As part of upcoming World Trade Organization talks aimed at reducing trade barriers, the Society of the Plastics Industry Inc. is pushing for the first-ever negotiations targeting tariffs on plastic machinery.
SPI is seeking the deal as a side agreement to a major rewrite of WTO rules, slated to begin in Hong Kong in December. SPI sees it as a way to open markets to U.S.-made machines, particularly in major developing economies like India and Brazil.
The larger WTO talks are a key priority for U.S. business, although countries must resolve contentious agricultural disputes to move ahead. SPI and groups like the National Association of Manufacturers have been lobbying WTO and trade ministers. The National Association of Manufacturers and other major U.S. business groups held a news conference Oct. 25 with President Bush's top trade official in Washington to try to bolster the WTO talks.
At the heart of their campaign is the premise that U.S. tariffs on manufactured goods are among the lowest in the world, averaging 3.3 percent, and that U.S. firms would increase exports if other countries cut their tariffs and lowered nontariff barriers to match.
For example, India has an average industrial tariff of 27.9 percent, and Brazil 12.9 percent, according to figures presented by U.S. companies.
Manufacturers do not support the WTO agenda universally. The U.S. Business and Industry Council, for example, argues that because previous rounds of WTO talks have not done enough to open foreign markets, U.S. manufacturing trade deficits have continued to rise, to $388 billion through August. USBIC argues that countries simply have replaced tariffs with other barriers to trade.
SPI's proposal focuses on plastics machinery tariffs, where the gap between the United States and other countries does not seem to be as wide.
U.S. tariffs on plastics equipment are generally 3.1 percent, although they are zero for countries with which the United States has a free-trade deal. By comparison, tariffs for India average 25 percent, Brazil's average 18 percent and China has a 5 percent tariff on plastics machinery, according to U.S. government figures.
SPI's proposal would require countries that sign the sectoral agreement to cut their tariffs on machinery deeper than overall WTO cuts, and every country would have to bring them to the same level.
``For the plastics industry, this certainly is important because we still face high tariffs,'' said Karen Toliver, SPI's senior director for international trade and industry statistics. ``We want the same level of parity into other markets.''
She said SPI floated the idea at a meeting of worldwide plastics trade associations this summer, and found some ``receptive'' ears, although she said it was hard to gauge opinion at this point.
She said Washington-based SPI will continue lobbying industry and other countries to put the issue on the agenda at the WTO meeting in December, and start serious talks next year. Toliver said she campaigned for the sectoral during a lobbying session that manufacturing groups from around world staged Oct. 5-6, at WTO headquarters in Geneva.
The machinery sectoral agreement probably will include molds, she said. SPI is not seeking a sectoral agreement for plastic products because many of them are components of other goods, making it very hard to separate them in trade flows, she said.
There is a sectoral being considered for sporting goods that SPI is monitoring to see if processors would be affected, Toliver said. Plastic resin was part of a chemical industry sectoral at the last round of WTO talks, and that resulted in tariffs for participating countries falling to about 6 percent.
Pushing the WTO talks, known as the Doha round, is a key priority for some of the larger U.S. business lobbying groups.
NAM, the U.S. Chamber of Commerce and the Business Roundtable announced the formation of the American Business Coalition for Doha at the news conference. SPI is also a member.
NAM President John Engler said successful WTO talks are critical because they would reduce tariffs and nontariff barriers for U.S. companies. But he said the fate of the talks is tied up in unrelated agricultural disputes.
``We recognize that we're not going to get anywhere unless the European Union and others get very serious very soon about agricultural market access,'' he said.
Washington-based NAM argues that trade deals are better for U.S. manufacturers. Engler cited a recent NAM study that found that 94 percent of the U.S. trade deficit in manufactured goods is with countries with which the United States does not have a free-trade deal.
Through the first seven months of the year, the overall U.S. manufacturing trade deficit grew 12 percent, but deficits with free-trade partners shrunk 25 percent, NAM said.
``Where we have free-trade agreements in place, trade deficits are lower,'' Engler said. ``Where we don't have them, predictably, the deficits are higher.''
Supporters of the WTO talks acknowledge they are not designed to deal with other trade issues like currency imbalances, but said tariff reductions are still worth pursuing.
Others, like the USBIC, argue that the WTO system is imbalanced.
Alan Tonelson, a research fellow at Washington-based USBIC, said WTO has done a pretty good job of cutting tariffs, but has been ineffective at dealing with the spread of nontariff barriers to trade, and said the system favors multinational corporations.
``The basic strategy pursued by recent administrations in global trade talks is completely misguided,'' he said. ``We believe that American trade policy should accord a higher priority to manufacturing.''