To say that the companies who produce chemicals in America could by hurt by the incr
eased tariffs in China is an understatement.
Ed Brzytwa is the Director for International Trade at the American Chemistry Council. As one of five panelists at the GBD colloquium last week on the China 301 case, he made crystal clear what an enormous stake American chemical manufacturers have in the issues - and threats - that have arisen from USTR's investigation into Chinese practices aimed at acquiring U.S. intellectual property.
As we did with our last entry, we'll begin with a few key dates:
August 18, 2017 - USTR opens an investigation "to determine whether acts, polices, and practices of the Government of China related to technology transfer, intellectual property, and innovation are actionable under section 301 (b)(1) of the Trade Act" of 1974.
March 22, 2018 - USTR issues its report. This is the findings of the
Investigation into China's Act, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974. On the same day,
March 22, 2018 -
President Trump issues a memorandum authorizing a) increased tariffs, b) the initiation of a case against China in the WTO, and c) potential new restrictions on Chinese investments in the United States.
April 3, 2018 - USTR releases an initial list of imports from China that could be subject to an additional, punitive tariff of 25 percent. This list is published in the Federal Register on April 6.
April 4, 2018 - China publishes its own cross-retaliation list in the 301 dispute.
May 15, 2018 - This is the announced date for the public hearing on the issue. And the issue here is not whether Chinese conduct burdens U.S. commerce. USTR has made the determination that it does. The issue for the hearing is the appropriateness of the proposed responses.
The American Chemistry Council clearly believes that raising tariffs on $50 billion - or $150 billion - in imports from China is not appropriate. Here is more of what Mr. Brzytwa had to say about the threat of increased tariffs:
Forty percent of the products on the China list relate to chemicals. First off - let's just get this out of the way. The American Chemistry Council opposes the use of tariffs on both sides. We don't want tariffs. We think tariffs are damaging to economic growth in general. We support free and fair trade. We want open trade, but we do not want tariffs being imposed between the United States and China. And similar to Josh [Kallmer of ITI], [we believe] these are not the right tools to address the problems that USTR has identified. They are not going to make matters better. They are only going to make matters worse, and not just for the industries that are implicated in the report but for a broad range of industries that will be subject to retaliation.
Making Chemicals in America. Mr. Brzytwa's presentation last week wasn't just about the current trade conflict with China. It was also about the chemical industry in America.
"This is an industry that's undergoing a very significant renaissance here in the United States," Mr. Brzytwa said, "mainly because we have access to low cost natural gas, shale gas, which is the feedstock for the business of chemistry."
We are not going to repeat Mr. Brzytwa's whole presentation. You can read or listen to that for yourself by clicking the appropriate link below. Here, however, are a few of the data points he listed in a fact-rich presentation:
The U.S. chemical industry is
a nearly $800 billion enterprise.
It
supports more than 25 percent of U.S. GDP [because of the large number of industries that rely on chemical inputs].
It provides "
more than 822,000 skilled, good-paying American jobs."
"Approximately
$194 billion in new chemicals and plastics production capacity has been announced in the last eight years, and more than 60 percent of that is foreign direct investment."
