Hill Activity

House Passes DR-CAFTA . . . By a vote of 217-215, the U.S. House of Representatives passed the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The successful vote came in the early morning of July 28 with 15 Democrats voting in favor of the deal and 27 Republicans voting against it. Thus far, El Salvador, Guatemala, and Honduras have ratified the agreement and the other Central American signatories are expected to follow suit by the end of the year to enable the agreement to take effect January 1, 2006. SPI joined many business and industry groups in support of the agreement, which will immediately eliminate tariffs on most U.S. plastic resins, machinery, and molds shipped to the DR-CAFTA markets (Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). Tariffs on plastic products will be reduced and eliminated over a 5-10 year period. However, Congressman Mark Souder (R-IN-3rd) reached a deal with the Administration to invoke a special mechanism under the agreement to improve the tariff treatment on plastics products. "We commend President Bush, Ambassador Portman, Secretary Gutierrez and the House Republican leadership for their hard work in paving the way for a successful vote on DR-CAFTA," said SPI President Bill Carteaux. "Congressman Mark Souder also stands out for his strong support of the plastics industry. Through his leadership, we can obtain much quicker tariff relief on processed plastic products shipped to the DR-CAFTA markets." To build upon the momentum of DR-CAFTA's passage, Secretary of Commerce Carlos Gutierrez will be leading a high-level business development mission to Guatemala, El Salvador, and Honduras. See below for more information.

Trade Enforcement Bill Passed . . . A day before passage of DR-CAFTA, the House passed H.R. 3283, the so-called United States Trade Rights Enforcement Act, by a vote of 255-168. Introduced by Representatives Phil English (R-PA) and House Ways and Means Committee Chairman Bill Thomas (R-CA), the bill is aimed at strengthening enforcement of U.S. trading rights, with particular focus on complaints raised about U.S.-China trade relations. While H.R. 3283 contains a number of provisions, the most widely discussed is one that would subject subsidies provided by non-market economy governments, such as China, to the U.S. countervailing duty law. This would require the Commerce Department to investigate allegations by U.S. producers claiming injury from unfair competition with subsidized non-market economy imports. Many U.S. producers have long sought this statutory change because the Commerce Department's current practice excludes non-market economy subsidies from the scope of its unfair trade investigations. A companion bill (S. 1421) was introduced in the Senate by Senator Susan Collins (R-ME). Supporters of H.R. 3283 are calling for quick passage in the Senate when Congress returns from the August recess, however, some lawmakers oppose the subsidies provision. SPI supports H.R. 3283 because it contains elements consistent with SPI's Statement on U.S.-China Trade Relations and will join efforts of other supporters to work for its passage into law.

China Update

China De-Pegs Yuan From the Dollar . . . After a decade of a fixed yuan-dollar exchange rate, the Chinese government announced July 22, that it would permit the yuan value to float against a basket category of currencies. It first revalued the yuan by 2.11%, lowering the yuan value to 8.11%. Under the new system, the People's Republic Bank of China will allow the yuan to float daily within a 0.3 % range from the previous day's level. China recently clarified that the basket of currencies includes the U.S. dollar, euro, yen, South Korean won, and a few other currencies based on China's balance of trade and services. These changes have slightly strengthened the yuan against the dollar. According to NAM's monitor of U.S.-yuan daily exchange rates, as of August 15, the yuan was valued at 8.0971%, a 2.26% appreciation from the level posted prior to the July 22 revaluation. Click here to view NAM's monitor. Most commentators agree that the 2.11% revaluation is not significant in and of itself, but are cautiously optimistic that China's decision marks a significant step toward a market-based exchange rate system as long as Beijing does not intervene to keep the yuan from further appreciation to market-based levels. SPI continues to work with NAM's Sound Dollar Coalition to monitor movements of the yuan and push for concrete results by October when the Treasury Department is due to release its semi-annual report on foreign exchange rate practices of U.S. trading partners. SPI will continue to press the Treasury Department to abide by its pledge to cite China for currency manipulation and take action within the International Monetary Financial system if China has not made a more substantial move by October.

2005 Annual Review of China's WTO Compliance . . . The Office of the U.S. Trade Representative (USTR) has requested comments on China's compliance with commitments made when it joined the World Trade Organization (WTO) in December 2001. USTR is seeking information about China's progress, or lack thereof, in a number of areas including trading rights, subsidies, protection of intellectual property rights, standards, and transparency of laws and regulations. USTR will use the information submitted in the comments to prepare an annual report due to Congress later this year. SPI will prepare a submission that discusses plastics-specific issues. To assist us in providing a comprehensive and thorough analysis of China's WTO compliance and its impact on the plastics industry, we need input/specific examples from our members. We encourage you to use this important opportunity to help ensure that the concerns of SPI's members are included in USTR's analysis. Click here to share your experience in dealings with China.

