SPI: International Trade Update

For SPI Members Only – February 3, 2006

In This Edition

HILL ACTIVITY

Senator Baucus Unveils New Competitiveness Initiative . . . In a speech given on January 25 to the National Press Club, Sen. Max Baucus (D-MT) unveiled a framework of proposals aimed at “Advancing American Competitiveness in a Changing World.” Sen. Baucus, Ranking Member of the Senate Finance Committee, identified seven pillars of U.S. competitiveness: education, energy, health, savings, taxes, research, and international trade. He intends to unveil legislation addressing these areas in the coming months. With regard to international trade, Sen. Baucus’s proposals center on stronger enforcement of trade rules and regulations, as well as expanded government support for U.S. workers displaced by foreign competition. His planned bill would also create a new Chief Trade Prosecutor position within the Office of the U.S. Trade Representative (USTR) dedicated to investigating and prosecuting trade enforcement cases. He may introduce the bill in early February, but its prospects on official Senate action depend on the willingness of Senate Finance Committee Chairman Charles Grassley (R-IA) to move the legislation forward. Click here to access the text of Sen. Baucus’s recent proposals.

SPI To Participate in 2006 Manufacturers’ Fly-In . . . On February 7–8, U.S. manufacturers will convene with lawmakers on Capitol Hill to discuss energy and other critical issues impacting manufacturing in the United States. The 2006 Manufacturers’ Fly-In is organized by the National Association of Manufacturers (NAM). The Fly-In will include events with guest speakers to discuss economic forecasts for manufacturing, innovation, the skills gap, and other challenges that manufacturers confront in today’s competitive environment. SPI members are encouraged to attend this event and let federal legislators hear the concerns of the plastics industry. For more information, please contact Natha Freiburg, phone: (202) 974-5216.

CHINA UPDATE

ChinaPlas 2006 Is Approaching! . . . Asia’s No. 1 plastics and rubber show, featuring more than 1,300 exhibitors, will be held April 26–29, 2006 in Shanghai. This year’s show will cover 90,000 square meters with 10 pavilions from Austria, Canada, Germany, India, Italy, Japan, China, Taiwan, the United Kingdom, and the United States. Attendees will have the opportunity to view the latest technology in plastics and rubber machines, establish important business contacts, and purchase products. SPI is co-sponsoring the U.S. pavilion at this year’s ChinaPlas. SPI representatives will promote the U.S. plastics industry and meet with Chinese industry and government officials to discuss the plastics industry’s concerns. More information about the show is available at www.2456.com/chinaplas. If your company plans to attend, and would like SPI to help facilitate meetings with potential business partners, please contact Karen Toliver.

New Agreement on Intellectual Property Protection at Trade Shows in China . . . On January 11, the International Association of Exhibition Management (IAEM) and the China Council for the Promotion of International Trade signed an agreement to strengthen intellectual property (IP) protection at trade shows in China. The “Joint Declaration for the Protection of Intellectual Property at Exhibitions” declares that IP violations at exhibitions in China will not be tolerated and commits Chinese authorities to investigating complaints about IP infringement. As a member of IAEM, SPI strongly supports this agreement and urges members to take advantage of the IP enforcement provisions. For more information on this agreement, please contact SPI’s Walt Bishop. To discuss IP concerns in China, please contact SPI’s Gennie Ross.

China Becomes the World’s Second Largest Car Market . . . According to Chinese media, in 2005, China surpassed Japan as the second largest auto market in the world after the United States. Almost 6 million vehicles were sold in China last year. Sales of passenger vehicles performed particularly well, with a 21 percent increase over 2004 sales levels, reaching approximately 4 million units. The Chinese Association of Automobile Manufacturers projects that vehicle sales will grow by 10–15 percent in 2006 to 6.4–6.6 million units and that the robust growth observed last year was due partly to strong sales in secondary markets in the poorer inland provinces. China has become a valuable growth market for auto manufacturers, which are struggling in the competitive and fairly saturated U.S. and European markets.

TRADE ENFORCEMENT

Secretaries Rice and Chertoff Unveil New Visa Initiative . . . On January 17, Secretary of State Condoleezza Rice and Homeland Security Secretary Michael Chertoff announced a new “vision” to “Secure Borders and Open Doors in the Information Age.” The strategy has three primary components: use of advanced technology to welcome visitors to the United States through faster processing of visa applications and smoother entry procedures; new travel documents that protect personal identity and expedite secure travel; and smarter screening of travelers both abroad and at U.S. ports of entry. Under this strategy, the U.S. government plans to introduce new machine-readable “e-passports” and a secure biometric passport card for frequent travelers. The agencies also intend to streamline the visa application process. An advisory board comprised of representatives from the business, travel, and academic communities will be formed to provide input on the functioning of the initiative.

U.S. and EU Are Considering WTO Case Against China’s Tariffs on Auto Parts . . . According to Inside U.S. Trade, the United States and the European Union (EU) are compiling information to support a complaint against China’s tariff system for imported auto parts. China currently imposes a 25 percent tariff on imported autos compared to a 10–15 percent tariff on imported auto parts. However, if the amount of imported parts used to assemble the vehicle in China exceeds a certain percentage, China applies the 25 percent tariff to the imported parts. The U.S. and EU intend to argue that this tariff treatment on imported auto parts violates China’s WTO obligations. It is unclear whether the U.S. and EU-based auto manufacturing industries would support such a case because some car-makers may be concerned about retaliation against their operations in China. Meanwhile, USTR officials repeatedly have raised this issue with Chinese authorities and continue to seek elimination of this discriminatory tariff treatment.

