U.S. International Trade Commission

Robert A. Rogowsky

Director of Operations

COMMISSIONERS

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436

Jennifer A. Hillman, Vice Chairman

Deanna Tanner Okun, Chairman

Marcia E. Miller

Stephen Koplan

Charlotte R. Lane

Daniel R. Pearson

Acting Director, Office of Industries

Project Leader

Cynthia B. Foreso, Office of Industries

Deputy Project Leader

Eric Land, Office of Industries

Digest Authors

Raymond Cantrell, John Cutchin, Queena Fan, Cynthia B. Foreso, Lawrence Johnson,

John Kitzmiller, Eric Land, Deborah McNay, Rose Steller, and Norman VanToai

Office of Industries

Assisted by

Walker Pollard, Office of Economics

Brenda Carroll, Office of Industries
U.S. International Trade Commission

Washington, DC 20436

May 2004

www.usitc.gov

Publication 3696

Advice Concerning Possible Modifications

to the U.S. Generalized System of

Preferences, 2003 Review

Investigation No. 332-459

CLASSIFIED BY: United States Trade Representative, Letter Dated March 3, 1998

DECLASSIFIED BY: Robert B. Zoellick, United States Trade Representative,

Letter Dated February 13, 2004

NOTICE

THIS REPORT IS A PUBLIC VERSION OF THE REPORT SUBMITTED TO THE

UNITED STATES TRADE REPRESENTATIVE ON MAY 12, 2004. ALL NSI

CONFIDENTIAL AND CONFIDENTIAL BUSINESS INFORMATION HAS BEEN

REMOVED AND REPLACED WITH ASTERISKS (***).
CONTENTS

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Presentation of advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Digest locator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

Commodity digests:

Adipic acid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Ultra-high molecular weight polyethylene resins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

PET bottle-grade resins in primary forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

PET film . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Fancy leather . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Certain stamped aluminum cookware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Camcorders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Mufflers and exhaust pipes for motor vehicles other than tractors 

suitable for agricultural use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Wheel rims for bicycles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Appendix A

U.S. Trade Representative’s request letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

Appendix B

U.S. International Trade Commission’s notice of investigation . . . . . . . . . . . . . . . . . . . . . . . . . B-1

Appendix C

Calendar of the public hearing, March 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

Appendix D

Model for evaluating probable economic effect of changes in GSP status . . . . . . . . . . . . . . . . . D-1

OMB No.: 3117--0188

05/04

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Advice Concerning Possible Modifications to the U.S.

Generalized System of Preferences, 2003 Review

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Advice Concerning Possible Modifications to

the U.S. Generalized System of Preferences,

2003 Review
 1 The following Federal Register notices were issued by the USTR and the Commission relating to investigation

No. 332-459:

Date Notice Subject

Feb. 24, 2004 69 F.R. 8514 USTR notice of GSP review

Feb. 25, 2004 69 F.R. 8680 Notice of USITC investigation

iii

INTRODUCTION

On February 13, 2004, the Commission received a request from the United States Trade

Representative (USTR) for an investigation under section 332(g) of the Tariff Act of 1930 for the purpose

of providing advice concerning possible modifications to the U.S. Generalized System of Preferences

(GSP).1

 The USTR request letter is included in appendix A. Following receipt of the request, the

Commission instituted investigation No. 332-459 to provide as follows--

a. advice as to the probable economic effect on U.S. industries producing like or directly

competitive articles and on consumers of adding products to the list of eligible articles for the

Harmonized Tariff Schedule (HTS) subheadings 8708.92.50 and 8714.92.10; in providing its

advice on these articles, the USTR asked that the Commission assume that the benefits of the

GSP would not apply to imports that would be excluded from receiving such benefits by virtue

of the competitive need limits; 

b. advice as to the probable economic effect on U.S. industries producing like or directly

competitive articles and on consumers of removing products from the list of eligible articles

for all beneficiary countries under the GSP for the following HTS subheadings: 2917.12.10,

3901.10.00 (pt.), 3901.20.00 (pt.), 3907.60.0010, and 3920.62.00; and

 c. advice on whether any industry in the United States is likely to be adversely affected by a

waiver of the competitive-need limits for Argentina for HTS subheading 4107.11.80; for

Thailand for HTS subheading 7615.19.30; and for Indonesia for HTS subheading 8525.40.80. 

The Commission was requested to use the dollar value limit of $110,000,000.

The Commission instituted the investigation on February 19, 2004, and indicated that it would seek

to provide its advice no later than May 13, 2004, as requested by the USTR. The Commission’s notice of

investigation is contained in appendix B.

All interested parties were afforded an opportunity to provide the Commission with written

comments and information. In addition, the Commission held a public hearing on the investigation in

Washington, DC, on March 31, 2004. The list of witnesses testifying before the Commission is contained

in appendix C.
 2 Price elasticity is a measure of the changes in quantities supplied or demanded that result from a percent change

in price. Generally, price elasticities of supply are positive and price elasticities of demand are negative. There are a

number of guidelines based on the absolute elasticity value when characterizing elasticities. The elasticity is low

when its absolute value is less than 1.0 because the change in quantity demanded or supplied is less than

proportional to the change in price. The elasticity is moderate when its absolute value is between 1 and 2, with

percentage changes in quantity being one to two times greater than the change in price. The elasticity is high when

their absolute values exceed 2.0, as percentage changes in quantities exceed percentage changes in price by more

than two times. It should be noted that the elasticity levels (low, moderate, and high) are estimates based on

Commission staff analysis of industry trends.

iv

PRESENTATION OF ADVICE

In response to the USTR request for probable economic effect advice on whether any industry in the

United States is likely to be adversely affected by possible modifications to the U.S. GSP, the

Commission provides its advice in the form of commodity digests, as has been done in prior GSP

investigations. This

report contains 9 digests covering 10 HTS subheadings with each digest containing the following

sections:

I. Introduction.--This section provides basic information on the item(s), including description

and uses, rate of duty, and an indication of whether there was a like or directly competitive article

produced in the United States on January 1, 1995.

II. U.S. market profile.--This section provides information on U.S. producers, employment,

shipments, exports, imports, consumption, import market share, and capacity utilization. When exact

information is not obtainable, estimates based on the following coding system are provided:

* = Based on partial information/data adequate for estimation with a moderately high degree of 

confidence, or 

** = Based on limited information/data adequate for estimation with a moderate degree of 

confidence.

III. GSP import situation, 2003. -- This section provides 2003 U.S. import data, including world

total and GSP-country-specific data. 

IV. Competitiveness profiles, GSP suppliers. --This section provides background information on

GSP-eligible countries for the digest, their ranking as an import source, the price elasticities of supply and

demand for imports from that country, and the price and quality of the imports versus U.S. and other

foreign products.2

V. Position of interested parties. -- This section provides brief summaries of the GSP petitions, 

hearing testimony, and any written submissions from interested parties.
3

 For effects advice, "U.S. consumer" is limited to the first-level consumer and may be a firm receiving an

intermediate good for further processing or an end-use consumer receiving a final good.

v

VI. Summary of probable economic effect advice.--This section provides advice on the shortterm (1 to 5 years) impact of the proposed GSP-eligibility modifications on U.S. industries producing like

or directly competitive articles and on U.S. consumers. In the course of providing this advice, the

Commission also estimates changes in the U.S. import levels resulting from the GSP modifications. The

probable economic effect advice, to a degree, integrates and summarizes the data provided in sections I-V

of the digests with particular emphasis on the price sensitivity of supply and demand. Appendix D

provides a brief textual and graphic presentation on the model used for evaluating the probable economic

effect of changes in the GSP. It should be noted that the probable economic effect advice with respect to

changes in import levels is presented in terms of the degree to which GSP modifications could affect the

level of U.S. trade with the world. Consequently, if GSP beneficiaries supply a very small share of the

total U.S. imports of a particular product or if imports from beneficiaries readily substitute for imports

from developed countries, the overall effect on U.S. imports could be minimal. The digests contain a

coded summary of the probable economic effect advice. 

The coding scheme for both “addition” and “competitive-need-limit waiver” digests is as follows:

Total U.S. imports:

Code A: Little or no increase (less than 5 percent).

Code B: Moderate increase (6 to 15 percent).

Code C: Significant increase (greater than 15 percent).

Code N: No effect.

U.S. industry and employment:

Code A: Little or negligible adverse impact.

Code B: Significant adverse impact (significant proportion of workers unemployed, declines

in output and profit levels, and departure of firms; effects on some segments of the

industry may be substantial even though they are not industry-wide).

Code C: Substantial adverse impact (substantial unemployment, widespread idling of

productive facilities, substantial declines in profit levels; effects felt by the entire

industry).

Code N: No effect.

U.S. consumer:3

Code A: The bulk of duty saving (greater than 75 percent) is expected to be absorbed by the

foreign suppliers. 

Code B: Duty saving is expected to benefit both the foreign suppliers and the domestic

consumer (neither absorbing more than 75 percent of the costs).

Code C: The bulk of duty saving (greater than 75 percent) is expected to benefit the U.S.

consumer.

Code N: No effect.
The coding scheme for “removal” digests is as follows:

Total U.S. imports:

Code X: Little or no decrease (5 percent or less).

Code Y: Moderate decrease (6 to 15 percent).

Code Z: Significant decrease (over 15 percent).

U.S. industry and employment:

Code X: Little or negligible beneficial impact.

Code Y: Significant beneficial impact (significant number of additional workers

employed; increases in output; increases in profit levels; new firms; but

beneficial impact not industry wide).

Code Z: Substantial beneficial impact (substantial increase in employment; widespread

increased production; substantial increases in profits levels; beneficial impact

on the industry as a whole).

Code N: No effect. 

U.S. consumer:

Code X: The bulk of the duty increase (greater than 75 percent) is expected to be

absorbed by the foreign suppliers.

Code Y: The duty increase is expected to increase costs to both the foreign suppliers

and the domestic consumer (neither absorbing more than 75 percent of the

costs).

Code Z: The bulk of the duty increase (greater than 75 percent) is expected to be

passed on to the U.S. consumer.

Code N: No effect. 

The probable economic effect advice for U.S. imports and the domestic industry is based on

estimates of what is anticipated in the future with the proposed change in GSP eligibility compared with

what is anticipated without it. That is, the estimated effects are independent of and in addition to any

changes that will otherwise occur. Although other factors, such as exchange rate changes, relative

inflation rates, and relative rates of economic growth, could have a significant effect on imports, these

other factors are not within the scope of the USTR request.

DIGEST LOCATOR

Report digests are listed in sequential order by digest number, which is the HTS subheading. The

digest locator provides the following information on the individual digests: the proposed action, the HTS

subheadings, the digest title, the petitioner, the column 1 rate of duty as of January 1, 2004, the existence

of U.S. production on January 1, 1995, the probable economic effect advice, and the name of the

International Trade Analyst assigned. 

vi
Digest No. 

