In addition to the negative impact on domestic shipments, it appears that the

growing tide of Chinese tire imports also led domestic producers to reduce the amount of

production capacity allocated to PVLT tires. According to capacity data reported by

Modem Tire Dealer, the capacity to produce PVLT tires in U.S. plants fell from 589.3

million tires a day as of January 1, 2011 to 547.2 million tires a day as of January 14,

2014.115 This is a seven percent decrease in industry capacity over the period.

While production data for U.S. producers' domestic operations is not publicly

available, as least one producer, Cooper Tire, reported production curtailments in 2014 at

1 °9 Id

1 10 Bruce Davis, "Chinese post-tariff tire imports surging," TireBusiness. com (Jan. 22, 2013),


111 Bruce Davis, "Post-tariffs surge in Chinese tires, brands," TireBusiness.com (May 15,


112 Bob Ulrich, "Chinese tire companies invade Las Vegas," Modern Tire Dealer (Nov. 11,


"31d.

114m

115 Capacity data is attached at Exhibit 1-37.

1-43

its North American facilities.116 In addition, as noted above, domestic shipments fell 11

percent from 2011 to 2013. If production did not decline by a similar amount, it means

the domestic industry is burdened with growing inventories. If production did decline by

the same 11 percent as shipments, it indicates that domestic capacity utilization rates also

fell, as production dropped more quickly than capacity. The tires industry is highly

capital-intensive, making any decline in capacity utilization particularly problematic for

the domestic industry.

In addition to declines in shipments, market share, capacity, and capacity

utilization, there appears to have been a decline in domestic employment during the

period as Chinese imports rose. In 2011, Goodyear's plant in Union City, Tennessee

permanently closed, eliminating approximately 1,800 jobs at the facility.117 The workers

were certified for Trade Adjustment Assistance, based on the Department of Labor's

finding that increased imports of PVLT tires contributed importantly to the workers' job

loss.118 In October of 2013, Michelin announced it was going to lay off nearly 100

workers at its PVLT tire plant in Tuscaloosa, Alabama.119 According to the president of

the United Steelworkers local representing workers at the plant, the layoffs were due to a

soft economy as well as "import competition."12°

None of the publicly traded companies that produce PVLT tires in the United

States reports U.S. production, sales, costs of goods sold, employment, operating income,

116 "Failed merger contributed to lower income for cooper," RubberNews.com (Mar. 14,


117 "Goodyear Closes Tennessee Plant" (Feb. 10, 2011), attached at Exhibit 1-39.

118 TAA Certification No. 75,252, attached at Exhibit 1-40.

119 Miles Moore, "Michelin to lay off nearly 100 at Goodrich plant in Ala.," RubberNews.com

(Oct. 14, 2013), attached at Exhibit 1-41.

'201d.

I-44

or capital investments in a sufficiently detailed matter to enable an analysis of domestic

industry trends over the period. 121 While some companies report certain line items for

the North American market, these line items are unrepresentative for several reasons.

First, they include all tires, including bus, truck, off-the-road, agricultural, and other tires,

and thus are not limited to PVLT tires.122 Second, they include sales in Canada and

Mexico, as well as the United States. Third, they include the companies' production

operations in Canada and Mexico. As demonstrated in Exhibit 1-3, four U.S. producers —

Bridgestone, Goodyear, Michelin, and Pirelli — also have facilities in Canada and/or

Mexico. 123 Fourth, sales in the U.S. would include not only sales of domestically-

produced tires, but also sales of tires imported into the U.S. from other countries. As

shown in Exhibit 1-10, each of the domestic producers also imports at least some PVLT

tires into the United States from other countries, including China. In addition to their

offshore locations in China, Canada, and Mexico, U.S. companies have operations in

other countries that are significant import sources for the U.S., including Indonesia,

Taiwan, and Thailand.124 For all of these reasons, figures on North American sales and

income in the companies' financial statements do not provide reliable indications of the

fmancial performance of the companies' U.S. PVLT tires operations.

121 See annual report excerpts, attached at Exhibit 1-42. Bridgestone does not report any

items for the North American region but only the Americas, which includes Latin America.

Specialty Tire is not publicly traded.