U.S.-China Partnership Network . . . During the annual meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT) July 12, the two governments signed a Memorandum of Understanding to establish an enhanced export promotion program specifically targeted to U.S. and Chinese small and medium-sized companies. Under the Partnership Network, 14 service centers are set up throughout China to provide market research and trade lead information, matchmaking services for U.S. exporters, and cooperation on mutually beneficial trade exhibitions. U.S. companies interested in learning more about the export promotion resources are directed to contact their nearest Commerce Department U.S. Export Assistance Center or visit www.buyusa.gov/china/en.

SPI Representatives Meet with New Standards Attach´ . . . The Commerce Department recently appointed Mark Lewis as the new Standards Attachéé in China. Lewis, a long-time official in the Foreign Commercial Service, will be assigned to the U.S. Embassy in China and serve as the liaison for all standard-related issues with the Chinese government. SPI representatives recently participated in a series of informal meetings with Mr. Lewis before his departure for his three-year term in Beijing. During this meeting, SPI raised concerns about China's implementation and enforcement of its Food Hygiene Law, which regulates materials used to manufacture products, such as plastics packaging, which come into contact with food for human consumption. SPI urged him to press the Chinese government to accept as valid materials that the U.S. Food and Drug Administration and its counterparts in Europe and Canada have already approved to ensure that China's regulatory regime does not impede market access for U.S. products subject to the Chinese law. SPI also urged Lewis to work with the Chinese government to accept U.S. plastics machinery safety standards, many of which have been developed through active consultation with SPI's Machinery Division.

Trade Enforcement

New Intellectual Property Rights Official Appointed . . . President Bush recently announced the creation of a new senior level position in the Commerce Department to combat intellectual property rights violations. Christian Israel, currently a Commerce Department Deputy Chief of Staff, will lead the Office of the Coordinator for International Intellectual Property Enforcement. Among other duties, Mr. Israel will develop strategies to leverage inter-agency resources to protect U.S. intellectual property rights both domestically and in overseas markets. He will also oversee implementation of the ongoing "Strategy Targeting Organized Piracy ("STOP") program launched in 2004.

Notify U.S. Service Will Help Track Foreign Technical Regulations . . . U.S. interests can receive notice of proposed technical regulations and conformity assessment procedures instituted by WTO members. The National Institute of Standards and Technology (NIST) is now offering a free, Web-based service to alert users to technical regulatory measures contemplated by U.S. trading partners. Users can gain access to the full text of a proposed regulation, which will enable them to identify measures that may impact access to the particular export market. More information and registration for the service is available at www.nist.gov/notifyus.

Trade Agreement and Negotiations

U.S. and India Formalize Trade Working Group . . . U.S. Trade Representative Rob Portman and India's Ministry of Commerce Kamal Nath July 18 announced the creation of the U.S.-India Trade Policy Forum. Led by key trade officials from both governments, the Trade Policy Forum will serve as a formal mechanism for consultations between the countries to discuss bilateral trade issues. Topics on the agenda will include tariff and non-tariff barriers, foreign direct investment, subsidies, customs procedures, standards, protection of intellectual property rights, sanitary and phytosanitary measures, and services. "A bilateral United States-India Trade Policy Forum would ensure as our economic ties grow, our respective agendas receive the attention they deserve. Establishing this Forum demonstrates our mutual respect as trading partners and our commitment to work closely together. Through regular dialogue we hope to be able to resolve issues before they become problems," stated Ambassador Portman. According to USTR, India is the United States' 24th largest export market for U.S. goods. In 2004, U.S. goods exports to India were $6.1 billion. Imports from India were valued at $15.6 billion.