(HTS

subheading(s))

Digest title Petitioners

Col. 1 duty

rate as of

1/1/04

(% ad valorem)

U.S.

production

on

1/1/95?

Probable

economic

effect

advice

Analyst

(Division)

REMOVALS:

2917.12.10 Adipic acid Invista Inc., DE 6.5 Yes *** Johnson

(CH)

3901.10.00 (pt.)

 3901.20.00 (pt.)

Ultra-high molecular

weight polyethylene

resins

Ticona LLC, NJ 6.5

6.5

Yes ***

***

Land and

Cantrell

(CH)

3907.60.0010 PET bottle-grade

resins in primary

forms

U.S. PET Resins

Producers Coalition

(Voridian, TN;

Wellman, Inc., NJ;

M&G Polymers, USA,

TX; DAK Americas,

Inc., PA; Nan Ya

Plastics Corp., SC)

6.5 Yes *** Foreso

and

Cantrell

(CH)

3920.62.00 PET film Dupont Teijin Films,

DE; Mitsubishi

Polyester Film of

America, SC; Toray

Plastics (America),

Inc., RI; SKC

America, Inc., GA

4.2 Yes *** Foreso

and

Cantrell

(CH)

COMPETITIVE-NEED-LIMIT WAIVER (ARGENTINA):

4107.11.80 Fancy leather Camara de la

Curtidora, Argentina

2.4 Yes *** Steller

(AG)

COMPETITIVE-NEED-LIMIT WAIVER (THAILAND):

7615.19.30 Certain stamped

aluminum cookware

Meyer Corp., CA 3.1 Yes *** VanToai

(MM)

COMPETITIVE-NEED-LIMIT WAIVER (INDONESIA):

8525.40.80 Camcorders P.T. Matsushita

Kotobuki Electronics

Industries, Indonesia

2.1 No *** Fan and

Kitzmiller

(ET)

ADDITIONS:

8708.92.50 Mufflers and exhaust

pipes for motor

vehicles other than

tractors suitable for

agricultural use

Govt. of Argentina;

Conforma S.R.L.,

Argentina

2.5 Yes *** McNay

(ET)

8714.92.10 Wheel rims for

bicycles

Eninco Engeharia,

Industria e Comercio

Ltda, Brazil

5.0 Yes *** Cutchin

(MM)

vii

COMMODITY DIGESTS

Digest No. 2917.12.10

1

USITC public hearing, March 31, 2004, transcript (hereinafter “Hearing transcript”), p. 169. 2

Hearing transcript, p. 171.

3

Adipic Acid

I. Introduction

 X Removal

HTS

subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

2917.12.10 Adipic acid 6.5 Yes 

Description and uses.–Adipic acid is a synthetic organic aliphatic dicarboxylic acid principally derived

from the oxidation of cyclohexane. Adipic acid is used primarily to make nylon 6,6, which is in turn used in the

production of industrial and apparel fabrics and carpets as well as engineering resins.1

 Other uses include the

production of polyurethane foam, esters for use as plasticizers and synthetic lubricants, food additives, baking

powders, and adhesives.

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ......................... 33333

Employment (1,000 employees)........ (

1

) (1) (1) (1) (1)

Shipments (1,000 dollars)

2 ............ *843,700 *917,100 *775,700 *970,000 *986,490

Exports (1,000 dollars) ............... 61,268 64,220 53,520 66,911 84,080

Imports (1,000 dollars) ............... 56,395 58,199 63,233 51,448 47,701

Consumption (1,000 dollars) .......... *838,827 *911,079 *785,413 *954,537 *950,111

Import-to-consumption ratio (percent).... 76855

Capacity utilization (percent) .......... *90 *90 *90 *90 *90 1

 Not available.

2

 Prehearing submission of Rhodia Poliamida Ltda., Mar. 5, 2004, p. 5.

Comment.–More than 80 percent of domestically-produced adipic acid is used captively to manufacture

nylon 6,6 fibers and resins.

2

 Shipments rose during 1999-2003, except for 2001. The dip in 2001 was attributed

to a decline in demand in the Asian markets for both adipic acid and finished nylon fibers corresponding with a

small increase in production capacity for adipic acid in that region. Exports also rose each year during the period

except for 2001. Imports from Canada accounted for more than 88 percent of total adipic acid imports during the

period, while Canada and Brazil together supplied more than 99 percent.
Digest No. 2917.12.10

4

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total . . . . . . . . . . . . . . . . . . . . . . . . 47,701 100 (1

) *5

Imports from GSP countries:

GSP total2 . . . . . . . . . . . . . . . . . . . . . . . . . 5,259 11 100 *1

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,259 11 100 *1

1

 Not applicable.

2

 HTS subheading 2917.12.10 was added to the list of GSP-eligible items in July 2003.

Comment.–Brazil was the only source of GSP imports of adipic acid in 2003; such imports began in July

of that year. Rhodia, a French firm with subsidiaries worldwide, produces adipic acid in Brazil at its subsidiary. 

The U.S. subsidiary, Rhodia North America, imports adipic acid from the Brazilian subsidiary and sells it in the

U.S. market.
Digest No. 2917.12.10

3

Hearing transcript, p. 172.

5

IV. Competitiveness profile, Brazil

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Brazil is currently the only GSP-eligible supplier of adipic acid to the U.S. market. Adipic

acid from Brazil is similar in all respects, including technical requirements and price, to the domestic product but

primarily serves the merchant market,3

 and is similarly priced. Imports of adipic acid from Brazil supply segments

of the U.S. market that do not have a current domestic source of supply and are competitive in segments of the

U.S. market where domestic supply exists.
Digest No. 2917.12.10

4

Hearing transcript, p. 190

6

IV. Competitiveness profile, all GSP suppliers

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NA 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Brazil is currently the only GSP-eligible supplier of adipic acid to the U.S. market. There is

currently no other GSP-eligible country with adipic acid production capacity.4
Digest No. 2917.12.10

7

V. Position of interested parties

Petitioner.–Invista, Inc., the petitioner, stated that GSP treatment for the product helps a major foreign

producer that already has a substantial presence in the U.S. market. Invista stated that this is contrary to the

intent of the GSP program, which is to help a developing country enter the U.S. market. Invista also cited

domestic oversupply, a weak market made worse by rising GSP imports, and the lack of reciprocity by Brazil as

reasons for removing GSP treatment for adipic acid. They claim GSP imports have resulted in falling prices and

lost sales by U.S. manufacturers in the U.S. market.

Support.--Inolex Chemical Co. supports the petition for removal of GSP treatment for adipic acid

because it believes that GSP benefits help a major foreign producer that already has a substantial presence in

the U.S. market. Inolex stated that this is contrary to the intent of the GSP program, which is to help a

developing country enter the U.S. market. Inolex also cited weak market conditions in the United States, falling

prices, and domestic oversupply, which are being exacerbated by rising GSP imports from Brazil.

Opposition.–Rhodia Poliamida Ltda. (Rhodia), the producer of the adipic acid imported from Brazil under

the GSP, indicated that the proposed action would damage U.S. consumers by increasing the cost of this

ingredient in formulated products produced in the United States. Further, Rhodia stated that there is no impact on

a U.S. industry because most of the domestically-produced adipic acid is consumed captively by the U.S.

manufacturers to make other products. Rhodia indicated that its imports are a very small part of a very large

market and have declined since the granting of GSP in July 2003. Rhodia claimed that even if all its excess

capacity were directed to the United States, it would still make up a small share of the U.S. market. Rhodia

stated that much of its excess capacity is expected to supply growing markets in Brazil and Argentina and that its

prices in the U.S. market are rising, not falling, as contended by the petitioner. In addition, Rhodia stated that

U.S. manufacturers are net exporters of adipic acid to South American markets.
Digest No. 2917.12.10

8

VI. Summary of probable economic effects advice-Removal

* * * * * **
Digest No. 2917.12.10

9 

Table 1.--Adipic acid: U.S. imports for consumption, by principal sources, and U.S. exports of domestic 

merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Canada ........................ 49,798 52,557 58,246 46,077 42,111 88.3%

 Brazil............................ 6,080 5,465 4,604 4,608 5,259 11.0%

 Japan........................... 0 7 193 460 204 0.4%

 Ukraine ........................ 110 0 116 171 66 0.1%

 United Kingdom ........... 20 0 3 6 32 0.1%

 Taiwan ......................... 0 0 0 0 13 0.0%

 Ireland.......................... 0 0 0 6 10 0.0%

 Korea ........................... 0 0 0 0 4 0.0%

 Germany...................... 274 0 21 0 2 0.0%

 Belgium........................ 0 26 0 0 0 0.0%

 All other ....................... 113 144 50 120 0 0.0%

Total ................................. 56,395 58,199 63,233 51,448 47,701 100.0% 

Imports from GSP-eligible 

nations:

 Brazil............................ 6,080 5,465 4,604 4,608 5,259 100.0%

Total from GSP-eligible 

nations............................. 6,080 5,465 4,604 4,608 5,259 100.0%

Export market:

 Argentina ..................... 12,552 16,535 7,929 10,795 19,056 22.7% 

 Japan........................... 11,350 21,776 14,728 17,989 16,680 19.8% 

 Israel............................ 3,707 1,297 1,759 3,858 12,371 14.7% 

 Canada ........................ 10,485 6,343 6,406 7,784 12,007 14.3% 

 Taiwan ......................... 6,910 5,665 3,733 4,502 6,689 8.0% 

 China ........................... 295 112 248 2,201 4,987 5.9% 

 Mexico ......................... 2,188 2,807 3,169 2,734 3,367 4.0% 

 Korea ........................... 2,734 1,752 317 3,826 2,788 3.3% 

 Singapore .................... 177 3,785 0 6,215 2,577 3.1% 

 Brazil............................ 287 885 842 1,030 861 1.0% 

 All Other....................... 10,582 3,264 14,390 5,976 2,699 3.2% 

Total ................................. 61,268 64,220 53,520 66,911 84,080 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 3901.10.00(pt.)

11

Ultra-high Molecular Weight Polyethylene Resin

I. Introduction

 X Removal

HTS

subheading(s) Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

3901.10.00(pt.)

3901.20.00(pt.)

Low-density polyethylene

High-density polyethylene

6.5

6.5

Yes

Yes

Description and uses.–Ultra-high molecular weight polyethylene resin (UHMWPE) is a very specialized

product within the range of polyethylene products. UHMWPE is a white powder with an average molecular weight

in the range of 3,000,000 to 6,000,000, and with a relative viscosity of 1.44 or greater, at a concentration of 0.02

percent, at 135°C in decahydronapthalene, according to ASTM Standard D-4020. UHMWPE has a molecular

weight average 10 times that of conventional polyethylene. 