In See id.

123 Bridgestone has plants in Joliette, Quebec, Monterrey, Mexico, and Cuernavaca, Mexico.

Goodyear has plants in Medicine Hat, Alberta and Napanee, Ontario. Michelin has three plants in

Nova Scotia and one in Queretaro, Mexico. Pirelli has a plant in Guanajuato, Mexico.

124 U producers' global locations are attached at Exhibit 1-43.

1-45

There is, however, anecdotal evidence that U.S. producers' fmancial performance

likely suffered as shipments, market share, capacity, capacity utilization, and employment

declined while aggressively priced imports of PVLT tires from China increased.

At the end of 2013, domestic tire manufacturers interviewed by an industry

publication "tend to agree that 2013 ended up being a difficult year for the industry, most

notable because of the adjustments that had to be made with the removal of tariffs on

Chinese-made passenger and light truck tires and low-price product coming in.51125

According to a foreign producer that exports to the U.S., those producers that did reduce

prices to maintain volume in the face of rising Chinese imports did so "at a cost and that

cost was price and profit .... Expectation of price levels of profit, even though we knew it

was going to drop, it was even more severe than expectations for 2013.126 In addition,

one domestic producer, Yokohama, noted: "There are many low-cost imports, which are

impacting everyone in the market."127

The adverse market conditions resulting from the influx of low-priced tires from

China also affected union contract negotiations conducted by two of the largest U.S.

producers in 2013. Goodyear's new contract capped the company's legacy pension

obligations, reduced the percentage of earnings paid out and the maximum annual

payments to employees under the company's profit-sharing plan, and kept overall wage

costs neutral for the company. 128 The contract also gives Goodyear the ability to reduce

125 Jennifer Karpus, "Tire makers are optimistic despite economic concerns,"

RubberNews.com (Jan. 30, 2014), attached at Exhibit 1-28.

128

' 27 1d.

128 See "Goodyear outlines contract details," Modern Tire Dealer (Aug. 27, 2013), attached at

Exhibit 1-44. See also Goodyear, "North America United Steelworkers 2013 Agreement

Conference Call" (Aug. 27, 2013), attached at Exhibit 1-45.

1-46

staffing by up to 15 percent at each facility.129 When Michelin completed contract

negotiations in 2013, the company noted that the agreement was reached "in a very cost

competitive and challenging environment."130

Finally, it is worth noting that, in the recent past, rising import volumes from

China have led to deteriorating financial performance for the domestic industry and

resulted in the closure of U.S. facilities where profits appeared to be inadequate to sustain

continued production. In the China-specific safeguard investigation, the Commission

found that there was "a direct and significant connection" between rapidly rising imports

of PVLT tires from China and the domestic industry's deteriorating financial

performance and declining capacity, production, shipments, and employment.131 In that

case, imports had tripled over a five year period, coinciding with a decline in the

domestic industry's operating income, which was negative at the end of the period as

imports peaked.132 The Commission also found that "the substantial reduction in

domestic capacity and the closures of U.S. plants during the period examined were

largely in reaction to the significant and increasing volume of subject imports from China

'9133

In 2013, imports of PVLT tires from China exceeded 50 million— this is even

higher than the peak of 46 million tires reached in 2008, the last full year previously

'291d.

' 30 "BFGoodrich plant workers ratify agreement," Modern Tire Dealer (Aug. 26, 2013),



'321d at 22-23.

'331d. at 24.

I-47

examined by the Commission.I34 Subject imports have continued to grow in 2014. Thus,

imports are now higher than the large volumes that led to operating losses and plant

closings that were found to demonstrate the existence of material injury in the pre-

safeguard period. As detailed above, declines in shipments, market share, capacity,

capacity utilization, and employment all demonstrate that the domestic industry is again

suffering material injury by reason of PVLT tire imports from China.

F. Threat of Material Injury

The domestic industry is not only suffering material injury at the present time; it

is also imminently threatened with additional material injury absent relief from dumped

and subsidized imports from China.

In assessing the threat of material injury, the statute directs the Commission to

consider, among other factors, the extent of subsidies involved and whether any such

subsidies are prohibited subsidies, unused capacity and capacity expansions, and the

volume and prices of subject imports.135 Each of these factors is met in this case.

