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February 04, 2008 01:00 AM

Latest ruling favors U.S. bag makers

Steve Toloken
Assistant Managing Editor
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    The U.S. government is considering imposing stiff penalties on Chinese woven plastic laminated sacks, arguing that the bags are being unfairly dumped in the U.S. market and damaging U.S. companies.

    Critics of the government's Jan. 25 preliminary decision, however, said U.S. officials are making some questionable judgments about costs in China and expressed concerns about the political impact of anti-trade sentiment in Washington.

    The five U.S. domestic sack producers that brought the claim welcomed the Jan. 25 decision from the Department of Commerce, which would impose fines from 68-108 percent on Chinese sacks.

    ``Today's ruling vindicates our strongly held belief that the cheap prices from China have been the result of unfair trade practices, not lawful competition,'' said Mike Nowak, president of Coating Excellence International LLC in Wrightstown, Wis., in a Jan. 25 statement. His company is one of the five firms that brought the case.

    The sacks are typically multilayer, mixing polyethylene and polypropylene with paper, and are used in packaging consumer goods like pet food and birdseed.

    The U.S. government said Chinese imports doubled from 78 million bags to 153 million bags from 2004-06, and now hold an 80 percent market share.

    The U.S. is conducting two such investigations of the bags, including one under so-called ``countervailing duty'' laws. Final rulings are expected in the summer.

    Preliminary penalties issued in November in the CVD case range from 2.57 percent to about 57 percent, and will be added to penalties in the anti-dumping case, said a lawyer for the five U.S. producers.

    ``The combined final duties - anti-dumping plus countervailing - should be very high,'' said Joseph Dorn, a partner in law firm King & Spalding LLP of Washington.

    The other four firms are Bancroft Bag Inc. in West Monroe, La.; Mid-America Packaging LLC in Twinsburg, Ohio; Polytex Fibers Corp. in Houston; and Hood Packaging Corp. in Madison, Miss.

    But a lawyer representing a U.S. importer that opposes the fines questioned the basis of the government's decisions.

    Bill Perry, a lawyer with Garvey Schubert Barer in Seattle, said U.S. calculations - such as printing-plate pricing and prices that Chinese firms paid for land - distorted costs for Chinese firms and made penalties much higher. He represents Shapiro Packaging Inc. in Grand Rapids, Mich.

    Perry said the U.S. government has been taking a much tougher line in recent trade cases. ``I'm concerned because of the political winds blowing in Washington,'' he said by telephone from his firm's Beijing office.

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