In 2000, the U.S. plastic bag industry had about 80 percent of the domestic market for grocery and retail shopping bags.
Two years later, the U.S. industry had only 60 percent of the market, a steep drop in a relatively short time.
That dramatic swing has prompted a loose coalition of U.S. manufacturers, the Polyethylene Retail Carrier Bag Committee, to file a formal antidumping complaint in Washington urging the U.S. government to restrict imports. A preliminary decision is expected from the U.S. International Trade Commission by Aug. 4, but a final decision could be at least a year away.
The culprit, in the eyes of the industry coalition: a flood of cheap, subsidized bags from China, Malaysia and Thailand.
But not everyone sees it that way. Companies that import heavily point to other factors for the industry's troubles, like the rise of Internet-based auctions run by large retailers like Target that open up contracts to worldwide bidding and squeeze profit margins.
``A group of U.S. bag manufacturers is trying to use the federal government to do what they have not been able to do on their own - compete more favorably in the current U.S. bag market,'' said Allen Golbert, executive vice president of Spectrum Plastics, an importer and domestic producer based in Cerritos, Calif.
``U.S. bag makers need to update their equipment and lower their costs to compete with highly efficient manufacturers in Asia,'' he said.
Not true, according to the PRCBC. Imports from China, Malaysia and Thailand are being subsidized and sold in the United States at dumping margins, PRCBC said.
The group consists of Inteplast Group Ltd. in Livingston, N.J.; PCL Packaging Inc. in Barrie, Ontario; Sonoco Products Co. in Hartsville, S.C.; Superbag Corp. in Houston; and Vanguard Plastics Inc. in Farmers Branch, Texas. At least six other companies in the United States and Canada formally support the petition, and together the firms account for two-thirds of U.S. bag production.
They argue that imports from those Asian countries now account for at least 30 percent of U.S. consumption, double the figure from 2000, and are projected to rise. And they contend that profit margins have dropped from 10 percent in 2001 to 4 percent this year.
``Unfairly priced imports from China, Malaysia, and Thailand are clearly having a very serious adverse effect on U.S. producers and their employees,'' said Joseph Dorn, counsel for the committee and a lawyer with King & Spaulding LLP in Washington.
The data at the heart of the committee's argument, which allegedly proves that Asian firms are dumping products at below cost, is not available for public analysis. That's because ITC allowed the group to withhold confidential business information from public versions of its filings.
The information is available under strict conditions to other parties in the case.
While the committee argues dumping, other U.S. industry groups say that China's currency manipulation has a big impact on exports. The value of China's currency is kept artificially low by pegging it to the dollar, which encourages exports, U.S. manufacturing groups argue.
The petition also exposes cracks between some leaders of the U.S. bag industry.
One U.S. firm, Advance Polybag Inc. in Metairie, La., is singled out in the petition as an ``imminent threat to the domestic industry'' because it established a $7 million bag-making plant in Thailand in 2001 that it uses to export to the United States.
Vic Platta, vice president of sales and marketing for API, said the company does not dump its product below cost in the United States, and he is confident that the company will be cleared by the ITC.
Platta, who serves on the board of another trade group, the Film and Bag Federation, with top executives of PCL and Vanguard, said API was surprised to see its name mentioned in the petition.
``These are guys I played golf with and all of the sudden, `Bingo,' '' he said. ``To play in the world scene you need to be more than a domestic producer.''
Spectrum's Golbert said it's ``hypocritical'' for some of the companies to be involved with the petition because he said that prior to filing it, many of the committee members supplemented their production with imports.
The determination of whether dumping occurred is ultimately made jointly by ITC and the Department of Commerce. One lawyer representing about 15 Chinese firms in the case said the rules for determining dumping from China are complicated. Bill Perry, with the Seattle law firm of Garvey, Schubert & Barer in Seattle, said that because China is not considered a market economy, data from India is used to estimate cost.
One firm named as an importer, Poly-Pak Industries Inc., said it welcomes the petition.
Len Levy, chairman of the Melville, N.Y., company, said U.S. firms are at a huge disadvantage because their raw material costs are higher than in Asia, and he said he has seen Asian bags sell in the United States for less than the resin cost.
Levy, who said his firm does only a small amount of importing, thinks tariffs would help American manufacturers. But he is not sure the Bush administration is willing to spend the political capital and risk angering China to help the relatively small plastic bag industry.
``Whether the plastic bag industry is important to the Bush administration, I have my doubts,'' he said.