First, with regard to subsidies, Volume III of these petitions documents the wide

range of subsidies available to PVLT tire producers in China, including an array of export

subsidies. Export subsidies alleged to benefit PVLT tires producers in China include:

1) Discounted Loans for Export-Oriented Enterprises and Export Loan Interest

Subsidies;

2) Export Seller's Credit;

3) Export Buyer's Credit;

4) Other Export Financing from State-Owned Banks;

'341d. at 22.

135 19 U.S.C. § 1677(7)(F).

1-48

5) Export Credit Insurance Subsidies;

6) Export Credit Guarantees;

7) Provision of Land-Use Rights for FLEs for Less Than Adequate Remuneration

(including based on export performance);

8) Preferential Electricity Rates for Export-Oriented FlEs;

9) Preferential Water Rates for Export-Oriented FIEs;

1 0) Famous Brands Program;

1 1) Export Interest Subsidy Funds for Enterprises Located in Guangdong and

Zhejiang Provinces; and

12) Funds for "Outward Expansion" of Industries in Guangdong Province. 136

As the Commission has recognized, Congress considered export subsidies "to be more

likely to threaten material injury" than purely domestic subsidies "because they are

directed specifically at the export market." 137

The wide array of subsidies available to the PVLT tires industry in China is

specifically designed to increase domestic production and exports. PVLT tires have been

identified by the Government of China as high-tech products for export, meaning that the

government has adopted an official policy of promoting the export of PVLT tires. 138 The

Government of China has also adopted a Tire Industty Policy to encourage the

development of radial tires by Chinese producers. The policy sets target rates for

radialization of the industry and encourages the adoption of new technology to develop

136 See Volume III.

137 Leather Wearing Apparel from Uruguay, Inv. No. 701-TA-68 (Final), USITC Pub. 1144

(May 1981) at 13-14; H.R. Rep. No. 96-317, at 43 (1979).

138 Volume HI of these petitions at 111-7 — 111-8.

1-49

new tire products.139 The Government of China has also adopted policies to develop and

encourage the production of special raw materials for high-performance radial tires.14°

Provincial and local governments have adopted similar policies, including, in 2011, the

government-backed creation of a "Rubber Valley" in Shandong Province to "make the

industry bigger and stronger in fierce international competition." 141

In addition to subsidy programs designed to stimulate exports, the Government of

China has also imposed performance requirements on foreign 'investors that require them

to export in return for investment approval. During the Commission's China-specific

safeguard investigation, Cooper specifically requested that if a quota were imposed it be

administered by the U.S. government so as to permit Cooper to continue exporting tires

from China to the United States, because it was required to export every tire produced at

its plant in Kushan, China from 2008 through 2012: "Cooper explains that it is concerned

about how a quota would be administered procedurally because its business license for its

Kushan plant in China requires Cooper to export all the tires produced in the plant during

the first five years; production at the plant began in February 2008." 142 Such export

requirements, to the extent they continue to apply to other producers in China, pose an

additional threat to the U.S. industry.

Second, publicly available information indicates that these producers are in fact

adding capacity and ramping up production and exports consistent with these policies.

From 2006 to 2012, for example, Chinese tire production ballooned from 280 million sets

'391d. at 111-8 — 111-9.

'401d. at LTI-1 0 — III-1 1.

'411d. at 111-13 — 111-17.

142 Tires 421 Investigation at 34 n.190.

1-50

of tires to 470 million tire sets.143 China accounts for a quarter of global production, and

it is now the world's largest producer and exporter of tires.'" These massive additions to

capacity and production will only continue in the imminent future.

In 2013, tire makers budgeted about $1.4 billion towards expanding and adding

capacity in China.145 A summary of some of the more significant recent and planned

capacity expansion projects in China is below.

