For SPI Members Only – April 14, 2006

In This Edition

Hill Activity | China Update | Trade Enforcement | Trade Agreements and Negotiations | WTO Update | Member Services | Export Promotion | Global Business Council

House Ways and Means Committee Holds Hearing on U.S.–Oman FTA . . . On April 5, 2006, the House Ways and Means Committee held a hearing on the U.S.–Oman Free Trade Agreement (FTA), following the Senate Finance Committee hearing in early March. The United States and Oman completed the deal in October 2005 after only two negotiating sessions. Conclusion of the U.S.–Oman FTA reflects further progress in the Bush Administration’s Middle East Trade Initiative, the ultimate goal being establishment of a U.S.–Middle East Free Trade Area. Because Oman is not a large market for U.S. plastics industry exports, the United States has a substantial plastics trade surplus with the country. U.S. plastics imports from Oman totaled $482 thousand in 2005, while U.S. plastics exports amounted to $5.8 million. Plastics products such as pipes and tubes, kitchenware, and other household items were the top plastics exports to Oman last year. The Oman FTA is expected to pass in both the House and Senate without much controversy despite demands by Democratic lawmakers for stronger labor rights commitments by the Omani government.

View the testimonies presented at the recent House Ways and Means Committee hearing...

SPI Members Urge Treasury to Cite China for Currency Manipulation. . . Last week, through the SPI Political Action Center, SPI members sent over 50 letters to the Treasury Department urging the agency to cite China for currency manipulation in its pending report to Congress on International Economic and Exchange Rate Policies. These members voiced the plastics industry’s longstanding grievances with China’s significantly undervalued yuan. SPI President Bill Carteaux also sent a letter to Treasury Secretary John Snow detailing the adverse impact that the artificially low value of the Chinese yuan has had on U.S. plastics manufacturers. Carteaux stressed that “the distorted yuan-dollar relationship now makes it imperative that the U.S. plastics industry observe a specific course of action to persuade China to move toward a flexible, market-based exchange rate system in the near term.”

SPI Member letters add to the letters submitted by various industry groups also pressing for the citation. Members of the National Association of Manufacturers reportedly submitted hundreds of similar letters. The China Currency Coalition, a group of about 45 manufacturing, service, agricultural, and labor organizations also advocated citing China for currency manipulation, noting that “the yuan’s undervaluation has badly skewed economic fundamentals and basic factors and has compounded the situation by deterring other countries from Japan to India from letting their currencies naturally and realistically rise against the dollar.” Treasury has not officially announced its reaction to these letters, and whether/how it will take into account such comments in its congressional report. It is widely expected, however, that Treasury will hold off releasing the report until after the visit of President Hu Jintao on April 20. Some observers believe that given the recent intensified pressure from U.S. business groups, lawmakers, and the Bush Administration, the Chinese President may announce a more significant upward adjustment to the yuan during this visit.

For more information about SPI’s activities on this issue or Treasury’s annual report, please contact Karen Toliver or Gennie Ross.

U.S. and Chinese Officials Hold Annual JCCT Meeting . . . On April 11, 2006, senior U.S. and Chinese officials convened in Washington, DC for the annual meeting of the U.S.–China Joint Commission on Commerce and Trade (JCCT). The JCCT, formed in 1983, is a forum for high level discussions between the governments to identify and resolve problems in U.S.–China bilateral trade relations. The meeting was chaired by U.S. Trade Representative (USTR) Robert Portman and Commerce Secretary Carlos Gutierrez on the U.S. side and Vice-Premier Wu Yi on the Chinese side. The United States has stressed the need for increased market access for U.S. goods and services, stronger enforcement of intellectual property rights, and a market-based government procurement system in its discussion with Chinese officials.

Following this latest round of high level discussions, China made a number of commitments in these areas. It agreed to liberalize trade in medical devices by eliminating duplicative testing and certification requirements by the end of May. China also made specific commitments to reduce intellectual property rights infringement by developing a comprehensive action plan. To increase transparency, China will require all laws, regulations, and other measures affecting trade in goods and services to be published in a single official journal. Chinese officials also committed to initiate formal negotiations no later than December 2007 to join the Government Procurement Agreement. The U.S. and China also signed a Memorandum of Understanding to improve bilateral cooperation on measures governing food safety and sanitary and phytosanitary issues. “We’ve made clear progress in some areas including intellectual property rights and market access. We still have work to do, but today’s meeting was a positive step forward on a number of key issues,” reported Commerce Secretary Gutierrez. “We welcome the progress made today and will continue to press for additional steps to promote greater equity, durability and balance in the U.S. China trade relationship,” stated USTR Portman.

Press releases and a complete list of outcomes from the JCCT meeting...

