US to impose duties on subsidised Vietnamese PE bags

03 September 2009 17:37  [Source: ICIS news]

WASHINGTON (ICIS news)--US importers of polyethylene-based (PE) retail bags from Vietnam must begin paying a duty of up to 4.2% under a federal order meant to counter subsidies by the Hanoi government, the attorney for US plastic bag producers said on Thursday.

Joe Dorn, an attorney with Washington-based King & Spalding and counsel to US plastic bag manufacturers, said a new decision by the Department of Commerce established the first countervailing duty against exports from Vietnam.

The department ruled in a preliminary determination that the Hanoi government had been subsidising Vietnamese PE bag producers by as much as 4.24% to give those exporters a competitive edge in the US market.

The US imposes countervailing duties on a country’s exports to the US when that country's government subsidises its domestic producers. Countervailing duties are distinct from duties assessed against individual foreign firms for so-called dumping of products in the US market at below cost prices.

The department said in its 31 August preliminary ruling that Vietnamese PE bag makers and exporters have been receiving government subsidies ranging from 0.2% to 4.24%.

The department’s International Trade Administration (ITA) said that it would instruct US Customs offices to begin collecting cash deposits or bonds from US importers of Vietnamese PE bags in amounts equal to the subsidies that Vietnamese bag producers receive.

Last month’s ruling by the department is preliminary until the ITA and the US International Trade Commission (ITC) issue final determinations that Vietnam is exporting subsidised bags to the US to the detriment of domestic producers.

Those final determinations are expected in the first quarter of 2010. When those final determinations are made, cash deposits and bonds collected from US importers of Vietnamese plastic bags will then be forfeited to the US Treasury.

The impact of the preliminary ruling is to discourage US importers from bringing in further shipments of Vietnamese PE bags.

Imports of PE bags from Vietnam have grown from an estimated 2006 value of about $17.4m (€12.2m) to nearly $80m in 2008, according to the commission, presumably aided by the competitive advantage conveyed by the Hanoi government subsidies.

US plaintiffs in the case against Vietnam’s PE bag producers are Hilex Poly of Hartsville, South Carolina, and Superbag of Houston.

($1 = €0.70)

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By: Joe Kamalick
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