Polyethylene, the leading commodity resin produced in the United States, is produced by polymerizing

ethylene, which is in turn produced from natural gas or petroleum feedstocks. UHMWPE, which accounts for a

very small share of the polyethylene produced in the United States, serves higher-end niche markets such as

sheets, rods, fibers, and linings that require its combination of characteristics, including superior strength,

inertness, lubricity, and abrasion resistance. It is also approved by the FDA (CFR Title 21 section

177.1520(a)(2)) and USDA for use on cutting boards, and table tops; for hangers used in poultry processing;

protective gloves; and molds for cookies and chocolates. Non-food applications include use in orthopedic

implants and bullet-proof vests, as well as large sheets used instead of ice for skating rinks.
Digest No. 3901.10.00(pt.)

5

Posthearing submission of Polialden Petroquímica S.A., Attachment 1.

6

Posthearing submission of Polialden Petroquímica S.A., pp. 5.

7

Posthearing submission of Ticona LLC to the USTR for the 2003 Annual GSP Review, Apr. 13, 2004,

p. 3. 8

Ticona Press Release, Ticona Breaks Ground for 30,000 Ton Plant for GUR® Ultra-High Molecular

Weight Polyethylene in Bishop, Texas, May 16, 2001, found at

http://www.ticona.com/news-details?id=4687. 

12

II. U.S. market profile

 

Profile of U.S. industry and market, 1999-20031

Item 1999 2000 2001 2002 2003

Producers2 . . . . . . . . . . . . . . . . . . . . . . . . *14 *14 *14 *14 *14

Employment (1,000 employees) ....... *12 *12 *12 *13 *13

Shipments (1,000 dollars)

3 ........... *10,400,000 *11,500,000 *10,000,000 *9,800,000 *11,700,000

Exports (1,000 dollars) .............. 1,580,492 1,860,866 1,690,148 1,677,799 1,877,937

Imports (1,000 dollars)............... 1,009,750 1,191,905 1,263,356 1,045,134 1,306,511

Consumption (1,000 dollars) .......... *9,829,258 *10,831,039 *9,573,208 *9,167,335 *11,128,574

Import-to-consumption ratio (percent) ... *10 *11 *13 *11 *12

Capacity utilization (percent)

3

. ......... *89 *88 *82 *85 *86 1

 This table contains data for the total U.S. primary polyethylene industry and market. 2

 There are 14 companies operating at 28 locations, primarily along the Texas and Louisiana Gulf Coast. 3

 Commission estimates based on American Plastics Council statistics and industry prices.

Comment.–The United States is the world’s largest producer and consumer of polyethylene. However,

the U.S. market for UHMWPE accounts for a *** share of the overall polyethylene market.5

 The following

tabulation shows a profile for the domestic UHMWPE market:

Item 1999 2000 2001 2002 2003

Producers1 . . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** ***

Employment (1,000 employees) ....... *** *** *** *** ***

Shipments (1,000 dollars) ............ *** *** *** *** ***

Exports (1,000 dollars) .............. *** *** *** *** ***

Imports (1,000 dollars)............... *** *** *** *** ***

Consumption (1,000 dollars) .......... *** *** *** *** ***

Import-to-consumption ratio (percent) ... *** *** *** *** ***

Capacity utilization (percent) .......... *** *** *** *** ***

1

 *** (See Posthearing submission of Polialden Petroquímica S.A., Attachment 1.) 2

 ***

3

 ***

The U.S. market for UHMWPE is reported ***.6

 However, Ticona has the ability to expand production

capacity at its domestic plant and to supplement the availability of UHMWPE in the U.S. market with temporary

burst capacity from their German plant.7

 GSP imports from Polialden in Brazil, dutiable imports from Ticona’s

UHMWPE plant in Germany, and imports from several other small suppliers in the Netherlands and China are

reported to supply most of the remaining domestic demand. In 2001, Ticona announced a major expansion of

capacity (from 16,000 metric tons to 30,000 metric tons) for which they constructed an entirely new domestic

facility.8

 This new plant, which became operational in 2002, received the International Organization for 
Digest No. 3901.10.00(pt.)

9

Ticona Press Release, All Seven Ticona North America Facilities Achieve ISO 14001, March 4, 2003,

found at http://www.ticona.com/news-details?id=4804.

10Ticona Press Release, Ticona to increase European GUR® capacity, October 9, 2003, found at

http://www.ticona.com/news-details?id=8413. 

13

for Standardization’s (ISO) approval in 2003.9 Annual growth in global demand for UHMWPE is estimated to be in

the range of 5 percent.10

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 20031

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total . . . . . . . . . . . . . . . . . . . . . . . . 1,306,511 100 (2

) *12

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . 50,900 4 100 (3

)

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,046 2 57 (3

)

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,314 2 42 (3

)

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 (3

) (3) (3)

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 (3

) (3) (3) 1

 Import data shown in this table include the total imports in the two relevant HTS subheadings and include

items other than UHMWPE. Brazil is currently the only GSP supplier of UHMWPE. 2

 Not applicable.

3

 Less than 0.5 percent.

Note.–Data may not add to the totals shown.

Comment.–Imports from GSP-eligible countries account for a relatively small share of total U.S. imports of the

products in the HTS subheadings covered in this digest and account for a negligible share of total U.S.

consumption. Thailand and Brazil were the only GSP-eligible sources of U.S. imports of any significance and

together these accounted for 99 percent of total GSP imports. However, Brazilian imports ***
Digest No. 3901.10.00(pt.)

14

IV. Competitiveness profile, Brazil

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic): 

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate X Low 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Brazil is the only source of GSP-eligible imports of UHMWPE to the United States.
Digest No. 3901.10.00(pt.)

11Hearing transcript, p. 10.

15

IV. Competitiveness profile, all GSP suppliers

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate X Low 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Brazil is the only source of GSP-eligible imports of UHMWPE to the United States.11 No other

GSP-eligible countries have the capacity to produce UHMWPE.
Digest No. 3901.10.00(pt.)

12Hearing transcript, p. 13.

16

V. Position of interested parties

Petitioner.–The petitioner, Ticona LLC (a division of Celanese AG), Summit, NJ, stated that GSP

eligibility should be removed for U.S. imports of UHMWPE from Brazil because such imports are not necessarily

beneficial to U.S. consumers of UHMWPE resin and are harmful to the petitioner’s competitiveness. The

petitioner is the only U.S. producer of UHMWPE and also imports the product from its sister plant in Germany. 

The Brazilian producer is reportedly the second largest global producer of UHMWPE and accounts for a significant

share of U.S. imports of the subject product. The petitioner stated that UHMWPE accounts for a small percentage

of the total annual U.S. polyethylene import volume, and, as a result, it is difficult to accurately track imports of

UHMWPE from U.S. Government trade statistics alone. The petitioner suggests that the Brazilian firm may be

shipping UHMWPE under alternate U.S. tariff classifications thus skewing actual U.S. imports. The majority of this

product is believed to be included under the HDPE classification, HTS subheading 3901.20.00. This category

includes a wide array of commodity-grade polyethylene resins, making it difficult for the UHMWPE industry to

identify UHMWPE import volumes. 

Opposition.–Polialden Petroquímica S.A. (Polialden) opposes the petition from Ticona to remove

UHMWPE from the list of GSP-eligible articles. Polialden stated that the removal petition should be denied

because the U.S. UHMWPE industry (Ticona) has not been adversely affected by GSP imports and because

Ticona mischaracterizes the relevant U.S. industry; Polialden also stated that it believes that Ticona would

immediately use the GSP removal as an opportunity to raise prices as it did when Basell, another U.S. producer,

left the market.12

Ultra Poly, a privately owned company located in Tacoma, Washington, that processes UHMWPE for

special applications in various industries, stated that it has worked with Polialden since 1997 and insecurities in

the market forced Ultra Poly to source raw materials from different suppliers, including Basell, Ticona, Polialden,

as well as from China. Twice during the last ten years, when UHMWPE resin was in tight demand, Ticona, the

main supplier at that time, decided to divert the product from Ultra Poly to more profitable markets and contracts.

Ultra Poly stated that this decision by Ticona almost forced Ultra Poly to close its plant. Ultra Poly believes that it is

critical to have a second large supplier in the market. 

*** opposes the removal of UHMWPE from GSP-eligibility. As the two main suppliers of UHMWPE to the

domestic market are Ticona and the one GSP supplier, Polialden, *** is concerned that having only one supplier in

the market would be detrimental to competition. The company stated that any reduction in the level of competition

among its suppliers would make it more difficult to produce in the United States and compete in the world market.

The company further stated that Polialden offers security of supply.

*** *** purchases UHMWPE from Ticona, Polialden, and other suppliers. It had previously purchased the

majority of its UHMWPE from Basell and is concerned that eliminating GSP status will leave Ticona as the only

viable option in the United States. While Ticona is competitive in terms of price and non-price factors, it would not

be able to fulfill the total U.S. demand without a large second supplier. *** believes that it is important to maintain

several sources of UHMWPE in the United States and worldwide. *** noted that much of their competition in the

*** comes from foreign sources supplied with their raw materials by Ticona. Prices in the market increased in 2002

related to the withdrawal of Basell from the domestic industry, and further price increases are feared if Polialden is

forced out of the U.S. market.
Digest No. 3901.10.00(pt.)