• Kenda Rubber Industrial has announced plans to increase capacity in its Tianjin

facility by 5,000 tires a day and in its Shanghai facility by 2,500 tires a day.1"

• Pirelli plans to invest $200 million in its Yanzhou, China plant to more than

double car tire capacity to 10 million units and to increase tire capacity to 850,00

units, making the facility Pirelli's largest in the world. 147

• Techking Tyres has plans to build a new $400 million car and light truck tire plant

in Shandong, China, with an initial capacity of 2 million tires that could increase

to 5 million by 2015.148

• Maxxis International/Cheng Shin International announced a $150 million

investment in a new tire test proving ground next to its plant in Kushan City,

China. 149

• In January of 2014, Yokohama announced that it is building a new passenger car

facility in China, with production slated to begin in April of 2014.1'0

• Bridgestone is planning to invest $140 million to boost car tire capacity at its

plant in Wuxi, China by 31 percent.151

143 Aeolus, "Execute green manufacturing; Lead transformation & upgrading" (2013) at slide

13, attached at Exhibit 1-47.

144

145 Bruce Davis, "Tire makers' infrastructure spending down, but still huge,"

RubberNews. com (Sept. 9, 2013), attached at Exhibit 1-48.

146 Id.

147 id

148 m

'491d.

15° Yokohama, "New Passenger Car Tyre Plant in China" (Jan. 23, 2014), attached at Exhibit

1-49.

Finally, numerous major Chinese producers are engaged in specific projects to expand

capacity and upgrade equipment at their existing plants in China. A list of these projects

is attached at Exhibit 1-51. These expansions will increase the supply available to

swamp lucrative export markets. While China's own automotive market is also growing,

as one U.S. tire distributor observed, "... it's going to be some time before they [China]

can consume a substantial percentage of the tires that they're producing today."152

Third, it is highly likely that a significant portion of this new production will be

directed at the highly attractive U.S. market if relief is not imposed. China has

demonstrated its willingness and ability to rapidly shift export volumes to the U.S.

market when duty relief is not in place.

China's Exports of Passenger Car Tires to the World153

KGs 201 1 2012 2013

U.S . 290,4 1 1 ,987 379,599,0 1 1 56 1 , 874,463

EU 442,687,303 376,5 1 6,958 408,488,469

Japan 3 0,740,2 1 7 36,033 ,054 36,6 1 7 ,664

World 1 ,4 1 9, 865,762 1 ,506,749,790 1 ,755 ,4 1 7, 83 0

U.S . % World 20 .45% 25 . 1 9% 32 .0 1%

Chinese export data show that China has quickly increased export volume to the U.S.

since the safeguard expired in September of 2012. In 2011, the U.S absorbed 20.5

percent of China's passenger car tire exports; by 2013, that share had jumped to 32

percent.

151 "Bridgestone to expand China car tire plant," TireBusiness.com (Oct. 30, 2013), attached

at Exhibit 1-50.

152 William Schertz, "Del-Nat expanding its Chinese tire offerings," TireBusiness. com (Apr.

28, 2014), attached at Exhibit 1-29.

153 Source is China Customs data for HS 4011.10. Export data for light truck tires cannot be

isolated from non-subject heavy truck and bus tires at the six digit level and are thus not included.

1-52

The attractiveness of the U.S. market if duties are not in place is further

demonstrated by the substantial efforts importers undertook to evade the safeguard relief

when it was in place. Del-Nat, a major U.S. dealer cooperative, acquired Free Trade

Zone status for its warehouse specifically so it could import tires from China duty-free

while the safeguard was in place and be able to remove those tires for immediate sale as

soon as the safeguard expired, without waiting for them to be shipped from China.154 As

one article explained: "With the three-year run of elevated tariffs on Chinese consumer

tire imports set to expire on Sept. 26, key players in the field are preparing to resume

shipping [Chinese] tires 'at 12:01 on the 27th' ...."155

In addition, it appears some importers may have sought to avoid the discipline of

the safeguard duties by shipping subject tires through basket "other" tire categories.

"Other" Tire Imports from China156

Million Tires

2007 2008 2009 2010 201 1 2012

1 2 . 14 1 1 . 1 2 1 0 .48 23 .65 2 1 .94 22 .49

The import data show that imports of "other" tires from China were declining steadily

before relief was imposed in September of 2009. Imports in these basket categories more

than doubled the year after relief was imposed, and remained elevated while duties were

in place. This highly unusual pattern further demonstrates Chinese producers' ardent

interest in the attractive U.S. market.

