SPI: International Trade Update

SPI Weekly Newsletter - January 6, 2006

In This Edition

HILL ACTIVITY

Let Your Voice Be Heard in Washington! . . . Participate with SPI in the 2006 Manufacturers' Fly-In hosted by the National Association of Manufacturers (NAM). On February 7 and 8, U.S. manufacturers will convene in Washington to meet with lawmakers to discuss the critical issues impacting manufacturing in the United States. As we are approaching the 2006 mid-term elections, this is a prime opportunity to let federal legislators hear the concerns of the plastics industry. The Fly-In will include events with guest speakers to discuss economic forecasts for manufacturing, innovation, the skills gap, and other challenges that manufacturers confront in today's competitive environment. For more information, or to register for this event please contact Natha Freiburg at (202) 974-5216 by January 20, 2006.

Senate Approves Repeal of the Byrd Amendment . . . As part of the late December budget reconciliation bill, the Senate voted to repeal the Continued Dumping and Subsidy Offset Act (CDSOA), also known as the "Byrd Amendment," named after its chief sponsor Sen. Robert Byrd (D-WV). Under the CDSOA, duties collected by Customs on imports of products subject to antidumping or countervailing orders are distributed to the U.S. companies that petitioned/supported the orders. The Senate vote comes after the House had approved a budget reconciliation package that included the repeal provision. However, when enacted, the repeal will not take immediate effect. Distribution of duties to U.S. companies will continue for goods that are entered before October 1, 2007. Supporters of the repeal legislation hail the measure as long overdue given the WTO's ruling against the Byrd Amendment in 2003. Those against the repeal also claim victory because they view the 2007 effective date as a window to re-visit the matter.

CHINA UPDATE

SPI Will Attend ChinaPlas 2006 . . . SPI representatives will attend this year's ChinaPlas to be held April 26–29 in Shanghai. SPI will promote the U.S. plastics industry and NPE 2006 and meet with Chinese industry and government officials to discuss the plastics industry's concerns. If your company plans to attend and would like SPI to help facilitate meetings with potential business partners, please contact Karen Toliver.

Sen. Schumer Vows to Seek Action on Currency Legislation . . . Prior to the legislative recess, Sen. Charles Schumer (D-NY) publicly announced his intention to seek a vote on the Schumer-Graham bill when the Senate reconvenes this month. The legislation is aimed at addressing China's currency manipulation by imposing a retaliatory 27.5 percent tariff on all Chinese imports. Sen. Schumer expressed dissatisfaction that China has yet to substantially revalue the yuan. Bush Administration officials, however, have repeatedly expressed optimism that the Chinese will allow greater currency flexibility soon. SPI has not supported the Schumer-Graham bill, but had hoped that lawmakers would be willing to discuss alternative measures that could provide tangible relief to U.S. plastics manufacturers adversely impacted by the undervalued yuan. For more information about legislative proposals related to U.S.-China trade, please contact Karen Toliver or Gennie Ross.

TRADE ENFORCEMENT

President Denies Steel Pipe Safeguard against China . . . On December 30, 2005, President Bush refused to impose import restrictions on standard non-alloy steel pipe from China. U.S. steel pipe manufacturers, claiming injury from these Chinese imports, sought such restrictions under a special provision in U.S. trade law known as a "Section 421 safeguard" investigation. Despite a recommendation from the U.S. International Trade Commission (ITC) to impose restrictions via some form of a quota, President Bush determined that such action is not beneficial to U.S. economic interests. The President's decision was the fourth rejection of a Section 421 safeguard petition in recent months, sparking criticism by the steel industry that the Administration is not implementing the special China safeguard mechanism as originally intended. Previously, citing national interests, President Bush also rejected Section 421 safeguards cases against China on ductile ironworks, wire hangers, and pedestal actuators. In the meantime, the U.S. recently announced the launch of a new dialogue on steel issues under the auspices of the U.S.-China Joint Commission on Commerce and Trade (JCCT). Discussions on bilateral steel trade issues in the JCCT context are expected in early 2006.

TRADE AGREEMENTS AND NEGOTIATIONS

Implementation of CAFTA-DR Delayed . . . On December 30, 2005, USTR announced that implementation of the US-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) will be delayed. CAFTA-DR, which comprises Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua, was originally scheduled to enter into effect on January 1, 2006. However, none of the other signatories have completed their internal procedures for the Agreement's implementation. El Salvador is the most advanced in the CAFTA-DR implementation process, while Costa Rica is the furthest behind and has not yet ratified the Agreement. According to USTR, Washington will implement the CAFTA-DR on a rolling basis as countries make sufficient progress to complete their commitments under the Agreement. In the meantime, the U.S. will continue to grant the countries trade preferences under the Caribbean Basin Initiative.

EXPORT PROMOTION – TOOLS TO EXPAND YOUR MARKETS

Commerce Department Market Research Reports . . . The Commerce Department'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. These reports are available on the Commercial Service's export portal at www.export.gov. This site also provides information on the extensive export services offered by the Commerce Department. Following are summaries of the latest reports available online:

Canada's Plastic Resins Market – According to the U.S. Commercial Service in Toronto, "dynamic opportunities exist in Canada for U.S export-ready plastic resin firms." The report notes that demand for resins appears to have recovered after recent setbacks due to macroeconomic factors, such as a stronger Canadian dollar and uncertainty in short-term interest rates. Since 2001, the Canadian resin industry has grown rapidly, and in 2004 was valued at 8.5 billion Canadian dollars ($6.8 billion). The largest segment of plastics usage is the packaging industry (34 percent), followed by the construction industry (26 percent) and the automotive industry (18 percent).

The Industrial Chemicals Market in Venezuela – The report notes that the Venezuelan market has traditionally focused on petrochemicals due to strength of the country's petroleum industry. However, the report stresses that the chemical industry is developing in a more diversified fashion, largely utilizing imported materials and feedstocks. Production of plastic resins is strong, particularly by the state-owned petrochemicals firm, Pequiven.

GLOBAL BUSINESS COUNCIL

GBC Program on Central and Eastern Europe . . . Always at the forefront of global issues impacting the plastics industry, the GBC is organizing a program to be held during NPE 2006. Attendees will hear about developments and business opportunities for plastics manufacturing in Central and Eastern Europe. Stay tuned for more details.

Join the GBC! . . . Does your company experience difficulties in exporting overseas? Are you concerned about import competition in your market? Do you want to have input on planning trade missions to overseas markets and SPI's positions on trade policy matters? Then consider joining SPI's Global Business Council.

The GBC's mission is to increase global awareness and competitiveness by providing resources to SPI members, while fostering growth of the plastics industry worldwide. All SPI members in good standing are eligible to join. If you are interested in joining the GBC, please contact Karen Toliver. More information on the GBC and its activities is available on the SPI website.

The Society of the Plastics Industry, Inc. · 1667 K St., NW, Suite 1000 · Washington, DC 20006-1620