17

VI. Summary of probable economic effects advice-Removal (3901.10.00(pt.) and 3901.20.00(pt.))

* * * * * **
Digest No. 3901.10.00

18 

Table 1.--Ultra-high molecular weight polyethylene resins: U.S. imports for consumption, by principal sources, 

and U.S. exports of domestic merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Canada ........................ 940,823 1,113,759 1,192,949 986,492 1,209,988 92.6%

 Thailand....................... 7,345 22,488 25,194 10,357 29,046 2.2%

 Brazil............................ 2,270 7,955 2,734 10,491 21,314 1.6%

 Japan........................... 8,392 8,164 10,786 12,698 13,685 1.0%

 Germany...................... 4,717 7,385 6,081 7,878 10,198 0.8%

 Belgium........................ 3,458 3,534 2,686 2,435 3,415 0.3%

 France ......................... 12,013 7,683 2,316 1,845 3,126 0.2%

 Mexico ......................... 7,521 7,358 3,559 3,268 2,955 0.2%

 Switzerland .................. 1,602 1,653 1,843 2,161 2,634 0.2%

 Korea ........................... 5,923 4,862 2,097 782 2,265 0.2%

 All other ....................... 15,686 7,065 13,111 6,727 7,887 0.6%

Total ................................. 1,009,750 1,191,905 1,263,356 1,045,134 1,306,511 100.0% 

Imports from GSP-eligible 

nations:

 Thailand....................... 7,345 22,488 25,194 10,357 29,046 57.1%

 Brazil............................ 2,270 7,955 2,734 10,491 21,314 41.9%

 India............................. 0 12 390 10 176 0.3%

 Indonesia ..................... 126 359 829 476 175 0.3%

 All other ....................... 4,682 1,028 1,633 422 190 0.4%

Total from GSP-eligible 

nations............................. 14,423 31,841 30,780 21,755 50,900 100.0%

Export market:

 Mexico ......................... 435,792 560,325 516,913 492,247 616,330 32.8% 

 Canada ........................ 417,643 504,658 454,093 414,350 520,123 27.7% 

 Belgium........................ 47,112 60,142 63,015 81,212 79,720 4.2% 

 China ........................... 52,950 86,930 73,517 58,622 54,465 2.9% 

 Netherlands ................. 29,943 35,614 28,468 33,312 46,697 2.5% 

 Columbia...................... 34,917 40,525 26,583 36,247 44,049 2.3% 

 Guatemala ................... 37,592 40,672 39,153 53,552 43,879 2.3% 

 Costa Rica ................... 30,311 33,995 31,882 27,429 42,853 2.3% 

 Israel............................ 24,680 26,040 17,192 23,639 38,226 2.0% 

 Taiwan ......................... 28,660 21,968 28,060 33,707 31,718 1.7% 

 All Other....................... 440,892 449,996 411,273 423,483 359,876 19.2% 

Total ................................. 1,580,492 1,860,866 1,690,148 1,677,799 1,877,937 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 
Digest No. 3901.10.00

19 

Table 2.--Ultra-high molecular weight polyethylene resins (by HTS subheading): U.S. imports for consumption, 

by principal sources, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

HTS subheading 3901.10.00: 

 Canada ........................ 460,029 525,361 411,715 326,028 344,869 92.1%

 Japan........................... 4,034 4,348 5,862 7,378 7,861 2.1%

 Brazil............................ 1,718 5,586 118 134 5,322 1.4%

 Thailand....................... 433 1,637 2,224 1,071 3,344 0.9%

 Germany...................... 2,143 2,418 3,275 1,892 2,565 0.7%

 Mexico ......................... 6,857 6,948 2,177 2,639 2,367 0.6%

 Switzerland .................. 1,247 1,322 1,630 1,933 2,042 0.6%

 Korea ........................... 4,873 2,390 1,198 259 1,485 0.6%

 France ......................... 10,757 5,497 882 352 1,129 0.6%

 Sweden........................ 135 134 633 1,413 778 0.6%

 All other ....................... 10,081 2,433 6,990 3,021 2,575 0.6%

Total ................................. 502,307 558,075 436,703 346,119 374,338 100.0% 

 

HTS subheading 3901.20.00: 

 Canada ........................ 480,794 588,399 781,234 660,465 865,119 92.8%

 Thailand....................... 6,911 20,851 22,970 9,286 25,702 2.8%

 Brazil............................ 551 2,369 2,616 10,357 15,991 1.7%

 Germany...................... 2,575 4,967 2,806 5,986 7,633 0.8%

 Japan........................... 4,358 3,816 4,924 5,320 5,823 0.6%

 Belgium........................ 991 2,838 2,141 1,893 3,031 0.3%

 France ......................... 1,256 2,186 1,434 1,493 1,996 0.3%

 Netherlands ................. 273 1,240 860 741 1,049 0.3%

 Sweden........................ 826 605 401 376 983 0.3%

 Korea ........................... 1,050 2,471 900 523 780 0.3%

 All other ....................... 7,858 4,089 6,367 2,575 4,066 0.3%

Total ................................. 507,442 633,830 826,653 699,015 932,174 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 3907.60.0010

13The information and probable economic effect advice in this digest are for the purpose of this report

only. Nothing in this report should be construed to indicate how the Commission would find in an investigation

conducted under any other statutory authority. 14Hearing transcript, p. 41.

15Hearing transcript, pp. 28.

21

PET Bottle-Grade Resins in Primary Forms13

I. Introduction

 X Removal

HTS

subheading

Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

3907.60.0010 PET bottle-grade resins in primary

forms

6.5 Yes

Description and uses.–Polyethylene terephthalate (PET) is a thermoplastic polyester resin produced from

purified terephthalic acid (PTA) and monoethylene glycol (MEG). PET resin producers typically sell the product to

downstream converters that fabricate the resin into finished products. PET resins are primarily used to

manufacture containers for soft drinks, water, juice, peanut butter, salad dressings, oil, cosmetics, and household

cleaners. Manufacturers prefer to use PET resins to package products because of their strength, thermo-stability,

and transparency. Customers prefer these items because they are lightweight, shatter-resistant, resealable, and

recyclable.

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ........................ 77777

Employment . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** ***

Shipments (1,000 dollars)............ *** *** *** *** ***

Exports (1,000 dollars)

1 ............. 301,262 331,476 460,163 399,551 476,244

Imports (1,000 dollars) .............. 197,785 269,467 257,351 282,288 369,876

Consumption (1,000 dollars) ......... *** *** *** *** ***

Import-to-consumption ratio (percent)... *** *** *** *** ***

Capacity utilization (percent) ......... *** *** *** *** *** 1

 The export data cover products not included in this digest. Actual export data for the products covered in this

digest are estimated to be 85 percent of the data shown. 

Comment.–The U.S. PET resins industry consists principally of large producers with facilities in the

United States, Canada and Mexico, many of whom have consolidated operations in recent years.14 During 1999-

2002, U.S. plants were running at relatively high capacity utilization rates to satisfy domestic demand that is

growing from 7 to 10 percent per year.15 The primary markets for U.S. exports are Mexico and Canada; Canada is

the primary supplier of U.S. imports under the provisions of NAFTA. U.S. production capacity was added during
Digest No. 3907.60.0010

16Hearing transcript, p. 40.

22

2003 to supply domestic consumption requirements in the United States and demand in Mexico and Canada. 

Capacity expansions, according to U.S. producers, take 2 to 4 years for planning and implementation; some North

American expansions were planned and completed but others were cancelled or delayed.16

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total ......................... 369,876 100 (1

) ***

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . 146,826 40 100 ***

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,141 21 53 ***

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,236 9 22 ***

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,763 8 21 *** 1

 Not applicable.

Note.–Data may not add to the totals shown.

Comment.–Thailand, India, and Indonesia are the principal GSP suppliers of PET bottle-grade resins in

primary forms to the U.S. market, together accounting for 96 percent of total GSP imports and 38 percent of total

U.S. imports. GSP imports accounted for about *** percent of total U.S. consumption in 2003.
Digest No. 3907.60.0010

17Hearing transcript, p. 27.

23

IV. Competitiveness profile, Thailand

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Thailand was the second-largest supplier of total U.S. imports of PET bottle-grade resins as well

as the largest GSP-import supplier during 2001-03, increasing its market share significantly in 2002 and 2003. The

United States is Thailand’s primary export market for these resins, accounting for 35 to 45 percent of Thailand’s

total production. U.S. imports of PET bottle-grade resins from Thailand are estimated to be of comparable quality

to U.S.-produced products. By volume, nearly 60 percent of U.S. imports from Thailand are landed on the West

Coast; most U.S. production is located in the Southeastern and Southern United States.17
Digest No. 3907.60.0010

24

IV. Competitiveness profile, India

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–During 2003, India was the second-leading GSP supplier of PET bottle-grade resins to the U.S.

market. U.S. imports of PET bottle-grade resins from India are estimated to be of comparable quality to the U.S.-

produced product. 
Digest No. 3907.60.0010

18Hearing transcript, p. 27.

25

IV. Competitiveness profile, Indonesia

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Indonesia was the fifth-largest supplier of U.S. imports of PET bottle-grade resins during 2001-03. 

These imports increased significantly in 2002 and are estimated to be of comparable quality to U.S.-produced

product. More than 70 percent of U.S. imports from Indonesia are landed on the West Coast.18
Digest No. 3907.60.0010

26

IV. Competitiveness profile, all GSP suppliers

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Thailand, India, and Indonesia are the primary GSP suppliers of PET bottle-grade resins to the

U.S. market. The United States is a major market for the GSP-eligible countries, and these countries have geared

much of their production capacity to export. 
Digest No. 3907.60.0010

19Council Regulation (EC) No. 2603/2000, 2000 O.J. (L 301) 1, Nov. 27, 2000.

20The PET Users Coalition consists of the following companies: The National Soft Drink Association,

American Frozen Food Institute, Constar International, Inc., The Cosmetic, Toiletry, and Fragrance Association,

Grocery Manufacturers Association, Graham Packaging, International Bottled Water Association, Lion

Chemical Industries, Inc., National Association for the Specialty Food Trade, National Food Processors

Association, Nestle USA, Nestle Waters North America, Ocean Spray Cranberries, Inc., Owens-Illinois, Inc.,

PepsiCo, Inc., Procter & Gamble Co., and Welch’s Co.

27

V. Position of interested parties

Petitioner.–The petitioner, the United States PET Resin Producers Coalition (PET Coalition), comprises 

the following major U.S. PET producers: Voridian, a Division of Eastman Chemical Company, Kingsport, TN; DAK

Americas, Inc., Chadds Ford, PA; Wellman, Inc., Shrewsbury, NJ; Nan Ya Plastics Corporation America, Lake

City, SC;, and, M&G Polymers USA, LLC, Houston, TX. These firms stated that GSP status is no longer needed

for this product because of the recent increase in import volume and the resulting downward price pressure, which

have negatively impacted the U.S. industry. The petition further stated that PET bottle-grade resins producers in

Thailand, India, and Indonesia received subsidies. As a result, the EC imposed antidumping and countervailing

duty orders against India, Indonesia, and Thailand in 2000 and those exports were thus diverted from the EC to

the U.S. market.19

Support.–BP Amoco Chemicals (BP) supports the petition to remove HTS subheading 3907.60.0010

from GSP-eligibility. BP is the world’s largest producer of PTA, the primary material used to manufacture PET

resin for use as beverage bottles and food containers. BP stated that PTA demand has been adversely impacted

by the economic conditions in the U.S. textile and polyester fiber industry. As a result, BP’s business has become

dependent on the PET resin industry, which is now facing deteriorating economic conditions due to increases in

low-priced imports of duty-free PET resins. BP stated that reinstating the 6.5 percent duty rate on PET resins

would reduce the price disadvantage now facing the U.S. industry.

CSX Transportation (CSXT), a major U.S. rail carrier and active transporter of finished industrial products

and raw materials for the chemical industry, supports the petition. CSXT stated that the U.S. PET resin industry is

an important component of its business and that GSP-eligible imports could result in a legitimate risk to sustained

operations for certain domestic producers.