154 Bruce Davis, "Prepping for tariffs' end," TireBusiness. com (Sept. 14, 2012), attached at

Exhibit 1-52.

'551d.

156 USITC Trade DataWeb, Imports for Consumption, for categories 4011.99.45 and

4011.99.85.

1-53

The attractiveness of the U.S. market as the prime target for China's exports is

further demonstrated by the existence of antidumping orders on Chinese tires in other

third country markets. Imports of Chinese passenger car tires are subject to antidumping

measures in Brazil, Egypt, India, Colombia, and Turkey.157 With the exception of the

Turkish measure, these measures were imposed in the last five years.

Fourth, the significant rate of increase of the volume and market penetration of

Chinese imports since 2011, and particularly since safeguard relief terminated in

September of 2012, indicates the likelihood of substantially increased imports in the

imminent future if relief is not imposed. As noted above, Chinese exports of PVLT Tires

to the U.S. more than doubled from 2011 to 2013, and their share of the U.S. market also

doubled. Imports rose by 24.6 percent in the first quarter of 2014, and likely also gained

increased market share given the low projected growth in demand. The tables below

project 2014 annual shipments if China maintains its first quarter rate of growth through

the rest of 2014 and demand in fact rises as slowly as predicted.

157 See G/ADP/N/2521BRA, 28 March 2014, Semi-Annual Report Under Article 16. 4 of the

Agreement: Brazil; G/ADP/N/252/EGY, 17 January 2014, Semi-Annual Report Under Article

1 6. 4 of the Agreement: Egypt; G/ADPN/252/1ND, 15 April 2014, Semi-Annual Report Under

Article 16.4 of the Agreement: India; G/ADP/N/252/COL, 21 March 2014, Semi-Annual Report

Under Article 16.4 of the Agreement : Colombia; and G/ADP/N/252/TUR, 24 January 2014,

Semi-Annual Report Under Article 16. 4 of the Agreement: Turkey. Excerpts attached at Exhibit

1-53. A number of the notifications refer to truck and bus tires, a 6-digit harmonized HS category

in which light truck tires are typically included.

1-54

Volume of Imports and Domestic Shipments, based on RMA Data158

Million Tires 2013 2014e

Total Consumption 275 .5 279 .70

China Imports 50 . 83 63 . 32

Non-Subject Imports 1 1 5 .96 1 1 8 .36

Domestic Shipments 1 08 . 7 1 98 .02

Domestic Share 39 .46% 35 . 04%

Volume of Imports and Domestic Shipments, based on MTD Data159

Million Tires 2013 2014e

Total Consumption 278 .3 282 . 50

China Imports 50 . 83 63 .32

Non-Subject Imports 1 1 5 . 96 1 1 8 .36

Domestic Shipments 1 1 1 . 5 1 1 00 . 82

Domestic Share 40 . 07% 3 5 .69%

If relief is not imposed and dumped and subsidized imports from China are allowed to

continue at their current pace, the domestic industry will sacrifice another four percentage

points of market share and lose more than 10 million tire shipments in 2014 alone. The

loss of 10 million tires is enough to shut down a U.S. tire facility this year. And it would

come on the heels of the 14 million tire shipments the domestic industry has already lost

to Chinese imports from 2011 to 2013.

Plants at risk if relief is not imposed include:16°

158 RMA consumption data is in Exhibit 1-15. Consumption for 2014 is estimated by adding

the 4.2 million additional tire shipments predicted in Exhibit 1-14. Chinese and non-subject

imports are from USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10,

4011.10.50, 4011.20.10.05, and 4011.20.50.10, with annual 2014 imports estimated based on

growth in first quarter 2014. Domestic shipments are the difference between consumption and

imports.

159 MTD consumption data is in Exhibit 1-16. Consumption for 2014 is estimated by adding

the 4.2 million additional tire shipments predicted in Exhibit 1-14. Chinese and non-subject

imports are from USITC Trade DataWeb, U.S. Imports for Consumption, for HTS 4011.10.10,

4011.10.50, 4011.20.10.05, and 4011.20.50.10, with annual 2014 imports estimated based on

growth in first quarter 2014. Domestic shipments are the difference between consumption and

imports.

