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Firms argue against tariffs on low-tech plastic products


  Reynolds Consumer Products introduced the Kitchens Quick Cut version of its polyethylene stretch film earlier this year. It is trying to win a waiver for the film now

Washington -- Is plastic food wrap low-tech or high-tech? That question came before a U.S. government panel looking at President Donald Trump's tariffs on Chinese imports.

A key reason President Trump gives for slapping tariffs on those imports is that he wants leverage to end unfair trade practices, such as forced technology transfers and favoritism for Chinese high-tech sectors like electric cars, as part of Beijing's Made in China 2025 program.

But in the case of plastics film and other lower-tech plastics goods on the latest tariff list, many U.S. companies are telling the Trump administration thanks but no thanks, they don't face those sorts of pressures, and they don't want to be part of a trade war.

They argue that things like plastic film or decades-old polyurethanes technology are commodities and not remotely connected to China's drive to advance into the next generation of manufacturing.

Enter polyethylene stretch film. Lake Forest, Ill.-based Reynolds Consumer Products told a special U.S. government panel July 25 that the Chinese-made PE film in its new Kitchens Quick Cut product is not important for China's high-tech push and should not face a 25 percent tariff.

"The manufacturing of plastic PE wrap is not a priority of the Made in China 2025 initiative," said Lisa Burns, vice president of marketing for Reynolds Brands. "PE plastics wrap does not involve industrially significant technology. To the contrary, the technology and know-how needed to manufacture PE plastic wrap has been widely available for many years."

She said that Made in China 2025 is focused in areas Beijing sees driving future economic growth, like artificial intelligence, aerospace, augmented and virtual reality, high-speed rail and new energy vehicles.

It's an argument that played out repeatedly over two days of hearings July 24-25, as companies sought exemptions for their products.

In some ways it's an understandable point for companies. The Trump administration said it wants to target unfair trade, forced technology transfer and intellectual property theft, along with any strong-arming by Beijing connected to Made in China 2025.

But the U.S. Trade Representative opened the door for arguments like that from Reynolds when it announced it would listen to requests if companies could show their products "were not strategically important" or connected to Made in China 2025.

Polyether polyols importer K2 Urethanes LLC seized on that.

K2 owner Mark Bradley told the government hearing that the polyurethane imports that face 25 percent tariffs are based on decades-old technology and are not an area where there's pressure from Beijing to turn over know-how.

"There is no pressure on U.S. companies to give or provide their technology to Chinese companies," he said. "The production of polyols is not related to the Made in China 2025 program."

The Trump administration argues U.S. firms are afraid to criticize Beijing publicly for fear of retaliation, and it says tariffs can be leverage to force Beijing to address the United States' $375 billion deficit in manufactured goods with China.

Another goal has been to get Beijing to loosen requirements in strategic sectors like automobiles, where foreign suppliers like General Motors Co. have historically had to be in a 50-50 partnership with a Chinese firm.

In announcing the first round of 25 percent tariffs in late May, President Trump said they'd be imposed on Chinese imports "containing industrially significant technology, including those related to the Made in China 2025 program."

Plastics and chemicals have figured prominently: They made up five of the 10 pages of categories of Chinese imports covered at the July 24-25 hearings, for what is the second round of China tariffs. (By value, however, they only accounted for $2.2 billion of the $16 billion in second round.)

In explaining why so many Chinese plastics exports were on the list, U.S. officials said it's because they benefit from Chinese government policies.

"All of the products on the proposed list benefit from Chinese industrial policies, including Made in China 2025," the press office of the U.S. Trade Representative told Plastics News.

But some plastics trade groups, including the Plastics Industry Association, have reacted skeptically to that argument.

"While the industry is concerned about China's theft of intellectual property and its role in undermining the ability of American companies to compete in China, the Plastics Industry Association and its membership report few incidents related to the reasoning for the tariffs," the group said in a written filing in the earlier round of China tariffs in May.

It's a point Reynolds made. Burns told the panel that the consumer products company has not been required to transfer sensitive technology or IP in connection with the plastic film, and that "to the best of our knowledge," their Chinese supplier has not benefited from any Made in China 2025 support.

"The absence of such efforts further demonstrates that there are no sensitive technologies associated with manufacturing PE plastic wrap in China," Burns said.

Importer Impak Films US LLC was seeking an exemption for PVC-coated PET films it brings in from China, arguing that the base technology itself is almost 50 years old and its Chinese supplier has developed specialized expertise from years of experience.

While the company said it's sympathetic to the Trump administration goals of targeting unfair trade, it said the flexible packaging industry is not part of Made in China 2025, so targeting plastic film would not help the broader U.S. goals, said Impak Business Director Ed Jenkins.

"A manufacturer of coated films is not in the realm of any such technology," he said. "Neither we nor our customer have been forced by the Chinese manufacturers to share IP or engage in forced technology transfer or set up joint ventures."


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