Opposition.–Futura Polyesters Ltd., Reliance Industries, Ltd., and South Asian Petrochem Ltd. are

opposed to the removal of HTS subheading 3907.60.0010 from GSP eligibility. They stated that the petitioners,

three of which are foreign owned, are strong global competitors either through exports to or production in foreign

markets, and maintain a commanding share of the U.S. market. These companies stated that taking into account

both market share based on U.S. production, as well as the share of imports from affiliates in NAFTA countries

controlled by domestic producers, the U.S. industry supplied approximately 90 percent of U.S. demand in 2003. 

India’s exports to the U.S. are negligible, accounting for only 1.5 percent of the U.S. market. The companies

further stated that demand for PET resin in the United States and globally is projected to increase dramatically, in

particular, demand in India is projected to sustain a 25-percent rate of growth in 2004. Under these

circumstances, access to diverse sources of PET resin supply is essential because this product is an important

input for a variety of end-products purchased by U.S. consumers.

The PET Users Coalition20 is opposed to the removal of HTS subheading 3907.60.0010 from GSP

eligibility because the U.S. economy benefits from the duty savings. The cost of PET resins for U.S. companies

would increase with the increase in the tariffs and add extra costs for U.S. converters of PET resins and consumer

product manufacturers. The PET Users Coalition stated that GSP countries supply only a small share of the U.S.

market and generally provide less complex and less expensive resins than those supplied by the U.S. producers. 

Although GSP imports increased in recent years, higher raw material costs in Asia during the first two quarters of

2004 will result in significant decreases in exports to the United States. GSP imports, according to the PET Users

Coalition, replaced imports from Canada, not U.S. production. Any injury suffered by the petitioners is the result of

the disparity between costs for the raw materials of PET resins and a temporary overcapacity in the U.S. market,

not GSP imports, according to the PET users Coalition. 

According to the PET Users Coalition, GSP imports did not lead to price declines; price declines were

due to efforts by the petitioners to debottleneck (improve the efficiency of the production process) and the addition

of production capacity in Mexico, Canada, and the United States. The PET Users Coalition further stated that

three U.S. producers have added nearly 1 million metric tons of production capacity in Mexico and in January
Digest No. 3907.60.0010

28

2004, M&G Polymers announced that it will increase production capacity in its Mexican facility. The PET Users

Coalition contends that U.S. imports from U.S. plants operating in Mexico will fill any void in import levels resulting

from the removal of GSP status. 

Indo-Pet (Thailand) Ltd., Thai Shinkong Industry Corp., Ltd., and Bangkok Polyester Public Co., Ltd.,

which are Thai producers of PET resins, and P.T. Indorama Ltd., an Indonesian producer of PET resin, oppose

the removal of HTS subheading 3907.60.0010 from GSP eligibility because GSP PET resin imports are not

significant in the U.S. market and removal of GSP status will result in a significant impact on U.S. consumers. 

According to these firms, most of the U.S. imports are from U.S. producers’ plants in Canada. In addition,

capacity expansions by U.S. producers operating in Mexico will result in Mexico replacing GSP imports if the HTS

subheading is removed from GSP eligibility. These firms stated that GSP imports supply only a small share of the

U.S. market and that the petitioners, which are large global companies, are not import sensitive or injured by GSP

imports. If this HTS subheading is removed from GSP eligibility, the U.S. PET resin producers, with worldwide

exports, will be in a position to control not only the U.S. market but also markets in Europe and Asia.
Digest No. 3907.60.0010

29

VI. Summary of probable economic effects advice-Removal

* * * * * **
Digest No. 3907.60.0010

30 

Table 1.--PET bottle-grade resins in primary forms: U.S. imports for consumption, by principal sources, and U.S. 

exports of domestic merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Canada ........................ 155,938 221,220 190,683 161,001 121,444 32.8%

 Thailand....................... 2,283 8,889 19,731 40,302 78,141 21.1%

 Mexico ......................... 10,642 4,606 7,762 13,390 62,062 16.8%

 India............................. 1,168 5,149 6,798 11,732 32,236 8.7%

 Indonesia ..................... 11,381 13,171 13,500 37,990 30,763 8.3%

 Taiwan ......................... 36 400 1,458 3,755 26,013 7.0%

 Korea ........................... 6,774 959 3,889 7,588 6,145 1.7%

 Pakistan....................... 597 189 0 49 2,921 0.8%

 Ireland.......................... 77 160 0 2,400 2,896 0.8%

 Turkey.......................... 1 0 0 0 2,151 0.6%

 All other ....................... 8,888 14,725 13,530 4,080 5,103 1.4%

Total ................................. 197,785 269,467 257,351 282,288 369,876 100.0% 

Imports from GSP-eligible 

nations:

 Thailand....................... 2,283 8,889 19,731 40,302 78,141 53.2%

 India............................. 1,168 5,149 6,798 11,732 32,236 22.0%

 Indonesia ..................... 11,381 13,171 13,500 37,990 30,763 21.0%

 Pakistan....................... 597 189 0 49 2,921 2.0%

 Turkey.......................... 1 0 0 0 2,151 1.5%

 All other ....................... 236 3,669 2,967 1,334 614 0.4%

Total from GSP-eligible 

nations............................. 15,666 31,067 42,995 91,408 146,826 100.0%

Export market:

 Mexico ......................... 36,260 39,278 64,528 95,776 117,806 24.7% 

 Canada ........................ 114,215 116,823 124,739 87,052 89,906 18.9% 

 Netherlands ................. 53,656 50,349 56,033 58,754 56,744 11.9% 

 Peru ............................. 611 24,161 24,950 31,579 51,624 10.8% 

 Brazil............................ 26,502 29,212 82,477 22,075 27,069 5.7% 

 Venezuela.................... 656 3,534 7,405 9,700 13,025 2.7% 

 Argentina ..................... 5,544 11,352 16,075 5,616 12,201 2.6% 

 United Kingdom ........... 6,130 4,806 4,747 5,843 9,233 1.9% 

 Singapore .................... 1,869 2,899 9,501 10,660 8,352 1.8% 

 Belgium........................ 3,705 3,877 3,839 5,322 8,309 1.7% 

 All Other....................... 52,104 45,185 65,870 67,175 81,976 17.2% 

Total ................................. 301,252 331,476 460,163 399,551 476,244 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 
Digest No. 3920.62.00

31

PET Film

I. Introduction

 X Removal

HTS

subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

3920.62.001 PET film 4.2 Yes

1

 Antidumping orders are currently in place for PET film from Korea (original order date: 6/5/91; continued

date: 3/7/00) and Taiwan (order date: 7/1/02). Antidumping and countervailing duty orders are currently in place

for PET film from India (orders date: 7/1/02).

Description and uses.–PET film is a high-performance, flexible, transparent or translucent material

produced from molten polyethylene terephthalate (PET) polymer, which is a linear, thermoplastic polyester resin. 

The end product is usually available in rolls of varying widths up to several feet, and in thicknesses ranging from

an ultra thin 2 microns (8 gauge), to a relatively thick 350 microns (1,400 gauge). Domestic PET film is consumed

captively, sold on the merchant market to downstream converters who fabricate the film into finished products, or

exported. These films have an excellent combination of physical and chemical properties suitable for a myriad of

applications, including packaging, industrial, electrical, imaging, and magnetics. Some typical applications are

food packaging, adhesive tapes, and plastic cards of many types (including smart cards), electrical motor

insulation, wire, cable, capacitors, microfilm, X-ray films, instant films, ink jet photo paper, overhead projector film,

audio and video tape, computer floppy disks, and computer storage media. 
Digest No. 3920.62.00

21Hearing transcript, p. 75.

32

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ........................ 9 9 9 8 8

Employment . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** ***

Shipments (1,000 dollars) ........... *1,250,000 *1,300,000 *1,000,000 *1,100,000 *1,300,000

Exports (1,000 dollars) ............. 350,837 437,427 356,620 345,416 405,748

Imports (1,000 dollars).............. 297,210 315,273 233,376 239,605 249,356

Consumption (1,000 dollars) ......... *1,196,373 *1,177,846 *876,756 *994,189 *1,143,608

Import-to-consumption ratio (percent) .. *25 *27 *27 *24 *22

Capacity utilization (percent) ......... *85 *80 *80 *85 *88

Comment.–DuPont Teijin is the largest U.S. PET film producer. Approximately 75 percent of industry

capacity is slated for the merchant market and about 25 percent for captive use. Film lines are designed to run at

full capacity to achieve maximum efficiency and cost competitiveness. Volume growth has been about 1 to 3

percent during the period covered, led by packaging applications, while magnetic media (audio/video tape, floppy

disks, etc.) have experienced negative growth. During 1999-2003, there was a considerable amount of

restructuring by merchant producers because of changing patterns in demand.

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total ......................... 249,356 100 (1

) *22

Imports from GSP countries:

GSP total2 . . . . . . . . . . . . . . . . . . . . . . . . . . 23,902 10 100 *3

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,380 4 43 *1

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,710 3 28 *1

 Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400 2 23 *1 1

 Not applicable.

2

 Data presented do not include U.S. imports from India. India was proclaimed by the President as non-eligible

for GSP treatment for articles included under HTS subheading 3920.62.00 as of July 1, 1998.

Comment.–While not the largest GSP-eligible source, Thailand increased shipments of PET film to the

U.S. market during the last half of 2003. In April 2003, the Indian-owned PET film producer in Thailand (Polyplex),

began operations.21
Digest No. 3920.62.00

33

IV. Competitiveness profile, Indonesia

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Indonesia ranks tenth in terms of overall U.S. imports. Indonesian product is believed to be

interchangeable with U.S. product for its intended use. Import values have fluctuated from a low of $5 million in

1999 to a high of $15 million in 2002. Imports were valued at $10 million in 2003.
Digest No. 3920.62.00

34

IV. Competitiveness profile, Brazil

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Brazil ranks twelfth in terms of total U.S. imports. Brazilian product is believed to be

interchangeable with U.S. product for its intended use. Imports from Brazil have fluctuated from a high of $10

million in 2001 to a low of $2 million in 2002; imports were $7 million in 2003. Some U.S. imports from Brazil may

be accounted for by a captive venture between a U.S. company and the Brazilian source.
Digest No. 3920.62.00

35

IV. Competitiveness profile, Thailand

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Comment.–While not currently a major source of U.S. imports of PET film, Thailand is the third largest

source of these imports from GSP-eligible nations. U.S. imports from Thailand increased significantly in 2003 as

shipments began from Polyplex, an Indian-owned plant located in Thailand.
Digest No. 3920.62.00

36

IV. Competitiveness profile, all GSP suppliers

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–All GSP products are believed to be interchangeable with U.S. products for a given

application. Although India was a leading source of U.S. imports of PET film from GSP-eligible countries, it was

removed from eligibility for GSP treatment for this product as of July 1, 1998.
Digest No. 3920.62.00

37

V. Position of interested parties

Petitioner.–The petitioners, DuPont Teijin Films, Wilmington, DE; Mitsubishi Polyester Film of America,

Greer, SC; Toray Plastics (America), Inc., North Kingstown, RI; and SKC America, Inc., Covington, GA,

requested the removal of this HTS subheading from GSP eligibility with respect to Thailand. Petitioners stated

that Polyplex, an Indian firm, built a plant in Thailand as a way to ship products to the U.S. market and thus avoid

duties. The petitioners claimed that in 2002, Polyplex began expanding its global production facilities to include

two large PET film lines in Thailand and is a worldwide competitor. According to the petitioner, the U.S. domestic

industry is already suffering from lost revenues and is thus having difficulty supporting investment in production

facilities and expanding U.S. capacity because of unfair imports of low-priced product from Thailand.

