Today, the U.S. bottling industry is facing unprecedented challenges – ranging from supply chain disruptions to labor shortages – that interfere with its efforts to provide buyers with bottled water at a time of increased demand. But beneath those cracks lurks a serious crack: a slew of duties levied on overseas imports of polyethylene terephthalate (PET) plastic resin, a crucial material used in thousands of food and drink containers. To support US bottlers and consumers who need help, the International Trade Commission (ITC) must revoke these unwarranted and onerous charges.
PET resin has become an essential substance for players in the bottling industry. Not only is it lightweight and durable, but it’s considered a “food-grade plastic,” meaning it meets the United States Food and Drug Administration’s high standards for use in packaging.
However, the markets for this material have been disrupted. Unprecedented demand for PET resin, coupled with supply issues, has obstructed access to the material. While the current supply chain crisis has only added further pressure, the problem had already been exacerbated by import duties imposed by the ITC and the US Department of Commerce a few years ago. .
These duties, while well-intentioned, were disastrous. They were supposed to support American producers of PET resin, but the opposite happened. Today, a small group of foreign-owned PET resin companies are taking advantage of the rights through their US subsidiaries at the expense of US product manufacturers and consumers.
For U.S. manufacturers — and especially those in the bottling industry — the duties have proven devastating. Manufacturers find that they have received foreign PET resin without their knowledge from these so-called “domestic” producers. In some cases, these producers have been unwilling to supply US-produced PET resin upon specific request. As we have seen, these international companies are using their overseas networks to source PET resin, but are still far from meeting US demand.
This problem, combined with supply chain issues, impacts small businesses at the local level. From Idaho to Texas, retailers are finding it increasingly difficult to stock their shelves with products that require PET resin for packaging and to meet their customers’ needs. Worse still, many of these businesses are still reeling from the initial lockdowns imposed at the start of the pandemic.
All of this comes at a time when consumers are now spending more at the grocery store and drugstore for everyday consumer goods. The latest Consumer Price Index data showed prices soared more than 7% throughout the year, climbing at the fastest pace in 40 years. Families have enough to worry about already, and access to everyday products should be the last thing on their minds.
Those who produce and supply bottled water – our country’s best packaged beverage – have a proven track record of economic growth and should not be forced into unnecessary costs. The industry, along with its wholesale and retail partners, directly or indirectly employs more than 700,000 workers who earn approximately $40 billion in wages. Although they may not always realize it, these employees depend on stable markets for PET resin.
While U.S. manufacturers, retailers, and consumers are all hurting, domestic PET resin producers seem to be doing just fine. These companies have managed to control 100% of the PET resin manufacturing capacity in the United States, even though they really inhabit countries like Thailand and Taiwan.
Worse still, these producers continue to invest heavily in their overseas facilities while their US production remains intact. In Corpus Christi, Texas, for example, several domestic producers have an unfinished plant that has been idle for several years and is unlikely to be commissioned in the near future despite growing domestic demand for US-produced PET resin.
Our nation’s top trade authority now has an opportune time to restore balance in the PET resin markets. The ITC conducts a routine “sunset review” of duties and assesses whether they should remain in place. The ITC held a hearing on the orders in January and is expected to issue its final decision in March.
As we approach the ITC’s final decision, agency commissioners must fully consider the harm caused by these rights. US bottlers and their customers cannot afford for the fee to remain in place. Brand owners and consumers would benefit from competitive PET resin markets, and ITC must not let this moment pass.