China has made progress in implementing the economic reforms called for when it joined the World Trade Organization in 2001, but significant barriers remain for plastics companies, according to one U.S. trade association.
The Society of the Plastics Industry Inc. is arguing in a report to the U.S. government that China falls short of full WTO compliance in several areas, including currency manipulation, violating intellectual property rights and non-tariff barriers like restricting imports based on ``unpublished'' regulations.
``For the plastics industry these issues are still very important,'' said Karen Toliver, SPI's senior director of international trade and industry statistics. ``Our bilateral trade deficit with China is certainly impacting the overall trade position, and our processors are feeling the brunt of it.''
Most of SPI's report to the U.S. Trade Representative is given over to complaints about China, but Toliver said it is not China-bashing.
SPI argues that China is a significant market for the U.S. industry, noting that it became the third-largest market for U.S. plastics industry exports in 2003, and in 2004 exports increased 43 percent, to $1.9 billion. The resin and machinery sectors, in particular, are seeing opportunities, although the processing sector must remain healthy for the domestic industry to grow, Toliver said.
SPI said China's WTO market reforms spurred those increases.
``SPI members are generally optimistic about the progress China has made in recent years to comply with its WTO obligations,'' SPI said. ``It has reduced tariffs, relaxed restrictions on trading rights, improved its legal framework to protect intellectual property rights and generally supported a more transparent trading system - areas where SPI members have observed concrete progress in recent years.''
Still, the bulk of SPI's report to the USTR highlights what it said are areas in which the country fails to live up to WTO rules.
SPI argues that China's undervalued currency fuels a growing trade deficit that hit $3.3 billion for all U.S. plastic industry shipments in 2004. The processing sector fared worse, with a $5 billion deficit, and SPI said plastic product imports from China on average have grown 15 percent per year for each of the past five years.
Toliver said China's currency policy is a big reason U.S. manufacturers have a larger deficit with China than other emerging markets.
China also does not take enough steps to protect the intellectual property of U.S. companies, SPI said. While examples are difficult to track down, SPI listed several unidentified companies that it said had products copied in China, ranging from medical devices to flashlights to consumer goods.
``China's lack of effective enforcement of intellectual property rights is a de facto trade barrier that hinders plastics exports to China,'' SPI said.
The U.S. government recently made a formal WTO request to China for detailed information on the country's efforts to protect intellectual property.
SPI's report also took issue with what it called a lack of transparent customs procedures in China that hinder U.S. goods: ``China's track record is deteriorating in this area.''
Other technical areas are concerns, SPI said.
China apparently is considering requiring new safety standards for plastics machinery to comply with the China Compulsory Certification, or CCC mark. SPI said U.S. companies comply with American National Standards Institute regulations - standards not recognized by China.
The only non-Chinese standards that China recognizes for electronic products are those from the International Organization for Standardization and the International Electrotechnical Commission.
``SPI members are concerned that China may establish new standards that will force U.S. plastics machinery manufacturers to either invest in costly technical changes to comply with any Chinese national standards or forego selling their products to the Chinese market,'' SPI said. China is the third-largest export market for U.S. plastics machinery.
Some plastic food-packaging companies also have expressed concern about a lack of specific procedures for certifying materials under China's food-hygiene law, SPI noted.