Opposition.–Polyplex, the Indian-owned Thai producer of PET film and exporter to the U.S. market,

stated that PET film from Thailand accounted for only 1 percent of U.S. consumption and 2 percent of total PET

film imports into the United States in 2003. The petitioners, according to Polyplex, are all Japanese and Korean

companies who import PET film from China, Indonesia, Korea, and Malaysia, and are attempting to increase nonGSP imports at the expense of GSP-eligible countries. In addition, Polyplex, which recently increased capacity,

has just begun to export PET film to the United States from its plant in Thailand. Polyplex stated that it faces high

transportation costs in shipping PET film from Thailand to the United States.
Digest No. 3920.62.00

38

VI. Summary of probable economic effects advice-Removal

* * * * * **
Digest No. 3920.62.00

39 

Table 1.--PET film: U.S. imports for consumption, by principal sources, and U.S. exports of domestic 

merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Japan........................... 72,201 65,557 40,675 42,096 48,367 19.4%

 Korea ........................... 63,870 46,760 36,721 41,136 47,484 19.0%

 Canada ........................ 17,383 24,003 15,946 18,993 21,472 8.6%

 United Kingdom ........... 32,978 31,633 21,315 20,520 17,952 7.2%

 China ........................... 27,971 25,145 16,204 19,322 16,819 6.7%

 Italy .............................. 9,226 12,004 15,623 11,539 14,052 5.6%

 Taiwan ......................... 6,766 12,435 9,050 8,938 13,315 5.3%

 India1

............................ 18,194 29,926 30,500 17,841 12,070 4.8%

 Germany...................... 7,695 11,971 6,965 15,335 11,839 4.7%

 Indonesia ..................... 5,155 11,845 7,302 14,784 10,380 4.2%

 All other ....................... 35,773 43,997 33,075 29,102 35,607 14.3%

Total ................................. 297,210 315,273 233,376 239,605 249,356 100.0% 

Imports from GSP-eligible 

nations:

 India1

............................ 18,194 29,926 30,500 17,841 12,070 33.6%

 Indonesia ..................... 5,155 11,845 7,302 14,784 10,380 28.9%

 Brazil............................ 9,039 10,447 6,152 2,030 6,710 18.7%

 Thailand....................... 0 13 19 25 5,400 15.0%

 All other ....................... 87 11 287 621 1,413 3.9%

Total from GSP-eligible 

nations............................. 32,475 52,241 44,261 35,300 35,972 100.0%

Export market:

 Canada ........................ 82,843 87,358 79,216 86,034 94,871 32.8% 

 Japan........................... 13,540 28,200 17,892 19,001 54,669 13.5% 

 France ......................... 17,993 57,107 32,456 35,208 41,563 10.2% 

 United Kingdom ........... 41,637 45,987 32,117 34,657 39,866 9.8% 

 Mexico ......................... 44,798 51,379 49,799 40,686 26,918 6.6% 

 Brazil............................ 9,380 20,593 22,875 18,323 21,941 5.4% 

 Singapore .................... 14,179 16,944 14,734 20,358 16,938 4.2% 

 Germany...................... 33,213 21,402 15,927 13,847 16,758 4.1% 

 Taiwan ......................... 7,667 10,140 10,829 9,941 13,398 3.3% 

 China ........................... 3,829 12,920 12,334 11,670 11,904 2.9% 

 All Other....................... 81,758 85,399 68,442 55,690 66,922 16.5% 

Total ................................. 350,837 437,427 356,620 345,416 405,748 100.0% 

1 U.S. imports of PET film from India are subject to both antidumping and countervailing duty orders.

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 4107.11.80

22As defined in Ch. 41, Additional U.S. Note 1 of the Harmonized Tariff Schedule of the United States.

41

Fancy leather

I. Introduction

 X Competitive-need-limit waiver: Argentina

HTS

subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

4107.11.801 Fancy leather further prepared after

tanning or crusting, including

parchment-dressed leather, of bovine

or equine animals, without hair on, full

grains, unsplit (other than full grains,

unsplit of bovines, and of a unit 

surface area not exceeding 28 square

feet)

2.4 Yes

1

 Argentina was proclaimed by the President as non-eligible for GSP treatment for articles included under

HTS subheading 4107.11.80 on July 1, 2003. 

Description and uses.–The term “fancy,” as applied to leather, means leather that has been embossed,

printed, or otherwise decorated in any manner or to any extent.22 Such leather is used for handbags, footwear,

and leather-covered specialities. The leather, which has been subjected to the tanning process, included in this

digest is derived from the hides and skins of bovine and equine animals. In the tanning process, hides and skins

of most animals are treated with chemicals to preserve them and convert them into a form in which they can be

made into common leather articles such as shoes, leather garments, and gloves. Fancy leather derived from

bovine hides is believed to be the most important leather type in terms of U.S. production and with respect to U.S.

imports within this subheading. 
Digest No. 4107.11.80

23U.S. Department of Commerce, Bureau of the Census official, interview by USITC staff, Feb. 26,

2004. 24Leather Industries of America official, interview by USITC staff, Feb. 20, 2004.

42

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ........................ (1) (1) (1) (1) (1)

Employment (1,000 employees) ...... (

1

) (1) (1) (1) (1)

Shipments (1,000 dollars) ........... (

1

) (1) (1) (1) (1)

Exports (1,000 dollars)

2 ............. 5,627 1,230 2,569 65 46,589

Imports (1,000 dollars)

2 ............. 105,830 94,266 82,404 33,714 21,400

Consumption (1,000 dollars) ......... (

1

) (1) (1) (1) (1)

Import-to-consumption ratio (percent) .. (

1

) (1) (1) (1) (1)

Capacity utilization (percent) ......... (

1

) (1) (1) (1) (1) 1

 Not available. 

2

 The 1999-2001 import and export data cover products not included in this digest. Actual 1999-2001 import

and export data for the products covered in this digest are estimated to be 25 percent of the data shown.

Comment.–During 1999-2001, one HTS number and one Schedule B number represented the product

“Fancy leather including full grains and full grain splits.” However, in 2002, revisions to the HTS and Schedule B

resulted in breaking out the HTS number and the Schedule B number into two numbers resulting in two products: 

“Fancy leather, full grains, unsplit” and “Fancy leather, grain splits.” Thus, import and export values for 1999-2001

are not directly comparable to data from 2002 forward. In addition, Commission staff contends that the value of

U.S. exports for 2003 is in error and has notified the U.S. Census Bureau.23

Data on U.S. manufacturers of fancy leather are not available. One industry source stated that U.S.

leather shipments have declined as many domestic manufacturing facilities have closed or relocated to countries

with low-cost labor.24 The United States is a major producer of hides, skins, and leather as well as a major

exporter of hides and skins. Of the leather produced in the United States, over 95 percent of the quantity is

derived from cattlehide skins.
Digest No. 4107.11.80

25Leather Industries of America official, interview by USITC staff, Feb. 20, 2004.

43

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total . . . . . . . . . . . . . . . . . . . . . . . . . . 21,400 100 (1

) (2)

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,549 77 100 (2

)

Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,493 58 75 (2

) 1

 Not applicable.

2

 Not available.

Comment.–Argentina is a major producer of hides, skins, and leather and restricts the export of its hides

and skins to encourage domestic processing of hides and skins.25 During 2003, GSP countries accounted for 77

percent of U.S. fancy leather imports from all sources and Argentina accounted for 58 percent of total imports and

75 percent of GSP imports. However, because it exceeded the competitive-need limit, Argentina became

ineligible for GSP treatment on July 1, 2003.
Digest No. 4107.11.80

44

IV. Competitiveness profile, Argentina

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Most leathers produced in Argentina are similar in performance to leather produced in other U.S.

import-source countries. However, Argentine hides reportedly only compete with U.S. hides in limited markets

because Argentine hides are smaller in size and differ in thickness. In addition, Argentine hides are generally

inferior to U.S. hides as a result of the use of farm barbed wire resulting in holes and marks on the hides, the

slaughtering method, and treatment in the chilling room.
Digest No. 4107.11.80

45

V. Position of interested parties

Petitioner.–The petitioner, Camara de la Industria Curtidora Argentina, requests the reinstatement of

duty-free treatment for fancy leather. The petitioner states that denial of GSP eligibility for imports of leather from

Argentina will seriously harm the Argentine leather tanning industry as well as U.S. leather manufacturers.

According to the petitioner, duty-free treatment will allow for the continued access of Argentine exports to the U.S.

market while benefitting U.S. consumers through lower prices and U.S. manufacturers via duty savings in their

import sourcing. In addition, the duty-free savings will allow Argentine leather producers to invest in new plant

equipment and technology to increase the productivity of their operations.

No statements were received in support of or in opposition to the proposed modifications to the GSP

considered in this digest.
Digest No. 4107.11.80

46

VI. Summary of probable economic effects advice-Competitive-need-limit waiver (Argentina)

* * * * * **
Digest No. 4107.11.80

47 

Table 1.--Fancy leather: U.S. imports for consumption, by principal sources, and U.S. exports of domestic 

merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Argentina ..................... 11,398 6,493 2,987 24,797 12,493 58.4%

 Brazil............................ 15,778 11,762 12,999 5,250 2,968 13.9%

 Italy .............................. 32,826 37,467 34,977 1,358 2,217 10.4%

 China ........................... 18 168 110 15 1,934 9.0%

 Uruguay ....................... 4,793 4,169 3,214 334 1,084 5.1%

 Korea ........................... 767 2,262 3,287 572 215 1.0%

 Spain ........................... 10,600 10,835 8,468 266 120 0.6%

 Belgium........................ 314 48 52 43 103 0.5%

 New Zealand................ 62 54 388 229 93 0.4%

 Hong Kong................... 58 10 114 0 88 0.4%

 All other ....................... 29,216 20,999 15,808 850 85 0.4%

Total ................................. 105,830 94,266 82,404 33,714 21,400 100.0% 

Imports from GSP-eligible 

nations:

 Argentina ..................... 11,398 6,493 2,987 24,797 12,493 75.5%

 Brazil............................ 15,778 11,762 12,999 5,250 2,968 17.9%

 Uruguay ....................... 4,793 4,169 3,214 334 1,084 6.6%

 All other ....................... 6,128 5,382 3,651 39 4 0.0%

Total from GSP-eligible 

nations............................. 38,096 27,805 22,851 30,420 16,549 100.0%

Export market:

 Mexico ......................... 612 79 466 0 46,059 98.9% 

 Italy .............................. 190 50 170 0 237 0.5% 

 China ........................... 1,136 569 243 0 137 0.3% 

 Hong Kong................... 2,357 310 104 49 108 0.2% 

 Brazil............................ 26 0 0 0 30 0.1% 

 United Kingdom ........... 53 4 1,445 12 18 0.0% 

 Argentina ..................... 41 26 0 0 0 0.0% 

 Colombia...................... 60 0 0 0 0 0.0% 

 Czech Republic............ 0 0 0 0 0 0.0% 

 Ecuador ....................... 0 4 0 0 0 0.0% 

 All Other....................... 1,152 189 141 3 0 0.0% 

Total ................................. 5,627 1,230 2,569 65 46,589 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 7615.19.30

26Posthearing submission of Meyer Corp., Apr. 7, 2004, Appendix. 

