Rubber meets resistance in trade dispute Tractor- tire imports to U.S. from China draw cry of dumping

BY TIMOTHY AEPPEL

At a time of growing trade battles between the U.S. and China, few have turned as strange as the fight over imports of big tires for tractors and other heavy equipment.

Leading the charge against Chinese tires is Maurice "Morry" Taylor Jr., one-time Republican presidential candidate, co-author of the book "Kill All the Lawyers and Other Ways to Fix the Government" and chief executive of tire maker Titan International Inc.

But rather than targeting Chinese producers, Mr. Taylor's latest crusade has evolved into a battle between him and GPX International Tire Corp., a Massachusetts-based tire manufacturer and importer.

In a petition filed with the Commerce Department and the International Trade Commission, Mr. Taylor accuses GPX and other importers of dumping tires subsidized by the Chinese government. "They're violating our laws," he says. "It's that simple."

The case is being watched by some of the country's biggest manufacturers, who need the tires to make mining, agricultural and construction equipment. Many of these so-called off-road tires are in short supply around the world. Curbs on imports as a result of Mr. Taylor's case are already worsening the shortage and pushing up prices.

"This could ultimately hurt our ability to competitively manufacture machines in the U.S.," by raising material costs, says Jack Koch, a Caterpillar Inc. purchasing manager who plans to testify at a hearing before the ITC in July on behalf of the heavy-equipment maker.

Titan, based in Illinois, is among the U.S: s largest producers of offroad tires, competing with industry giants Bridgestone Corp. of J即an, Goodyear Tire & Rubber Co. of Ohio and France's Michelin. petition with the Commerce Department and the ITC seeking duti against a host of Chinese off-

Founded in 1922, GPX began as a scrap and surplus tire dealer. The company, which has annual revenue of more than $500 million, is known for innovative twists, such as redirecting piles of surplus military airplane tires for use on farm equipment and developing heavy-duty offroad tire des堪ns with appealing names, such as the Beefy Baby.

GPX says Mr. Taylor wants to crimp competition and push up prices. "This is Morry's way of trying to stop us from growing," says Bryan Ganz, GPX's chairman and grandson of the company's founder.

Mr. Taylor is well known within the tire industry for his over-thetop "Buy American" television ads.

Cases involving dumping usually involve items that are plentiful, such as steel pipe, where it is easy to see how imports have pushed down prices and taken business away from domestic producers. In the case of offroad tires, prices keep rising and manufacturers say many types of tires are available only in limited supplies. One example: The retail price of a popular size of Titan tractor tire-which stands 69 inches tall and weighs 250 pounds-has gone up about 19% since January, while a comparable GPX tire has gone up even more.

The case began last summer, when Titan and the United Steelworkers union, which represents many of Titan's workers, filed a joint tire producers. In a preliminary finding, the Commerce Department found that China subsidizes its industry, hurting companies like Titan, and it ordered importers of Chinesemade tires to pay duties. GPX was hit with a duty of about 22%, and in March raised its prices. Mr. Ganz estimates the company lost 40% of its U.S. business for replacement tires because of the higher prices.

But the story is far from over. The Commerce Department is due to make its final ruling next month and then, after a hearing before the ITC this summer in which the two sides will have one last chance to state their cases, the ITC will decide how badly all this has hurt the U.S. industry.

The U.S. government could ultimately decide against Mr. Taylor and drop the duties, but the chance of that happening is far from certain given growing hostility in Washington over China's trade practices.

Mr. Ganz says his tires aren't subsidized and that his prices are based on market forces. Moreover, he adds, most of GPX's tires are higherpriced ones that compete directly with Titan in a marketplace where companies p盯more for higherquality brand-name tires.

Although about 50 other Chinese importers are named in the petition, the outcome wouldn't be as critical for them because the U.S. market represents a relatively small share of their business. For GPX, it is 75%.