Plastic bag makers from China, Malaysia and Thailand that export to the United States were dealt a blow Jan. 20, when the U.S. government imposed temporary tariffs that it said are needed to protect U.S. companies from unfairly subsidized imports.
But some observers said it remains to be seen how much the action will help the U.S. industry recoup $300 million in sales lost to dumped imports, because other low-cost countries could increase their exports to the United States and because some of the largest importers received only small tariffs.
The coalition of U.S. firms that brought the case praised the decision by the Department of Commerce, which imposed temporary tariffs ranging from less than 1 percent to 123 percent. But they urged the department to raise the tariffs higher when the agency comes out with its final decision in the anti-dumping case, scheduled for June.
``We are optimistic that in the final phase of its investigation, [DOC] will find that all foreign producers have positive dumping margins in at least double digits,'' said Joseph Dorn, a lawyer with King & Spalding LLP in Washington who represented the U.S. firms.
Some of the tariffs clearly will have a chilling effect on imports, observers said, such as an 81 percent rate for some Chinese firms, 102 percent for several Malaysian companies and 123 percent for three Thai manufacturers.
But others noted that some of the largest importers, including a Thai firm that is a major supplier to Target Corp. and some Chinese firms, were given tariffs of less than 10 percent. The Target supplier, Thai Plastic Bags, was given a tariff of just 2.84 percent, for example.
A lawyer for several of the Chinese firms, Ron Wisla with the Washington office of Garvey Schubert Barer, said the low margins point to weaknesses in the U.S. industry's case.
One U.S. importer of high-end plastic bags, typically those with better printing or extras like rope handles, said his suppliers probably will be able to work with the 13 percent tariff they received.
``That's certainly tolerable,'' said John Verrier, national sales manager for Regal Import Packaging in River Edge, N.J. ``At 13 percent, there's certainly a reason to stay home with a factory in China that you trust.''
Regal had argued that high-end bags should not be covered by the tariffs because they are labor-intensive and are not made in the United States, but the Commerce Department rejected that, saying that they are made domestically.
Another U.S. firm, however, appeared stung by the tariff put on its Thai subsidiary.
``We were dismayed by this,'' said Vic Platta, vice president of sales and marketing with Advance Polybag Inc. in Metairie, La., whose Thai plant was hit with a 35 percent tariff.
Platta said the Commerce Department overstated API's profit in Thailand and set the tariff too high because it used cost figures from another Thai plant to estimate what API bags would cost in Thailand, if the company sold them there. The Commerce Department said it based that calculation on financial data supplied by the U.S. companies seeking the tariffs.
The case was brought by an ad hoc group that includes Hilex Poly Co. LLC, Inteplast Group Ltd., PCL Packaging Inc., Superbag Corp. and Vanguard Plastics Inc.
The case is far from over. Commerce Department officials now will travel to the three countries to audit foreign producers, which can result in tariffs going up or down in the final order.
And before any permanent tariffs could be enacted, the U.S. International Trade Commission, a separate government agency, also would have to find that the industry has been harmed or faces threat of harm. That review is scheduled for August.
The U.S. industry contends that imports from the three countries are double what they were in 2000, and amount to 30 percent of U.S. consumption, and that profit margins have sunk in the past few years. But one executive following the case said the best the U.S. industry may be able to do is fight a delaying action.
``What's the result of this kind of action?'' the executive said. ``The Chinese are probably going to up their price a little bit. ... People are going to shift their production to other areas: Vietnam, Indonesia - which hasn't even been touched by this - and India.''