Commerce Seeks Comments on Intellectual Property Protection at Trade Events . . . As part of its Strategy Targeting Organized Piracy (STOP!) initiative, the Commerce Department is examining ways to strengthen protection of intellectual property rights at trade shows and other events. Commerce is seeking private sector input to get a better sense of the range and frequency of IP violations that may occur at such events. If your company has experienced or observed IPR problems at U.S. or foreign trade show, please consider sharing your experience with SPI staff by contacting Karen Toliver or Gennie Ross by February 3, 2006.

TRADE AGREEMENTS AND NEGOTIATIONS

The U.S. and South Korea Are Poised to Officially Launch FTA Talks . . . According to Bush Administration and Congressional sources, the two governments will likely initiate bilateral free trade negotiations in early February. In the past month, Seoul undertook two major steps to improve trade relations with the United States. On January 13, the South Korean government lifted its ban on U.S. beef imports, and on January 26, it significantly curtailed a long-standing restriction on the screening of foreign movies in its territory. These actions addressed substantial irritants in the U.S.–South Korean trade relationship and demonstrate Seoul’s commitment to undertaking the difficult political measures that will likely be required to complete an FTA with the United States. Korea is the United States’ seventh largest export market and the 11th largest economy in the world. Given its size, many U.S. businesses support a U.S.–Korea FTA. With respect to plastics, in 2004, the industry shipped goods worth $754 million, making it the 12th largest export market for plastics industry products (industry imports from Korea were valued at $875 million in 2004).

Potential Launch of U.S.–Egypt FTA Delayed . . . Concerns about recent anti-democratic actions by the Egyptian government have led the Bush Administration to withhold its decision to launch FTA talks with Egypt. Specifically, Washington is protesting the continued detention of the leading challenger to Egyptian President Hosni Mubarak in recently-held presidential elections. Also, the U.S. government is concerned about the general conduct of the 2005 presidential and parliamentary elections and Egypt’s treatment of Sudanese refugees. Egypt’s Ministry of Trade and Industry responded that “Egypt does not believe in linking issues of political reform to a future FTA between the two countries.”

No Launch of U.S.–Switzerland FTA Negotiations . . . Due to their inability to reach an agreement over the inclusion of agriculture in a potential FTA, the United States and Switzerland have agreed to establish a Swiss–U.S. Trade and Investment Cooperation Forum. This agreement was reached following a series of meetings between U.S. Trade Representative Robert Portman and Swiss Federal Councilor Joseph Deiss (who serves as the country’s Economy Minister). In announcing the new Forum, Ambassador Portman and Councilor Deiss noted that Washington and Bern “remain interested in a possible comprehensive free trade agreement and may resume discussions at a later stage.”

WTO UPDATE

WTO “Mini-Ministerial” Meeting Held in Geneva . . . Senior-level discussions on the Doha Round of multilateral trade negotiations among U.S. and foreign trade officials resumed last week. Trade ministers from approxiimately 35 countries convened on January 28–29, 2006 in Davos, Switzerland for meetings on the sidelines of the World Economic Forum. In the area of non-agricultural market access, the participating ministers affirmed the deadlines for completing a framework for the negotiations (April 30, 2006) and for submission of comprehensive draft schedules by WTO members (July 31, 2006), as agreed at the WTO’s ministerial meeting in Hong Kong, China in December 2005. U.S. trade negotiators remain steadfast in seeking significant tariff cuts and elimination of non-tariff barriers for industrial goods. SPI continues to work with USTR and other industry groups seeking greater market access on a global basis for plastics industry goods.

EXPORT PROMOTION – TOOLS TO EXPAND YOUR MARKETS

Commerce Department Export Promotion Webinars . . . The U.S. Commercial Service is offering a free monthly web seminar program for U.S. companies looking to enter or increase their presence in key foreign markets. Between now and April 2006, this program will include webinars on opportunities in South Africa, China, and India. The next webinar will be held on February 9, 2006 and will focus on sales opportunities in South Africa. Click here to access a flyer for the upcoming webinar. More information about doing business in South Africa and other countries with trade preferences under the Africa Growth and Opportunity Act is available here.

Commerce Department Market Research Reports . . . The Commerce Department’s Commercial Service offers a host of services to U.S. companies seeking to export their products. Industry and country market research reports prepared by Commercial Service officers stationed in overseas markets are particularly helpful to obtain an assessment of domestic market conditions and an understanding of the business climate for entering the particular market. The reports are brief and typically contain contact information to request additional information. The Commerce Department recently issued the following reports:

Plastic Molding Equipment Market in China – This report stresses that China’s demand for plastics and plastics molding equipment is increasing rapidly. It identifies injection molding, extrusion, and blow-molding equipment as the primary equipment used by China’s plastics processors. Injection molding machines account for about half of all plastics machinery utilized in China, and both domestically-produced and imported machines are projected to increase over the next five years to meet demand.

For a copy of these reports, please contact Gennie Ross, or directly visit Commerce’s website at www.export.gov. This website also provides information on the extensive export services offered by the Commerce Department.

GLOBAL BUSINESS COUNCIL

GBC Program on Central and Eastern Europe . . . Always at the forefront of global issues impacting the plastics industry, the GBC is organizing a program to be held during NPE 2006. Attendees will hear about developments and business opportunities for plastics manufacturing in Central and Eastern Europe. Stay tuned for more details.

Join the GBC! . . . Does your company experience difficulties in exporting overseas? Are you concerned about import competition in your market? Do you want to have input on planning trade missions to overseas markets and SPI's positions on trade policy matters? Then consider joining SPI's Global Business Council.

The GBC's mission is to increase global awareness and competitiveness by providing resources to SPI members, while fostering growth of the plastics industry worldwide. All SPI members in good standing are eligible to join. If you are interested in joining the GBC, please contact Karen Toliver. More information on the GBC and its activities is available on the SPI website.

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