THE NEED TO UNMASK HIDDEN TRENDS IN FILM AND BAG IMPORTS Karen Bland Toliver FBF 2006 Annual Spring Conference April 4,

1. THE NEED TO UNMASK HIDDEN TRENDS IN FILM AND BAG IMPORTS Karen Bland Toliver FBF 2006 Annual Spring Conference April 4, 2006 © The Society of the Plastics Industry, Inc. All rights reserved.

2. COLLECTION OF U.S. IMPORT DATA • International Convention on the Harmonized Commodity Description and Coding System • Administered by the World Customs Organization (WCO) • 169 members, covering 98% of world trade • Standardized tariff nomenclature (at the 6 digit level) • Basis for customs tariffs and publication of foreign trade statistics

3. COLLECTION OF U.S. IMPORT DATA • Harmonized Tariff Schedule of the U.S. (HTS) • Embodies the 6-digit Harmonized System (HS) • “National” break-downs at the 8 and 10 digit levels • Distinct from industry coding systems, e.g.,NAICS/SICS • The official basis for collecting trade statistics • International Trade Commission (ITC) • Responsible for reviewing and recommending changes • Conformity with HS amendments • HTS reflects changes in technology and trade patterns • Alleviate unnecessary burdens

4. HTS Categories for Film Imports • Captured under HTS 3920 • Non-self adhesive plates, sheet, film, non-cellular and not combined with any other materials • HTS 6-digit level is based on polymer content • e.g., “of polymers of ethylene” • HTS 10-digit level has some break outs based on other physical characteristics, e.g., flexible • Twenty-eight HTS 8-digit categories for non-self adhesive plates, sheet, and film products

6. PE Film Import Statistics Import Values Import Quantities Million lbs. $ Million $847 618 552 $ 712 455.5 $ 575 Source – U.S. Official Trade Stats, ITC Trade Database

7. PE Film Top 5 Import Sources - 2005 • In ’05, Canada shipped 372.6 million lbs. • Mexican imports grew by 113%, from • 15.2 million lbs. in ’04 to 32.4 million lbs. in ’05 – due to intra-company transfers? • Chinese imports increased by 31%, from 24.2 million lbs. in ’04 to 31.7 million lbs. in ‘05. • Malaysia was not in the top 5 sources based on value, but was ranked # 5 based on quantities. Malaysian imports grew by 170%, from 7.9 million lbs. in ’04 to 21.5 million lbs. in ’05. *Ranked by import volumes Source – ITC Trade Database

8. PE Film Imports by Port of Entry - 2005 Source – ITC Trade Database

9. Questions/Issues • Does the HTS category for PE film reflect business reality? • Is it adequate to accurately monitor/track imports? • Would the industry benefit from more specific break-downs? • If so, where are the “clear dividing” lines?

10. HTS Categories for Bag Imports • Captured under HTS 3923 • Articles for the conveyance or packing of goods, of plastics, stoppers, lids, caps and other closures • HTS 8-digit level is based product type • e.g., boxes vs. bags vs. bottles vs. stoppers/lids • HTS 10-digit level categorizes bags based on limited physical properties, e.g., PE vs. other plastics • Recent modification to break out PE retail carrier bags with handles • Only six HTS 10-digit categories for PE plastic bags

12. HTS Categories for PE Plastic Bags • Re-closable PE bags with no single side exceeding 75 millimeters in length • Re-closable bags with integral extruded closure • Non re-closable PE bags with no single side exceeding 75 millimeters in length • PE retail carrier bags with handles • Non re-closable PE bags • All other PE bags

13. Total PE Bag Import Statistics Import Values Import Quantities 1,000 units $ Million $ 1.2 B 203 $946 151 $ 776 126 Lbs. 1.9 B 2.3 B 3.0 B Conversion Factor – 15 lbs per 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database

14. PE Bag Imports by Port of Entry - 2005 Source – ITC Trade Database

15. Top 5 Import Sources – 2005PE Retail Carrier Bags (HTS 3923.21.00.85) • ITC reports official imports stats for 2005 only. • Import quantities were approx. 239 million lbs. in ’05 ($15 per 1,000 unit). • Imports were valued at $ 108 million. *Ranked by import volumes Source – ITC Trade Database

16. Non Re-closable PE Bags – HTS 3923.21.00.90 Import Values Import Quantities 1,000 units $ Million $ 799 M 105 $ 658 M 90 $ 490 M 55 Lbs. 1.6 B 1.4 B 822 M Conversion Factor – 15 lbs per 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database

17. Non Re-closable PE BagsTop 5 Import Sources - 2005 • It appears that PE bags in this category were re-classified under • HTS 3923.21.00.85. • Re-classification makes it difficult to • analyze trends because all imports from supplying countries decreased in 2005. *Ranked by import volumes Source – ITC Trade Database

18. Re-closable PE Bags – HTS 3923.21.00.19 Import Values Import Quantities 1,000 units 44.8 $ Million $ 169 34.6 30.2 $126 $ 106 Lbs. 454 M 519 M 672 M Conversion Factor – 15 lbs per 1,000 units Source – U.S. Official Trade Stats, ITC Trade Database

19. Re-closable PE BagsTop 5 Import Sources - 2005 • Imports from China and Thailand • accounted for a substantial portion of total imports in 2005 – 62%. • Chilean imports rose by 33% from levels in 2004, surpassing Canadian • import quantities. • Although relatively small in terms of absolute amounts, imports from South American and Central America appear to be growing: Brazil (90.4%), Dom. Rep. (3,369%), Colombia (240%), Argentina (511%). *Ranked by import volumes Source – ITC Trade Database

20. Questions/Issues • Do the HTS categories for PE bags reflect business reality? • Are they adequate to accurately monitor/track bag imports? • Would the industry benefit from more specific break-downs? • If so, where are the “clear dividing” lines?

21. WHAT CAN SPI/FBF DO? • Consider whether to pursue more specific categories • Advocacy before ITC and Customs • Form Task Force • Need input of knowledgeable industry participants • Assistance of experienced customs attorney

22. Recent Trade Developments • China Currency Manipulation • China trade legislation • U.S.-Korea FTA • U.S.-Malaysia FTA