WTO Update

Japan Retaliates for WTO Violation . . . On August 1, Japan announced its decision to impose retaliatory tariffs of 15% on U.S. goods in response to the United States failure to repeal the Continued Dumping and Subsidy Offset Act (CDSOA), otherwise known as "the Byrd Amendment." Japan took this action after a WTO arbitrator authorized it and other U.S. trading partners to impose retaliatory measures if the United States failed to comply with a WTO ruling that the CDSOA violates WTO rules. Japan has targeted 15 U.S. steel and machinery products, none of which relate to plastics industry exports. Japan's action joins the retaliatory tariffs currently being applied by both the EU and Canada. Brazil, Chile, India, Korea and Mexico are the five other WTO members authorized to impose retaliatory tariffs for the same reason. While these trading partners had also threatened to retaliate, none of them have done so to date. According to Inside U.S. Trade, the Office of the U.S. Trade Representative is currently examining whether the value of U.S. goods subject to the retaliatory tariffs imposed by the EU, Canada, and Japan exceed the amount authorized by the arbitrator's ruling. Although Congressman Jim Ramstad (R-MN) has introduced a bill, H.R. 1121, to repeal the Byrd law, there does not appear to be strong support in the House to move the bill forward at this time. SPI continues to monitor developments on this issue.

Doha Round Negotiations Face Difficulties . . . Trade Ministers of WTO members were unable to accomplish the goal of establishing an initial framework for tariff cuts on industrial goods by the end of July. Negotiations on industrial goods were stalled as members faced roadblocks in the agricultural talks due primarily to insistence by developing country members that a preliminary agreement on agriculture is needed before proceeding to further discussions on non-agricultural market access issues. Despite these difficulties, however, U.S. trade officials remain optimistic that the difficult issues can be overcome and, while challenging, expressed their opinion that sufficient progress can be made during the fall to launch actual negotiations on specific tariff rates and other liberalization steps at the WTO Ministerial to be held in Hong Kong in December. SPI continues to monitor developments on the non-agricultural market access negotiations at they related to plastics industry goods.

Export Promotion - Tools to Expand Your Markets

High-Level Business Development Mission to Guatemala, El Salvador and Honduras . . . In the wake of DR-CAFTA's passage, Commerce Secretary Gutierrez will lead a senior-level business development mission to Guatemala, El Salvador, and Honduras on October 16-22, 2005. Mission participants will have the opportunity to meet with high-level government officials in each country, representatives of local chambers of commerce and business associations, and potential customers to explore business opportunities in each country. Food Processing and Packaging, Plastic Resin and Materials, and Medical Equipment are among the targeted sectors for participation in the mission. The registration fee is $7,000 per company (for one representative) and an additional $2,000 for each additional representative. Expenses for travel, lodging and incidentals are the responsibility of the mission participant. The application deadline is September 16, 2005. A maximum of 15 companies will be selected for the mission. These high-level trade missions provide an invaluable opportunity to explore business opportunities and network with senior officials in both the U.S. government and the mission countries. SPI encourages its members to consider taking advantage of this opportunity. More information about the mission is available at www.buyusa.gov/centralamerica/en. You may also contact Karen Toliver at ktoliver@socplas.org; (202) 974-5333 for more information.

NAM Mission to Singapore . . . NAM is sponsoring a trade mission to Singapore on November 7-11, 2005. Singapore is touted as the "gateway" to Asia, and under the U.S.-Singapore free trade agreement, U.S. exports receive duty-free entry into the market. Thus, Singapore can offer lucrative opportunities to expand exports into the Asian region. For a fee of $1,000 (exclusive of hotel and travel arrangements), mission attendees will participate in "match-making meetings" with potential customers and attend networking receptions with local business representatives. Click here for more information. SPI is considering collaborating with NAM on this mission, depending on the level of interest by SPI members. If you are interested in joining this mission, please contact Karen Toliver as soon as possible at ktoliver@socplas.org; (202) 974-5333.

Commerce Department Market Research Reports . . . The Commerce Department U.S. Commercial Service offers a host of services to U.S. companies seeking to export their products. Industry and country market research reports prepared by Commercial Service officers stationed in overseas markets are particularly helpful to get an assessment of domestic market conditions and an understanding of the business climate for entering the particular market. The reports are brief and typically contain contact information to request additional information. The following are highlights of a recent report issued by the Commercial Service related to the plastics sector:

Plastics Machinery - Dominican Republic (July 2005) - The report notes that the plastics industry in the Dominican Republic is one of the largest industries in the Caribbean area. There are approximately 300 companies in the domestic market, most of which are small to medium-sized operations. Plastics processing in the country is comprised of injection molding (housewares, containers, parts), extrusion (pipes and tubes), blow molding (food packaging, bottles, caps), and thermoforming (foam products). The Dominican Republic relies solely on imports because there is no domestic production of plastics machinery and equipment. It suggests that U.S. exporters could increase their sales by offering credit facilities to local buyers.

For more information about SPI Link, mailing list additions/deletions, or to receive the publication by e-mail, contact Paula Weis, (202) 974-5282; e-mail pweis@socplas.org.

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