27Statement of Calphalon Corp., Mar. 29, 2004, p. 6, hearing transcript, p. 145, and posthearing

submission of Meyer Corp., Apr. 7, 2004, Appendix. 28Posthearing submission of Meyer Corp., Apr. 7, 2004, p. 5 and Appendix and hearing transcript, 

p. 139. 29Posthearing submission of Meyer Corp., Apr. 7, 2004, p. 5-6 and Appendix.

49

Certain Stamped Aluminum Cookware

I. Introduction

 X Competitive-need-limit waiver: Thailand

HTS

subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

7615.19.301 Aluminum, cooking and kitchenware

(other than cast), enameled or glazed

or containing nonstick interior finishes.

3.1 Yes

1

 Thailand was proclaimed by the President as non-eligible for GSP treatment for articles included under HTS

subheading 7615.19.30 as of July 1, 2003.

Description and uses.–This HTS subheading covers cookware made of stamped aluminum or spun

aluminum that is enameled, glazed or containing nonstick interior finishes. There are two major U.S. marketers of

these products, Calphalon Corp. and Meyer Corp. This cookware can be classified into two categories, gourmet

and low-end, with further breakouts within these categories based on price. Gourmet cookware falls into three

categories: good, at a price range of $150-$300; better, at a price range of $300-$400; and best, at over $400 per

set.26

The good gourmet sets are generally sold in bargain retail stores, such as Target and Kohl’s, and

department stores such as Hechts and Sears. The Calphalon product in this category includes Calphalon Kitchen

Essentials, Cooking with Calphalon, and Simply Calphalon, which are produced in China, and Calphalon Pots and

Pans, which is produced in Indonesia and receives GSP treatment. Meyer’s products in this category include

KitchenAid Gourmet and Fundamentals, Circulon Classic, Circulon 2, Circulon Premier, Anolon Classic, Anolon

Advanced, and Anolon Titanium, which are all produced in Thailand.27

The better gourmet sets are generally sold in department stores and specialty chain stores. Calphalon

Contemporary, which is both produced in the United States and imported from China, falls within this category. 

Meyer has no product in this price category.28

The best category are sets generally sold in better department stores, such as Bloomingdales. 

Calphalon’s U.S.-produced Calphalon Commercial Nonstick and, to a lesser extent, Germany’s Berndes account

for most of the sales in this category. Meyer has no product in this category.29
Digest No. 7615.19.30

30Newell Rubbermaid is the parent company of Calphalon and produced the low-end products at

Calphalon’s U.S. facility until 2002 when production was moved offshore and product was imported from China

and Mexico; Meyer’s low-end products are produced in Thailand. Posthearing submission of Meyer Corp.,

Apr. 7, 2004, Appendix and hearing transcript, p. 139. Newell Rubbermaid sold its Mirro Cookware division to

Global Home Products, LLC, an affiliate of Cerberus Capital Management L.P., a New York-based private

investment firm, on April 13, 2004. (See www.newellco.com for further details.) 31Hearing transcript, p. 107.

32The public version of the petition of Meyer Corp., to the USTR GSP Subcommittee, Sept. 2, 2003, 

p. 7.

50

Low-end cookware falls into two categories: under $50 per set, of which Newell Rubbermaid is the only

U.S. manufacturer and markets the Mirro and Regal brands; and $5 to $150 per set. In this range, Newell

Rubbermaid offers the Wearever brand, and Meyer offers the Farberware and Silverstone.30

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ......................... (1

) (1) (1) (1) (1)

Employment . . . . . . . . . . . . . . . . . . . . . . . *** *** *** *** ***

Shipments (1,000 dollars) ............ *** *** *** *** ***

Exports (1,000 dollars) .............. 18,931 19,438 17,329 18,653 16,168

Imports (1,000 dollars)............... 259,904 286,767 282,785 319,969 353,854

Consumption (1,000 dollars)

2 ......... *** *** *** *** ***

Import-to-consumption ratio (percent) ... *** *** *** *** ***

Capacity utilization (percent) .......... (

3

) (3) (3) (3) (3) 1

 Not available. ***

2

 ***

3

 Not available.

Comment.–To reduce production costs, many U.S. producers have outsourced production to countries

including China, Indonesia, and Thailand. Calphalon is the largest U.S. marketer of stamped aluminum cookware

with production capabilities in the United States; Meyer is the second-largest U.S. marketer with no U.S.

production facility as of 2002.31 Newell Rubbermaid, the parent company of Calphalon, closed its last remaining

U.S. production facility in 2003; Meyer closed its two U.S. production facilities in 1999 and 2001.32
Digest No. 7615.19.30

33Hearing transcript, pp. 117-120.

51

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total ........................ 353,854 100 (1

) ***

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . 139,277 39 100 ***

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,915 29 73 ***

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,173 4 11 ***

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,976 3 8 ***

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,223 1 3 ***

1

 Not applicable.

Comment.–U.S. imports of stamped aluminum cookware increased by $94 million or 36 percent during

1999-2003. Imports from China increased by over $110 million, or 536 percent, displacing imports mainly from

Indonesia, as well as replacing discontinued domestic production. U.S. imports from Thailand reached a high for

the period in 2002, exceeding the GSP competitive-need limit and was proclaimed non-eligible for GSP treatment. 

Once U.S. imports from Thailand were again dutiable, the level declined. During 1999-2003, U.S. imports from

Indonesia declined significantly (81 percent) as Calphalon closed its plant in Indonesia and transferred production

to China.33
Digest No. 7615.19.30

34Posthearing submission of Meyer Corp., Apr. 7, 2004, p. 7.

52

IV. Competitiveness profile, Thailand

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate X Low 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–U.S. imports from Thailand are produced using machinery and equipment similar to that used in

the United States. All imports of the subject product from Thailand are from the Meyer-owned Thai affiliate. 

Subject imports from Thailand are price- and quality-competitive with imports from other countries including Italy

and France. Product from Thailand is generally higher priced than cookware imported from China.34
Digest No. 7615.19.30

35Meyer International Holding Ltd. is a private British Virgin Island company with headquarters in

Hong Kong. 36Calphalon Corp. is the largest U.S. manufacturer and importer of aluminum cookware, which is sold

under the Calphalon brand name in retail outlets located throughout North America. Hearing transcript, p. 107.

53

V. Position of interested parties

Petitioner.–Meyer Corporation (Meyer) U.S., the U.S. affiliate of Meyer International Holding Ltd.,35

requested a waiver of the GSP competitive-need limit for Thailand on U.S. imports of certain stamped aluminum

cookware, as provided for under HTS subheading 7615.19.30. The petitioner stated that, given the limited

geographic scope of the waiver, the production rationalization of the U.S. cookware industry, and the small margin

of tariff preference at issue, such a waiver will not adversely affect the U.S. industry. On the other hand, Meyer

estimated that if it is required to absorb the 3.1-percent increase in import duty on a permanent basis, the

employment of up to 60 of its U.S. employees may be threatened. The petitioner maintained that the waiver will

allow its Thai affiliate to remain competitive with rapidly growing imports from China. Meyer further stated that

Thailand has undertaken steps to improve the protection of property rights and the protection of labor rights. In

addition, the Government of Thailand has endorsed the negotiation of a free trade agreement with the United

States that would abolish all trade barriers between the two countries.

Meyer disagreed with Calphalon’s claim that imports from Thailand compete with Calphalon’s

domestically-produced products. Meyer stated that Calphalon is the largest U.S. producer of coated, stamped

aluminum cookware and also imports a significant amount of cookware from China. Meyer also stated that its

imports from Thailand compete directly with Calphalon’s imported product from China, not, as Calphalon claims,

Calphalon’s domestic production of high-end cookware.

Opposition.–Calphalon Corporation36 opposed the granting of a waiver of the competitive-need limit for 

Thailand. Calphalon stated that a waiver defies the purpose of the GSP program because Thailand’s

manufacturers are already competitive and import penetration is already extremely high. Calphalon further stated

that granting the waiver would seriously jeopardize the continued production of stamped aluminum cookware at

Calphalon’s facilities in the United States. Calphalon maintained that stamped aluminum cookware manufactured

in Thailand competes directly with stamped aluminum cookware produced domestically by Calphalon and that

granting the petition would lead to further substitution of imports for domestic production of stamped aluminum

cookware, reducing capacity utilization at Calphalon’s Perrysburg, OH plant to levels that would threaten the

plant’s viability.
Digest No. 7615.19.30

54

VI. Summary of probable economic effects advice-Competitive-need-limit waiver (Thailand)

* * * * * **
Digest No. 7615.19.30

55 

Table 1.--Certain stamped aluminum cookware: U.S. imports for consumption, by principal sources, and U.S. 

exports of domestic merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 China ........................... 20,592 37,972 41,406 97,970 131,021 37.0%

 Thailand....................... 69,125 82,332 99,460 105,377 101,915 28.8%

 Italy .............................. 5,405 23,609 35,392 32,436 44,949 12.7%

 France ......................... 57,651 45,930 38,783 38,546 28,709 8.1%

 Brazil............................ 94 121 61 4,326 15,173 4.3%

 Indonesia ..................... 57,000 37,031 25,518 16,471 10,976 3.1%

 Korea ........................... 13,919 18,182 14,414 13,477 7,237 2.0%

 India............................. 331 605 623 1,313 4,223 1.2%

 Argentina ..................... 2 38 0 0 4,190 1.2%

 Colombia...................... 396 611 996 4,240 2,688 0.8%

 All other ....................... 35,391 40,335 26,131 5,813 2,774 0.8%

Total ................................. 259,904 286,767 282,785 319,969 353,854 100.0% 

