WASHINGTON — A tax break for rubber giant Michelin threatens to hurt U.S. manufacturers of plastics extruders and other equipment by lifting a tax on competing imports, U.S. plastics officials said.
Michelin North America, based in Greenville, S.C., is buying imported rubber extruders for a new South Carolina plant to make large, industrial tires and has garnered the support of the state's congressional delegation and U.S. senators for lifting the 3.4 percent tariff on such equipment for four years.
But both the Washington-based Society of the Plastics Industry Inc. and Goodyear Tire & Rubber Co. are opposed. Plastics officials say the broad language in the Michelin plan would snare plastics extruders and parts for injection molders, extruders and blow molders, making imports cheaper and putting U.S. manufacturers at a disadvantage.
It is the broadest such duty suspension proposal for plastics in at least seven years, SPI officials said.
Because of the complexity of tariff regulations, it is difficult to write legislation that would zero in only on Michelin, making it likely that SPI will oppose the measure, said Lori Anderson, director of government affairs for economic and international trade issues for SPI.
But Michelin said it did not intend to include plastics, and wants to talk with SPI about modifying the proposal.
``I can tell you unequivocally that we didn't intend to include any plastic equipment,'' said Lewis Leibowitz, a Washington lawyer representing Michelin. ``We may have goofed. I can't exclude that possibility.''
Leibowitz said he did not know how difficult it would be to write language that included only Michelin's equipment.
Lifting import duties are common if no U.S. company makes the product, but they are very difficult to lift if there is opposition or it will cost the U.S. government a substantial amount of money, both SPI and Michelin said.
What worries plastics officials is that such tax-break language typically is not considered until late in the session of Congress and can be lumped with other measures or quietly attached to larger bills, Anderson said.
Much of the equipment Michelin wants cannot be purchased in the United States, Leibowitz said. The tax break would cost the government less than $500,000 a year, he said.
But Goodyear said in a statement that the tax break would cost the government at least $2.5 million a year.
Akron, Ohio-based Goodyear said it opposes the bill because it is very broad and covers a range of rubber equipment.
A spokesman for Rep. Floyd Spence, R-S.C., said the congressman supported the language at the request of Michelin, and was not aware that plastics would be included until SPI wrote a letter Aug. 14.
When the tax break language was introduced, Sen. Strom Thurmond, R-S.C., said it would apply only to equipment not manufactured in the United States for making earthmover tires.