Today, the American bottling industry is confronting unprecedented challenges — everything from supply chain disruptions to labor shortages — that interfere with its efforts to provide shoppers with bottled water at a time of increased demand. But beneath these cracks lies a serious fissure: a slew of duties levied on overseas imports of polyethylene terephthalate (PET) plastic resin, a crucial material used in thousands of food and beverage containers. To support U.S. bottlers and consumers in need of relief, the International Trade Commission (ITC) must revoke these unwarranted and burdensome fees.
PET resin has become an essential substance for those in the bottling industry. Not only is it lightweight and durable, but it is considered “food grade plastic,” meaning that it meets the U.S. Food and Drug Administration’s high standards to be used in packaging.
However, the markets for this material have been thrown into disarray. Unparalleled demand for PET resin, coupled with issues involving supply, have obstructed access to the material. While the ongoing supply chain crisis has only added additional strain, the problem had already been exacerbated by the import duties imposed by the ITC and the U.S. Department of Commerce a few years ago.
These duties, while well-intentioned, have been disastrous. They were meant to bolster U.S. producers of PET resin, but the opposite has happened. Today, a small group of foreign-held PET resin companies is profiting off the duties through their U.S. subsidiaries at the expense of American product manufacturers and consumers.
For U.S. manufacturers — and particularly those in the bottling industry — the duties have proven to be devastating. Manufacturers are finding that they have been sent foreign PET resin without their advance knowledge from these so-called “domestic” producers. In some cases, these producers have been unwilling to provide U.S.‐produced PET resin when specifically requested. As we have seen, these international firms are using their foreign networks to source PET resin but are still falling far short of meeting U.S. demand.
This issue, combined with supply chain problems, is trickling down to 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 meet the needs of their customers. Making matters worse, many of these businesses are still reeling from the initial lockdowns imposed at the beginning of the pandemic.
This all comes at a time when consumers are now spending more at the grocery store and the pharmacy on everyday goods. The latest Consumer Price Index data revealed that prices skyrocketed over 7 percent throughout the year, climbing at the fastest pace in 40 years. Families already have to worry enough, and access to everyday products should be the last thing on their minds.
Those who produce and supply bottled water — our nation’s top packaged beverage — have a proven track record when it comes to economic growth and should not be forced to grapple with unnecessary costs. The industry, along with its wholesale and retail partners, directly or indirectly employ more than 700,000 workers who earn roughly $40 billion in wages. While they may not always realize it, these employees depend on stable PET resin markets.
As American manufacturers, retailers, and consumers all suffer, the domestic PET resin producers appear to be doing just fine. These firms have managed to control 100 percent of America’s PET resin manufacturing capacity — even though they really call countries like Thailand and Taiwan home.
Worse, these producers continue to invest heavily in their overseas facilities while their U.S. production is left untouched. In Corpus Christi, Texas, for instance, several of the domestic producers own an unfinished plant that has been dormant for several years and will likely not come online in the near future despite the surging domestic demand for U.S.-produced PET resin.
Our nation’s leading trade authority now has an opportune moment to restore balance to PET resin markets. The ITC is conducting a routine “sunset review” of the duties and evaluating 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, the agency’s commissioners must fully consider the harm these duties are causing. U.S. bottlers and their customers cannot afford for the fees to remain in place. Brand owners and consumers alike would benefit from competitive PET resin markets, and the ITC must not let this moment pass.