1. 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.

2. 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

3. 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

4. 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

6. PE Film Import Statistics Import Quantities Million lbs. 455.5 552 618 Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 575 $ 712 $847

7. PE Film Top 5 Import Sources - 2005 *Ranked by import volumes In ’05, Canada shipped 372.6 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

8. PE Film Imports by Port of Entry - 2005 PortValue ($ Millions)% of Imports Detroit, MI$ 214.525.3% Ogdensburg, NY$ 100.411.9% Pembina, ND$ 71.28.9% Buffalo, NY$ 67.58% New York, NY$ 62.77.4% Source – ITC Trade Database

9. 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?

10. 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

12. 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

13. Total PE Bag Import Statistics Import Quantities 1,000 units 126 151 203 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

14. PE Bag Imports by Port of Entry - 2005 PortValue ($ Millions)% of Imports Los Angeles, CA$ 25920.5% Detroit, MI$ 17513.9% New York, NY$ 977.7% Ogdensburg, NY$ 826.5% Seattle, WA$ 695.5% Source – ITC Trade Database

15. Top 5 Import Sources – 2005 PE Retail Carrier Bags (HTS 3923.21.00.85) *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

16. Non Re-closable PE Bags – HTS 3923.21.00.90 Import Quantities 1,000 units 90 105 55 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

17. Non Re-closable PE Bags Top 5 Import Sources - 2005 *Ranked by import volumes It appears that PE bags in this category were re-classified under HTS 3923.21.00.85. Re-classification makes it difficult to analyze trends because all imports from supplying countries decreased in 2005. Source – ITC Trade Database

18. Re-closable PE Bags – HTS 3923.21.00.19 Import Quantities 1,000 units 30.2 34.6 44.8 Source – U.S. Official Trade Stats, ITC Trade Database Import Values $ Million $ 106 $126 $ 169 454 M 519 M672 M Lbs. Conversion Factor – 15 lbs per 1,000 units

19. Re-closable PE Bags Top 5 Import Sources - 2005 *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

20. 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?

21. 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

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