I-55

• Cooper Tire, Findlay, OH (23,000/day; 8,395,000/year)

• Goodyear, Buffalo, NY (6,500/day; 2,372,500/year)

• Goodyear, Gadsden, AL (26,000/day; 9,490,000/year)

• Michelin, Ft Wayne, IN (30,500/day; 11,132,500/year)

• Michelin, Tuscaloosa, AL (30,000/day; 10,950,000/year)

• Yokohama, Salem, VA (26,800/day; 9,782,000/year)

Indeed, an article published on April 7, 2014 concluded that the rapid rise in Chinese

imports so far, along with a recent announcement that Michelin will phase out car tire

production at a plant in Nova Scotia, is evidence that plants in the U.S. are also "in

1 jeopardy.''

61

The threat of substantially increased import volume if relief is not imposed is also

evident in the aggressive push that Chinese manufacturers have made to ramp up their

presence in the U.S. market since the expiration of the safeguard duties. As detailed in

Section IH.E, above, since the expiration of the safeguard measure, large and rapidly

growing numbers of Chinese producers have courted buyers at industry exhibitions,

numerous tire dealers have announced agreements to source more tires from China, and

Chinese producers have announced plans to establish their own new or expanded

presence in the U.S. market.

Fifth, the prices at which PVLT tires from China are entering the U.S. market are

likely to have a significant depressing or suppressing effect on U.S. prices and are likely

160 Daily plant capacities are attached at Exhibit 1-3. Annual capacity is estimated by

multiplying daily capacity by 365.

161 "Editorial: Tariffs hampered U.S. passenger, LT production," RubberNews. com (Apr. 7,


1-56

to increase the demand for imports even further. As described in Section III.D, above,

average unit values for all categories of tires are lower in the first quarter of 2014 than

they were in the first quarter of 2013, and prices for the highest volume products have

been declining steadily since safeguard relief terminated. Moreover, numerous industry

sources indicate that the plummeting prices for Chinese tires has affected the entire

market, forcing other producers to also lower prices to compete or risk losing volume.

As import prices have fallen, import volumes have risen at the expense of domestic

producers. If duties are not imposed, these trends will only worsen, threatening the

domestic industry and its workers with further injury.

For all of these reasons, the domestic PVLT tire industry and its workers are

threatened with further injury by reason of subject imports if orders are not imposed.

IV. CONCLUSION

Based on the information reasonably available to the petitioner and presented in

these petitions, PVLT tires from China are being dumped in the U.S. market, they benefit

from countervailable subsidies, and they are causing and threatening to cause injury to

the domestic PVLT tires industry. Accordingly, the petitioner respectfully requests that

the U.S. Department of Commerce initiate antidumping and countervailing duty

investigations on imports of PVLT tires from China and issue affirmative determinations

in each investigation. The petitioner further requests that the U.S. International Trade

Commission initiate investigations into material injury, including threat of material

injury, to the domestic industry by reason of subject imports and issue affirmative

determinations of injury.


TABLE OF EXHIBITS

I-1. Domestic Producers of PVLT Tires

1-2. Tire Marketing Materials from tirerack. corn

1-3. North American Tire Plant Capacities, as of Jan. 1, 2014, Modern Tire Dealer

1-4. Industry Support Calculation

I-5. U.S. Tire Producers' Relationships with Chinese Producers and Imports from China

1-6. 2014 Tire and Rim Association Yearbook (excerpts)

1-7. Harmonized Tariff Schedule Excerpts

1-8. Requested Scope Language

1-9. Foreign Producers and Exporters of PVLT Tires from China

I-10. Importers of PVLT Tires from China

I-11. Popular Tire Sizes, 2012

I-12. Negligibility Calculations

1-13. Sean McAlinden and Yen Chen, "CAR' s U.S. Vehicle Sales, Production, &

Employment Outlook — First Quarter — January 2014," Center for Automotive

Research

1-14. Bob Ulrich, "The signposts up ahead? Tire sales," Modern Tire Dealer (Jan. 2014)

