On 18 June, the U.S. International Trade Commission issued an affirmative determination in its Section 421 safeguard investigation of certain tyres from the Chinese mainland. Two of the three Republicans who make up the six-member commission voted against proceeding with a safeguard action while all three Democrats voted in favour. The investigation covers new pneumatic rubber tyres of a kind used on motor cars (except racing cars) and on-the-highway light lorries, vans and sport utility vehicles, classified under HTSUS subheadings 4011.10.10, 4011.10.50, 4011.20.10 and 4011.20.50. The petition was filed on behalf of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union under Section 421 of the Trade Act of 1974, which implements the transitional product-specific safeguard contained in China's Word Trade Organisation accession agreement. 

Under Section 421, the USITC determines whether a specific product from the mainland is being imported into the U.S. in such increased quantities, or under such conditions, as to cause or threaten to cause market disruption. "Market disruption" is defined as rapidly increasing imports, either absolutely or relatively, so as to cause or threaten to cause material injury to a U.S. domestic industry. If the USITC makes an affirmative determination it proposes a remedy, which the President may or may not implement. The petitioner in this case has requested the establishment of an annual import quota of 21 million units on subject mainland Chinese tyres, which would increase by five percent per year over a three-year period. The petition alleges that this remedy would return mainland Chinese imports to their 2005 levels and provide the domestic industry with the opportunity to significantly increase its production and shipments of consumer tyres. On 29 June, the U.S. International Trade Commission unanimously recommended that the President impose, for the next three years, an additional tariff of 55 percent in year one, going down to 45 percent in year two, and then down to 35 percent in year three (The two commissioners who voted against proceeding with a safeguard action were precluded from participating in the vote on the remedy proposal). 

The case will then move to the Office of the U.S. Trade Representative for further deliberation and recommendation, which is due within 55 days after receipt of the USITC's recommendation. The President will make a final decision concerning whether to provide relief to the industry and the type and duration of any such relief within 10 days of the White House's receipt of the USTR's recommendation.

As previously reported, the probability that the President will grant import relief in this proceeding is fairly high. President Obama told the National Council of Textile Organizations during his presidential campaign that he would decide any Section 421 safeguard cases on their merits rather than on ideological grounds. In addition, administration officials have made clear that ensuring strong trade enforcement will be one of their principal priorities on the trade front. There is no question that a decision to provide relief would encourage several U.S. industries, such as the textile sector, to consider pursuing Section 421 safeguard actions on a range of additional products.