The U.S. and EU File WTO Case Against China on Auto Parts . . . On March 30, 2006, the United States and the European Union filed a formal challenge under World Trade Organization (WTO) rules against China’s tariff system for auto parts, components, and accessories. China currently imposes a higher tariff on imported auto parts if taken together the parts exceed 60 percent of the value of the assembled vehicle. Automakers complain that this tariff treatment penalizes imported auto parts and significantly impedes trade in these goods. USTR Portman noted that to date, the Chinese government has rebuffed the United States’ pressure for repeal of the higher tariffs. Portman expressed hope that the filing of the new WTO case “will lead to a speedy resolution of this issue.” The timing of the U.S./EU action – 10 days before the annual JCCT meeting (see above) – was undoubtedly aimed at increasing pressure on the Chinese government to resolve this trade dispute expeditiously. With the filing of the WTO complaint, the three governments must hold formal consultations on the matter. If consultations do not result in a satisfactory resolution within 60 days, then the U.S. and the EU may request the creation of a WTO dispute settlement panel.

For more information on this case, please visit the USTR website.

SPI’s OHEIC Committee Discusses China’s RoHS-Like Regulations . . . At its recent meeting at SPI headquarters in Washington, DC, the Product Composition Restriction and Disclosure Subcommittee of SPI’s Occupational Health and Environmental Issues Committee (OHEIC) extensively discussed the potential impact of China’s new regulation restricting the use of lead and several other hazardous substances in electronics and information industry products. Modeled after the European Union’s “Restriction on Hazardous Substances in Electrical and Electronic Equipment” (RoHS), the new Chinese regulation, called “Administrative Measure on the Control of Pollution Caused by Electronic Information Products” is widely known as “China RoHS.” The measure was issued on February 28, 2006 and will enter into effect on March 1, 2007. OHEIC members have identified a number of concerns about the China RoHS restrictions and have directed SPI staff to work with the U.S. government and other industry groups to try to minimize the negative impact of this regulation on the U.S. plastics industry.

We need your input on how this regulation affects your business. Please contact Gennie Ross or Marie Martinko to discuss the new China RoHS regulation.

View an unofficial translation of the Chinese regulation...

USTR Issues Annual National Trade Estimate Report . . . On March 31, 2006, USTR released its 2006 National Trade Estimate Report on Foreign Trade Barriers (NTE Report), an annual report to Congress documenting foreign trade and investment barriers and U.S. efforts to reduce and eliminate those barriers. The NTE Report covers 62 major trading partners and analyzes barriers and unfair trade practices affecting U.S. exports. USTR General Counsel Jim Mendenhall stressed that the Bush Administration has “an aggressive and proactive agenda to open markets and reduce trade barriers” and noted that “the NTE report is a useful tool in identifying trade barriers [U.S.] exporters face.” Among the foreign trade barriers highlighted in the report are the inadequate protection of intellectual property rights in China, the continued subsidization of large commercial aircraft production in the European Union, and Japan’s ban on imports of U.S. beef. The report also identifies an array of concerns related to trade with prospective FTA partners Malaysia and South Korea.

Access the latest NTE report...

Member Input Requested for ITC Investigation of Medical Device Trade Barriers . . . On April 3, 2006, at the request of the House Ways and Means Committee, the U.S. International Trade Commission (ITC) initiated a fact-finding investigation of the impact of international barriers on U.S. exports of medical devices and equipment. The ITC’s findings will be released by March 9, 2007 and will focus on regulatory conditions affecting sales of U.S. medical devices and equipment in Japan and other principal foreign markets. The investigation will cover medical devices falling under the following NAICS codes:

The ITC does not plan to issue surveys to U.S companies as part of this investigation. However, the agency encourages written submissions from U.S. interested parties.

If you manufacture products covered by the above NAICS codes and would like your views to be communicated to the ITC, please contact Karen Toliver or Gennie Ross no later than May 15, 2006.

Korea Issues RoHS-Like Regulation . . . On March 31, 2006, South Korea notified the WTO of its intent to implement a new regulation, the “Act for Resource Recycling of Electrical/Electronic Products and Automobiles.” The regulation combines elements of the European Union’s “Restriction on the Use of Hazardous Substances” (RoHS) and its directives on “Waste Electrical and Electronics Equipment” (WEEE) and “End-of-Life Vehicles” (ELV). The new Korean regulation aims to address “the entire product life cycle to promote recycling and restrict the use of hazardous substances.” Once enacted, Korea will require manufacturers and importers of electronic/electrical products and automobiles to declare the use of hazardous substances, commit to improving the material structure and recoverability of their products, and implement recycling plans. The regulation is vague in terms of the specific hazardous substances covered, their concentrations, and testing and labeling methods. At the same time, the measure describes in great detail the recycling responsibilities of manufacturers/importers and vendors, as well as the penalties imposed for non-compliance. SPI has obtained an unofficial translation of the new Korean regulation and seeks input from members on its potential impact on plastics manufacturers.

For a copy of the regulation, or to discuss your company’s concerns about Korea’s RoHS/WEEE approach, please contact SPI’s Gennie Ross.

SPI Needs Your Input on the U.S.–Malaysia FTA . . . Now that the U.S. has launched trade talks with Malaysia, USTR seeks input from U.S. industries and businesses to help establish its negotiating agenda and priorities. In conjunction with elimination of tariffs on U.S. goods, USTR will seek removal of other barriers that hinder access to the Malaysian market. SPI is currently developing the U.S. plastics industry’s priorities for the negotiations and will maintain an ongoing dialogue with our trade negotiators. If your company has experienced any difficulties either operating in or exporting to Malaysia, SPI would like to hear from you. Any information you submit will be kept confidential and will be included in a comprehensive report to USTR on the plastics industry’s priorities in the U.S.–Malaysia free trade negotiations.

