After seeing that the Central American Free Trade Agreement did not work well for U.S. plastic processors, the American plastics industry is staking out some new ground on upcoming trade deals with South Korea and Malaysia.
The Society of the Plastics Industry Inc. wants Washington to reduce the tariffs on U.S. plastics products no faster than the two Asian nations reduce their own tariffs. That's a switch from the Central American pact, when Washington negotiated a deal that was not good for the U.S. plastics processing industry, SPI President William Carteaux said at the NPE opening news conference June 19.
This time around, SPI is pressing U.S. trade negotiators to take a stronger position on plastics products tariffs, and although negotiations for the Korean and Malaysian pacts only began this month, Carteaux said he was hopeful they would not be a repeat of the CAFTA pact.
Reflecting the increasing sensitivity of trade deals globally, the U.S. plastics products industry has seen its trade balance worldwide shift from a surplus in 2001 to a deficit of $6.1 billion in 2005, said Karen Bland Toliver, senior director of international trade and industry statistics for Washington-based SPI.
Toliver said SPI wants the U.S. government to declare plastic products `'import sensitive'' and give them the longest possible time frame for phasing out tariffs, usually a period of several years spelled out in each trade deal.
She said SPI would find it acceptable if the Korean and Malaysian governments called for a similar slowdown on reducing tariff protections for their plastics processing industries.
She said SPI still supports free trade deals generally, and Carteaux said CAFTA did work well for U.S. machinery and resin makers. The CAFTA countries - the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua - didn't have domestic resin or machinery industries, so they immediately lowered tariffs for those U.S. goods. For products, however, the tariffs were only phased out slowly, since the Central American countries do have domestic production.
SPI does not want a similar disparity on the Asian deals and is communicating its stance with U.S. officials at the start of the talks, not at the end as it did with CAFTA, when the deal had been reached, Toliver said. As a result, SPI and members of Congress negotiated a side deal that will try to speed up plastic product tariff reductions in CAFTA.
The U.S. wants to complete the Asian deals by the end of 2006 because presidential trade negotiating authority is set to expire, but Toliver said SPI would rather have no deal than a deal that isn't good.