THE NEED TO UNMASK HIDDEN TRENDS IN FILM AND BAG IMPORTS Karen Bland Toliver FBF 2006 Annual Spring Conference April 4, 2006 © The Society of the Plastics Industry, Inc. All rights reserved.

COLLECTION OF U.S. IMPORT DATA  International Convention on the Harmonized Commodity Description and Coding System  Administered by the World Customs Organization (WCO)  169 members, covering 98% of world trade  Standardized tariff nomenclature (at the 6 digit level)  Basis for customs tariffs and publication of foreign trade statistics

COLLECTION OF U.S. IMPORT DATA  Harmonized Tariff Schedule of the U.S. (HTS)  Embodies the 6-digit Harmonized System (HS)  “National” break-downs at the 8 and 10 digit levels  Distinct from industry coding systems, e.g.,NAICS/SICS  The official basis for collecting trade statistics  International Trade Commission (ITC)  Responsible for reviewing and recommending changes Conformity with HS amendments HTS reflects changes in technology and trade patterns Alleviate unnecessary burdens

HTS Categories for Film Imports  Captured under HTS 3920  Non-self adhesive plates, sheet, film, non-cellular and not combined with any other materials  HTS 6-digit level is based on polymer content  e.g., “of polymers of ethylene”  HTS 10-digit level has some break outs based on other physical characteristics, e.g., flexible  Twenty-eight HTS 8-digit categories for non-self adhesive plates, sheet, and film products

PE Film Import Statistics Import Quantities Million lbs Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 575 $ 712 $847

PE Film Top 5 Import Sources *Ranked by import volumes In ’05, Canada shipped million lbs. Mexican imports grew by 113%, from 15.2 million lbs. in ’04 to 32.4 million lbs. in ’05 – due to intra-company transfers? Chinese imports increased by 31%, from 24.2 million lbs. in ’04 to 31.7 million lbs. in ‘05. Malaysia was not in the top 5 sources based on value, but was ranked # 5 based on quantities. Malaysian imports grew by 170%, from 7.9 million lbs. in ’04 to 21.5 million lbs. in ’05. Source – ITC Trade Database

PE Film Imports by Port of Entry PortValue ($ Millions)% of Imports Detroit, MI$ % Ogdensburg, NY$ % Pembina, ND$ % Buffalo, NY$ 67.58% New York, NY$ % Source – ITC Trade Database

Questions/Issues  Does the HTS category for PE film reflect business reality?  Is it adequate to accurately monitor/track imports?  Would the industry benefit from more specific break- downs?  If so, where are the “clear dividing” lines?

HTS Categories for Bag Imports  Captured under HTS 3923  Articles for the conveyance or packing of goods, of plastics, stoppers, lids, caps and other closures  HTS 8-digit level is based product type  e.g., boxes vs. bags vs. bottles vs. stoppers/lids  HTS 10-digit level categorizes bags based on limited physical properties, e.g., PE vs. other plastics  Recent modification to break out PE retail carrier bags with handles  Only six HTS 10-digit categories for PE plastic bags

HTS Categories for PE Plastic Bags  Re-closable PE bags with no single side exceeding 75 millimeters in length  Re-closable bags with integral extruded closure  Non re-closable PE bags with no single side exceeding 75 millimeters in length  PE retail carrier bags with handles  Non re-closable PE bags  All other PE bags

Total PE Bag Import Statistics Import Quantities 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 776 $946 $ 1.2 B 1.9 B 2.3 B3.0 B Lbs. Conversion Factor – 15 lbs per 1,000 units

PE Bag Imports by Port of Entry PortValue ($ Millions)% of Imports Los Angeles, CA$ % Detroit, MI$ % New York, NY$ 977.7% Ogdensburg, NY$ 826.5% Seattle, WA$ 695.5% Source – ITC Trade Database

Top 5 Import Sources – 2005 PE Retail Carrier Bags (HTS ) *Ranked by import volumes ITC reports official imports stats for 2005 only. Import quantities were approx. 239 million lbs. in ’05 ($15 per 1,000 unit). Imports were valued at $ 108 million. Source – ITC Trade Database

Non Re-closable PE Bags – HTS Import Quantities 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 658 M $ 799 M $ 490 M 1.4 B 1.6 B 822 M Lbs. Conversion Factor – 15 lbs per 1,000 units

Non Re-closable PE Bags Top 5 Import Sources *Ranked by import volumes It appears that PE bags in this category were re-classified under HTS Re-classification makes it difficult to analyze trends because all imports from supplying countries decreased in Source – ITC Trade Database

Re-closable PE Bags – HTS Import Quantities 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 106 $126 $ M 519 M672 M Lbs. Conversion Factor – 15 lbs per 1,000 units

Re-closable PE Bags Top 5 Import Sources *Ranked by import volumes Imports from China and Thailand accounted for a substantial portion of total imports in 2005 – 62%. Chilean imports rose by 33% from levels in 2004, surpassing Canadian import quantities. Although relatively small in terms of absolute amounts, imports from South American and Central America appear to be growing: Brazil (90.4%), Dom. Rep. (3,369%), Colombia (240%), Argentina (511%). Source – ITC Trade Database

Questions/Issues  Do the HTS categories for PE bags reflect business reality?  Are they adequate to accurately monitor/track bag imports?  Would the industry benefit from more specific break- downs?  If so, where are the “clear dividing” lines?

WHAT CAN SPI/FBF DO?  Consider whether to pursue more specific categories  Advocacy before ITC and Customs  Form Task Force  Need input of knowledgeable industry participants  Assistance of experienced customs attorney

Recent Trade Developments  China Currency Manipulation  China trade legislation  U.S.-Korea FTA  U.S.-Malaysia FTA