Sarno is concerned tariffs against China would affect CRRC in city

Sept. 20, 2018 | G. Michael Dobbs
news@thereminder.com

SPRINGFIELD – Mayor Domenic Sarno has entered the controversy about tariffs and international trade by sending a letter last week to United Trade Representative Robert Lighthizer.

According to the Federal Register, the Trump administration is considering a further escalation in the trade war. The Register reported, “On July 6, 2018, China responded to the initial action by imposing increased duties on goods of the United States. In light of China’s decision to respond to the investigation by imposing duties on U.S. goods, the Trade Representative proposes a modification of the action taken in this investigation. The proposed modification is to maintain the original $34 billion action and the proposed $16 billion action, and to take further action in the form of an additional 10 percent ad valorem duty on products of China with an annual trade value of approximately $200 billion.”

Sarno is concerned how such an action would affect CRRC.

The mayor wrote, “I want to comment on the Trump Administration’s Section 301 investigation into the acts, policies and practices of the Government of China as it relates to technology transfer, intellectual property and innovation. Springfield, Massachusetts is home to the world’s largest rail car company, CRRC, which recently invested $95 million in a new facility that opened in 2018 and is now producing rail cars, employing 150 in our City with the average salary of $65,000.  

“It is CRRC’s first North American facility and its success is critical to our city and region’s economy, bringing back manufacturing and skilled labor to our city.  That success is tied not only to the production and jobs created by CRRC, but the supply chain of smaller local businesses that are feeding the facility and creating good paying jobs for our residents.

“We applaud the President’s pledge to addressing unfair trade practices faced by American businesses. However, we are writing today to express our concern that certain items proposed for tariffs in response to these practices would increase the cost of CRRC’s rail cars, which would eventually affect the publicly funded projects and penalize the taxpayers. Specifically, we are concerned that a number of rail cars and bus related goods from Chapter 86 of the Harmonized Tariff Schedule (HTS) will severely undermine the nation’s plans for expansion and moderation of its public mass transit.      

“At this time CRRC has contracts with the Massachusetts Bay Transit Authority (MBTA) and the Los Angeles County Metropolitan Transportation Authority (Metro). These contracts are expected to last for the next five years. The Office of the US Trade Representative’s (USTR) proposes tariff action will have an adverse effect on the cost of these rail cars and our local economy.

“It is our understanding that USTR’s stated objective in the proposed action is to diminish Chinese sponsored acts that harm and deprive US companies from competing in a fair and open market. The application of a tariff on rail cars will not accomplish that goal as there are no U.S. manufacturers of light and heavy rail transit vehicles. All Transit Vehicle Manufacturers are foreign owned. Also, the FAST Act requires all federally funded projects to meet ‘Buy America’ requirement that dictate a minimum value of U.S. manufactured products, components and systems content in each rail car. As an example, CRRC has committed to Los Angeles Metro’s contract to use 70 percent of US-manufactured components and systems in each rail car. CRRC has also committed to performing the final assembly of Metro’s vehicles in Massachusetts.

“Springfield’s objection based on the potential harm the proposed tariffs will have to our local economy is not unique to Western Massachusetts. On behalf of the City of Springfield and a clear appreciation that the taxpayers are funding a portion of funding of the rail cars I urge USTR to remove these rail cars and bus related goods from the list of products that will be subject to 301 tariffs.”

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