9 countries’ paper bag imports harmed US producers, tariffs to come: USITC

Dive Brief:

The U.S. International Trade Commission determined Friday that U.S. paper bag manufacturers are “materially injured” by imports of the products from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan and Vietnam. This follows a similar USITC ruling in April about paper bags from Turkey.
The U.S. Department of Commerce will issue antidumping duty orders on products imported from all named countries, and it will issue countervailing duty orders on paper bag imports from China and India.
The Coalition for Fair Trade in Shopping Bags submitted petitions that initiated the investigations last year; the coalition is comprised of packaging manufacturer Novolex and the United Steelworkers union. Members of the Alliance for Responsible Trade in Paper Bags, comprised of smaller packaging companies, opposed the petition.

Dive Insight:

Commerce first determined that bags from the named countries were being sold at less than fair value. Then it was up to USITC to determine if tariffs should be issued, and now the action moves back to Commerce for duty implementation.

USITC specified in various documents that the products covered in this case are paper shopping bags with die-cut handles or attached handles made from any substrate. The PSBs have a width of at least 4.5 inches and depth of at least 2.5 inches. They’re typically made from kraft paper, although they also “can be made from any type of cellulose fiber, paperboard, or pressboard with a basis weight less than 300 grams per square meter,” per USITC.

Novolex’s initial petitions last year said bags from the nine named countries represented 65% of U.S. imports of paper shopping bags in the first quarter of 2023. It said these are dumped, or sold below normal value, in the U.S. and sometimes subsidized by other countries’ governments. This activity harms domestic producers, according to the petitions. The petitions named more than 90 entities — primarily brands, food service businesses and smaller packaging companies — that are known importers of the bags in question, and it listed foreign producers and exporters.

“The unanimous decision of the ITC, after hearing all of the evidence, was a win for fair markets and competition. By collecting cash deposits and duties on imports from the subject countries, the U.S. government is helping to level the playing field with respect to fair pricing,” a Novolex spokesperson said via email Tuesday, adding that the company and its employees are grateful for USITC and Commerce’s investigations.

Novolex is owned by private equity firms Apollo Global Management and the Carlyle Group. It makes up an estimated 75% of paper shopping production in the U.S., according to the Alliance for Responsible Trade in Paper Bags.

That group, which includes smaller producers such as AnnJoy, Commonwealth Packaging and S. Walter Packaging Group, denounced the petitions. In a February news release, the alliance referred to Novolex as a private-equity owned, multi-billion-dollar packaging giant that was attempting “to misuse U.S. trade laws” to drive smaller competitors out of the market.

Opponents say large corporations might try to shut out foreign suppliers of products like paper bags from the domestic market as a way to restrict alternative sources of supply or disrupt supply chains to smaller competitors, thus pushing product buyers toward the large corporation.

The Alliance for Responsible Trade in Paper Bags did not provide comments by publication time. It said in the February news release that Novolex is trying to knock competitors out of the market. It also said that smaller packaging companies and customers would incur hardships from the extra tariff costs, or consumers would bear the burden if the costs are passed down.

“U.S. trade law is intended to protect American companies and workers from unfair foreign trade, not drive out competitors that offer more appealing product choices,” Terri Ethridge, partner at AnnJoy, said in the release.

Novolex is “asking the U.S. Government to do their dirty work by imposing duties that give them an unfair advantage,” said Andrew Straitman, CEO of Commonwealth Packaging, in the release.

Commerce did not respond by publication time to a request for information about its timeline for issuing antidumping and countervailing tariff orders for the bag imports.