WASHINGTON — The U.S. trade surplus for plastic products hit a record $1.64 billion in 2000, an 80 percent leap that was fueled by booming exports to Mexico.
The Mexican surplus masks a growing deficit in plastic fabricated products with much of the rest of the world, including the United States' other two largest trading partners, China and Canada.
The resin industry saw a big jump in its trade surplus, up 18 percent to $6.63 billion, according to U.S. Department of Commerce data.
For the machinery and mold-making sectors the picture was not as good: They continued to run sizable trade deficits, although the deficits did shrink quite a bit in 2000.
While U.S. companies weigh concerns about a slowing domestic economy this year, for exports at least, 2000 was a good year.
Most of the U.S. growth in exports came because of the North American Free Trade Agreement, several analysts said.
"The trade surplus with Mexico is exploding, just exploding," said Michael Paslawskyj, vice president of economic research for the CIT Group in Livingston, N.J. "We are sending everything we can down to Mexico."
U.S. molders, extruders and other processors sent $4 billion worth of products to Mexico in 2000, up from $3.2 billion in 1999 and $2.3 billion in 1997, according to U.S. data. Mexico, on the other hand, sent just $773 million worth of processed goods to the United States in 2000.
"NAFTA has really opened things up," Paslawskyj said. "It is a positive for the processors. It may not be a positive for the industries that assemble those products."
The trade situation for the other two large U.S. plastics trading partners is not as good, however.
U.S. processors ran a larger deficit with Canada in 2000, about $250 million, after a slight deficit in 1999 and surpluses in earlier years. The two countries send $6.27 billion worth of processed plastic goods between them, according to U.S. government data.
Faris Shammas, the chief economist with the Canadian Plastics Industry Association in Mississauga, Ontario, said the sizable Canadian surplus is a change. It probably reflects the cheaper Canadian dollar and higher unemployment, making the country a more attractive spot for U.S. firms, he said.
But for China, the U.S. plastic products trade deficit is ballooning, from $1.3 billion in 1997 to almost $2 billion in 2000.
For Paslawskyj, who describes himself as an "unabashed free trader," the Chinese situation reflects China taking business growth from Asian competitors. Taiwan and Japan, the fourth- and fifth-largest exporters to the United States, saw very little growth. Japan's plastics products exports to the United States grew just 1 percent, while Taiwan's grew 5 percent.
"My impression is it is not China winning business from domestic producers but taking it from other locales," said Paslawskyj. "China is so much cheaper than Japan and Taiwan."
The Asian trade situation also seems to reflect some improvements in that region's economies, said Lori Anderson, director of economic and international trade affairs with the Society of the Plastics Industry Inc. in Washington. U.S. exports to Japan, South Korea, Hong Kong and Taiwan were up between 19 percent and 41 percent in 2000, returning to levels they had reached before the Asian financial crisis in 1997.
Anderson cautioned that the data does not present a complete picture of plastic product trade because it does not include plastics used in major markets like automotive and electronics. Those products are included in end-market figures the U.S. government collects.
But the numbers are valuable because they indicate general trends, she said.
For resins, 2000 was a strong year.
U.S. plastic resin makers exported $12.4 billion, $6.63 billion more than the country imported. Exports to Mexico, Belgium and China, the second-, third- and fifth-largest markets, were up between 25 and 55 percent.
"In general terms, the year 2000 was actually a strong period of economic growth, except in the fourth quarter," said T. Kevin Swift, an economist with the American Chemistry Council in Arlington, Va.
Swift expects the industry's historically strong trade surplus to drop in 2001 because rising prices for natural gas, heavily used as a feedstock in the United States, will leave U.S. resin suppliers less competitive internationally.
Processing machines and molds saw smaller trade deficits, but analysts questioned how valid some of those numbers are.
Anderson said the declining deficits probably have more to do with better U.S. government data collection than with market changes.
The trade deficit for machines and parts fell from $1.16 billion in 1999 to $830 million in 2000, with much of that coming from smaller trade deficits with Germany and France, according to U.S. government data. Those figures also include rubber processing machines.
In 1999, U.S. customs officials developed a program to improve data after a study by U.S. machinery companies found frequent errors that labeled other products as processing equipment.
"If this is the result, it is working," Anderson said. "It had been the understanding of many in the industry that they were inflating the import numbers."
Anderson said SPI will start publishing its own machinery equipment trade data in May, after four years of not collecting the figures. SPI now has enough participation in the program to make it viable, she said.
The data for molds also indicates a declining trade deficit, down from $600 million in 1997 to $430 million in 2000. The largest deficits in 2000 were from Canada and Japan, at $350 million and $170 million, respectively. The other large deficits were with Portugal, Taiwan and Germany, but they were under $40 million each.
"The industry feels like imports are really coming in, but our data [in SPI reports] does not support that," Anderson said. "What does our mold data say? The deficits have been relatively constant, ranging from $500 million to low $700 million[s]."
Anderson said U.S. customs officials engaged in a similar attempt in 1998 to make mold data more accurate.
Matthew Coffey, president of the National Tooling & Machining Association in Fort Washington, Md., said he believes mold orders are coming back to the United States.
U.S. customers are finding overseas tool shops reluctant to make changes in tools, and the growing technological expertise of U.S. shops is letting them build lower-cost, short-run molds, which are needed as products become more customized, Coffey said.