1-15. Rubber Manufacturers' Association Press Releases on U.S. Shipments

1-16. U.S. Shipments from Modern Tire Dealer

1-17. NHTSA, "Importation and Certification Facts"

1-18. NHTSA, Consumer Guide to Uniform Tire Quality Grading (July 2013)

1-19. Examples of Tires Made in Both the U.S. and China from tirerack. corn

1-20. "Top U.S. Commercial Tire Dealers," Modern Tire Dealer (Oct. 2013)

1-21. Del-Nat Website Excerpts

1-22. Import Data by Customs District

1-23. Hankook 2012 Annual Report (excerpt)

1-24. John Healy and Nick Mitchell, "Dealers remain cautious about operating trends going

forward," Modern Tire Dealer (Dec. 18, 2012)

1-25. John Healy and Nick Mitchell, "Service sales are seen as bright spot in an otherwise

soft market," Modern Tire Dealer (May 21, 2013)

1-26. "Editorial: Tariffs hampered U.S. passenger, LT production," RubberNews. com (Apr.

7, 2014)

1-27. Bob Bissler, "Yokohama plants roots in U.S. soil," Modern Tire Dealer (Nov. 4, 2013)

1-28. Jennifer Karpus, "Tire makers are optimistic despite economic concerns,"

RubberNews. com (Jan. 30, 2014)

1-29. William Schertz, "Del-Nat expanding its Chinese tire offerings," TireBusiness. com

(Apr. 28, 2014)

1-30. Tire Marketing Materials from simpletire. com

1-31. Import Volume by HTS Subheading

1-32. Cooper Tire & Rubber Co. 2013 Form 10-K (excerpt)

1-33. "2013 Review and 2014 Outlook with Takayuki Hamaya, Yokohama Tire

Corporation's Chief Operating Officer" (Jan. 13, 2014)

1-34. Bruce Davis, "Chinese post-tariff tire imports surging," TireBusiness. com (Jan. 22,

2013)

1-35. Bruce Davis, "Post-tariffs surge in Chinese tires, brands," TireBusiness.com (May 15,

2013)

1-36. Bob Ulrich, "Chinese tire companies invade Las Vegas," Modern Tire Dealer (Nov.

11, 2013)

1-37. North American Tire Plant Capacities, as of Jan. 1, 2011 and Jan. 1, 2014, Modern

Tire Dealer

1-38. "Failed merger contributed to lower income for cooper," RubberNews. com (Mar. 14,

2014)

1-39. "Goodyear Closes Tennessee Plant" (Feb. 10, 2011)

1-40. TAA Certification No. 75,252

1-41. Miles Moore, "Michelin to lay off nearly 100 at Goodrich plant in Ala.,"

RubberNews. com (Oct. 14, 2013)

1-42. U.S. PVLT Tire Producers' Annual Report Excerpts

1-43. U.S. PVLT Tire Producers' Global Locations

1-44. "Goodyear outlines contract details," Modern Tire Dealer (Aug. 27, 2013)

1-45. Goodyear, "North America United Steelworkers 2013 Agreement Conference Call"

(Aug. 27, 2013)

1-46. "BFGoodrich plant workers ratify agreement," Modern Tire Dealer (Aug. 26, 2013)

1-47. Aeolus, "Execute green manufacturing; Lead transformation & upgrading" (2013)

1-48. Bruce Davis, "Tire makers' infrastructure spending down, but still huge,"

RubberNews.com (Sept. 9, 2013)

1-49. Yokohama, "New Passenger Car Tyre Plant in China" (Jan. 23, 2014)

I-50. "Bridgestone to expand China car tire plant," TireBusiness. com (Oct. 30, 2013)

1-51. "Intending Projects," Ch ina Rubber (2013)

1-52. Bruce Davis, "Prepping for tariffs' end," TireBusiness. com (Sept. 14, 2012)

1-53. Excerpts from Semi-Annual WTO Antidumping Reports from Brazil, Egypt, India,

Colombia, and Turkey

consumer tire petition injury narrative

Documents

prest stewart

stewart terence

department of commerce

petitioner union certification

counsel certifications

signed certification

clc usw

appropriate certifications