Please contact SPI’s Gennie Ross to share your comments and/or concerns by April 28, 2006.

Honduras and Nicaragua Implement CAFTA . . . On April 1, 2005, President Bush proclaimed implementation of CAFTA with respect to Honduras and Nicaragua. El Salvador implemented the agreement on March 1, 2006. This presidential proclamation certifies that the countries have ratified the agreement and adopted all legislative, regulatory, and administrative changes required to implement their FTA obligations. Guatemala, the Dominican Republic, and Costa Rica still have not implemented the agreement. Moreover, Costa Rica has not yet ratified CAFTA. The agreement was originally scheduled to enter into effect on January 1, 2006 with all six Central American countries. However, a series of obstacles related to the adoption of necessary legislation by the signatories precipitated the delay in CAFTA’s implementation.

More information about CAFTA...

U.S. Continues Bilateral Negotiations on Russia’s WTO Accession . . . In late March, U.S. and Russian negotiators held a round of bilateral talks on Russia’s pending membership in the WTO. Enforcement of intellectual property rights (IPR) is one of the primary outstanding issues in the bilateral negotiations. USTR Portman has noted that the experience with China, which did not implement an effective IPR enforcement regime prior to its accession to the WTO, has prompted the U.S. government to seek greater efforts in this area from Russia, another country with widespread counterfeiting and piracy problems. The Bush Administration has come under intense pressure from U.S. IPR-reliant industries. These industries contend that Russia must demonstrate its commitment to IPR enforcement before the U.S. agrees to its WTO membership.

More information on Russia’s WTO accession negotiations is available on the WTO website.

Temporary Suspension of U.S. Import Duties on Your Inputs . . . Is your company compelled to import products because there is no U.S. manufacturer of the product? Do you pay import duties on such products? If so, then you may be eligible to obtain temporary suspension of the import duties and a corresponding reduction in your input costs. The Senate may soon consider requests from U.S. businesses to temporarily suspend import duties on products of interest to their constituents. These suspensions will be enacted through a Miscellaneous Tariff Bill. To be eligible for the temporary duty suspension, there must be no U.S. production of the product and the potential loss of revenue to U.S. Treasury (from the lifting of import duties) cannot exceed $500,000 annually.

If you are interested in determining if you have imports that are potentially eligible for inclusion in the MTB, please immediately contact Gennie Ross.

Commerce Department to Lead Trade Mission to Europe in May . . . The U.S. Commercial Service is organizing a “Gateway to Europe” trade mission on May 14–18, 2006. Participants will visit Amsterdam and Brussels and attend briefings, business appointments, and networking activities. The Commerce Department is targeting several sectors, including automotive parts and services, environmental technology, medical equipment, consumer products, and telecommunications equipment and services.

More information about the mission...

“China: Risk, Reward & How to Win” Business Conference . . . The Commerce Department is sponsoring a business conference on China in several cities in May 2006. The conference will provide participants with tools, business intelligence and resources needed for successful operations in China. The event is aimed at companies already in China or those that are serious about exploring the Chinese market. This intensive conference is intended to benefit CEOs, Presidents, International Sales Managers, VPs of Global Development, International Logistics Managers, Directors of Business Development, and career-minded professionals interested in business in Asia, in addition to individuals in the healthcare, technology, and infrastructure industries. You can attend the conference in three separate locations: Houston, TX on May 15–17, 2006, Washington, DC on May 18–19, 2006, or Cleveland, OH on May 22–24, 2006.

More information or to register...

GBC Program on Central and Eastern Europe . . . Always at the forefront of global issues impacting the plastics industry, the GBC is organizing a breakfast program to be held during NPE 2006. Attendees will hear about developments and business opportunities for plastics manufacturing in Central and Eastern Europe and Russia. The event will take place on Tuesday, June 20, 2006 at 8:00–9:30 a.m. Speakers will include Helmar Franz, executive vice president, Ningbo Haitian Group Co. Ltd., Jim Peck, corporate vice president and general counsel, Nypro Inc., Charles Sholtis, CEO, Plastic Molding Technology Inc., and a representative of the U.S. Department of Commerce (invited).

Registration is now open through the NPE 2006 website.

Trade Mission To Central Europe . . . The GBC is planning a business development mission to Central Europe in late September 2006. The participants will meet with government officials and plastics industry representatives and build key contacts to utilize in future expansion in the region. Central Europe is a dynamic and growing market for plastics products, with a wealth of opportunities in the automotive, packaging, and consumer goods sectors. The region’s low-cost and highly-educated workforce makes it an ideal base for sales to both Western Europe and further east to Southeastern Europe and Russia. Join other plastics industry executives interested in learning how to enter and establish a presence for their companies in this exciting region!

For more information, please contact Gennie Ross.

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 Gennie Ross. More information on the GBC and its activities is available on the SPI website.

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