Imports from GSP-eligible 

nations:

 Thailand....................... 69,125 82,332 99,460 105,377 101,915 73.2%

 Brazil............................ 94 121 61 4,326 15,173 10.9%

 Indonesia ..................... 57,000 37,031 25,518 16,471 10,976 7.9%

 India............................. 331 605 623 1,313 4,223 3.0%

 All other ....................... 523 799 1,127 4,430 6,991 5.0%

Total from GSP-eligible 

nations............................. 127,073 120,888 126,789 131,917 139,277 100.0%

Export market:

 Japan........................... 7,517 7,351 7,085 7,725 6,424 39.7% 

 Canada ........................ 3,671 5,014 4,638 5,207 5,025 31.1%

 Mexico ......................... 1,455 1,214 1,338 1,522 1,237 7.7%

 Singapore .................... 112 295 106 90 434 2.7%

 South Africa ................. 10 3 24 9 299 1.8%

 Saudi Arabia ................ 64 730 197 176 267 1.7%

 Ecuador ....................... 5 7 24 78 192 1.2%

 Costa Rica ................... 374 42 89 173 160 1.0%

 Guatemala ................... 144 180 207 80 144 0.9%

 Hong Kong................... 211 134 81 87 143 0.9%

 All Other....................... 5,370 4,468 3,540 3,507 1,842 11.4%

Total ................................. 18,931 19,438 17,329 18,653 16,168 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 8525.40.80

57

Camcorders

I. Introduction

 X Competitive-need-limit waiver: Indonesia

HTS

subheading

Short description Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

8525.40.801 Camcorders 2.1 No

1

 Indonesia was proclaimed by the President as non-eligible for GSP treatment for articles included under

HTS subheading 8525.40.80 as of July 1, 2003.

Description and uses.–A camcorder is a combination camera and video recorder in one device. 

Camcorders permit easy and rapid photography and recording simultaneously. Camcorders are available in most

home video formats, such as 8mm, VHS, and so forth.

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers ....................... (1

) (1) (1) (1) (1)

Employment (1,000 employees)...... (

1

) (1) (1) (1) (1)

Shipments (1,000 dollars)........... (

1

) (1) (1) (1) (1)

Exports (1,000 dollars)

3 ............ 59,608 67,195 62,690 76,112 97,606

Imports (1,000 dollars) ............. 2,067,312 2,383,504 2,047,504 2,109,612 1,941,263

Consumption (1,000 dollars) ........ 2,007,704 2,316,309 1,984,814 2,033,500 1,843,657

Import-to-consumption ratio (percent).. 100 100 100 100 100

Capacity utilization (percent) ........ (

2

) (2) (2) (2) (2) 1

 There is no U.S. production of the products covered in this digest. 2

 Not applicable.

3

 These data reflect imports that were re-exported by firms in the United States.

Comment.–There is no U.S. production of camcorders. The United States is not a significant producer of

consumer electronic products other than television receivers. Consumer electronic products such as camcorders

generally are produced in regions such as Asia to take advantage of lower labor costs.
Digest No. 8525.40.80

58

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total . . . . . . . . . . . . . . . . . . . . . . . . . 1,941,263 100 (1

) 100

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . 122,397 6 100 6

Indonesia ............................... 106,906 6 87 6 1

 Not applicable.

Comment.–Indonesia accounts for the largest share (87 percent) of U.S. imports of camcorders from

GSP countries. Indonesia is the third-largest source of total U.S. imports of camcorders, accounting for 6 percent.
Digest No. 8525.40.80

59

IV. Competitiveness profile, Indonesia

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High X Moderate Low 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes _ No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Comment.–There is no U.S. production of camcorders. According to the petitioner, MKI is the sole producer

of camcorders in Indonesia and over 95 percent of its Indonesian camcorder production is exported to the United

States. 
Digest No. 8525.40.80

60

V. Position of interested parties

Petitioner.–P.T. Matsushita Kotobuki Electronics Industries Indonesia (MKI), the petitioner, stated that it

is the sole producer of camcorders in Indonesia with over 95 percent of its camcorder production exported to the

United States. MKI stated the following reasons in support of its request for a competitive-need-limit waiver: (1)

there is no U.S. production, (2) there are no imports of camcorders from other beneficiary developing countries,

(3) the United States would show its continued support of Indonesia’s economic recovery process, and (4) the

waiver would be a measure of support for Indonesia’s government under President Megawati.

No statements were received in support of or in opposition to the proposed modifications to the GSP

considered in this digest.
Digest No. 8525.40.80

61

VI. Summary of probable economic effects advice-Competitive-need-limit waiver (Indonesia)

* * * * * **
Digest No. 8525.40.80

62 

Table 1.--Camcorders: U.S. imports for consumption, by principal sources, and U.S. exports of domestic 

merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Japan........................... 1,679,736 1,760,275 1,230,032 1,446,050 1,363,553 70.2%

 Malaysia....................... 33,470 194,444 341,737 203,271 217,021 11.2%

 Indonesia ..................... 3 2,132 168,110 171,443 106,905 5.5%

 Korea ........................... 79,107 73,980 77,688 164,317 102,214 5.3%

 China ........................... 190,363 228,217 149,314 30,242 89,182 4.6%

 Thailand....................... 37,569 82,276 45,484 59,344 13,834 0.7%

 Taiwan ......................... 13,623 9,602 8,663 11,224 12,327 0.6%

 Germany...................... 2,757 4,948 4,623 7,137 9,713 0.5%

 Denmark ...................... 5,312 6,545 5,727 5,036 8,119 0.4%

 United Kingdom ........... 18,884 15,109 9,574 2,277 5,354 0.3%

 All other ....................... 6,489 5,975 6,551 9,272 13,041 0.7%

Total ................................. 2,067,312 2,383,504 2,047,504 2,109,612 1,941,263 100.0% 

Imports from GSP-eligible 

nations:

 Indonesia ..................... 3 2,132 168,110 171,443 106,905 87.3%

 Thailand....................... 37,569 82,276 45,484 59,344 13,834 11.3%

 India............................. 0 0 25 0 1,220 1.0%

 All other ....................... 560 284 338 385 438 0.4%

Total from GSP-eligible 

nations............................. 38,132 84,693 213,957 231,173 122,397 100.0%

Export market:

 Mexico ......................... 11,878 19,705 22,917 20,187 23,856 24.4% 

 Italy .............................. 1,648 2,067 5,269 8,083 12,609 12.9%

 China ........................... 1,084 2,699 547 8,770 11,671 12.0%

 Hong Kong................... 5,350 6,403 4,061 6,230 8,865 9.1%

 Brazil............................ 4,069 3,363 2,876 2,846 6,186 6.3%

 United Kingdom ........... 3,750 4,752 6,249 6,294 5,320 5.5%

 Argentina ..................... 13,825 6,720 1,320 2,945 3,769 3.9%

 Colombia...................... 118 45 46 1,559 2,053 2.1%

 Czech Republic............ 733 675 520 595 1,614 1.7%

 Ecuador ....................... 1,486 1,599 509 416 1,560 1.6%

 All Other....................... 15,666 19,167 18,376 18,188 20,103 20.6%

Total ................................. 59,608 67,195 62,690 76,112 97,606 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 
Digest No. 8708.92.50

37Information developed from William K. Toboldt, Larry Johnson, and Steven W. Olive, eds.,

Automotive Encyclopedia (South Holland, IL: The Goodheart-Willcox Company, 1999), pp. 269-270, and

“How Mufflers Work,” found at http://auto.howstuffworks.com/muffler.htm, retrieved Feb. 23, 2004.

63

Mufflers and Exhaust Pipes for Motor Vehicles Other

than Tractors Suitable for Agricultural Use

I. Introduction

 X Addition

HTS

subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

8708.92.50 Mufflers and exhausts for motor

vehicles other than tractors suitable

for agricultural use

2.5 Yes

Description and uses.–A muffler, which is part of a motor-vehicle exhaust system, is a unit through which

exhaust gases are passed to quiet the sounds of a running engine. The muffler is designed to slow the expansion

of the exhaust gases and to develop the least amount of back pressure, which prevents the free flow of the

exhaust gases. The body of the muffler is constructed in three layers: two thin layers of metal, such as stainless

steel or aluminum, with a thicker, slightly insulated layer between them.

Although muffler design varies by manufacturer, there are two common muffler types – straight flow and

reverse flow. Straight flow mufflers push exhaust gases through the system without changing the direction of the

exhaust gases. In this design, a central pipe perforated with holes is surrounded by sheet metal. The space

between the pipe and sheet metal can be open or filled with a sound-deadening material, such as fiberglass. 

Reverse flow systems, on the other hand, change the direction of exhaust gases to reduce noise more efficiently

and save space.37 

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Establishments . . . . . . . . . . . . . . . . . . . **40 **40 **37 **40 **38

Employment . . . . . . . . . . . . . . . . . . . . . . **11,000 **11,100 **10,100 **11,000 **10,500

Shipments (1,000 dollars)........... **2,883,068 **3,067,735 **2,881,680 **3,035,687 **2,952,542

Exports (1,000 dollars) ............. 330,556 366,610 349,491 344,636 364,822

Imports (1,000 dollars) ............. 244,940 277,412 360,798 423,190 484,768

Consumption (1,000 dollars) ........ **2,797,452 **2,978,537 **2,892,987 **3,114,241 **3,072,488

Import-to-consumption ratio (percent).. **9 **9 **12 **14 **16

Capacity utilization (percent) ........ (

1

) (1) (1) (1) (1) 1

 Not available.
Digest No. 8708.92.50

64

Comment.–The U.S. industry producing motor-vehicle parts, including mufflers and exhaust pipes, serves

two distinct markets -- the original equipment market (OEM) for vehicle makers and the aftermarket (replacement). 

Because of the different requirements for these markets (e.g., QS-9000 certification and designated manufacturing

and materials specifications for OEM suppliers), manufacturing facilities are generally dedicated to production of

parts for only one market segment.

U.S. demand for OEM mufflers and exhaust pipes is largely influenced by the number of vehicles

produced in North America, which experienced an overall decline of 7 percent during the period in part because of

continued economic weakness following the September 2001 attack. The shift to more durable materials such as

stainless steel in the manufacture of mufflers and exhaust pipes may impact demand for aftermarket exhaust

system components. The bulk of imports (76 percent) are sourced from Japan and NAFTA partners Canada and

Mexico. The North American automotive industry is highly integrated and producers rationalize production among

their regional facilities to suit individual company requirements. Japanese transplant producers in the United

States are believed to be significant purchasers of mufflers and exhaust pipes from Japan.

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total ........................... 484,768 100 (1

) **16

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,488 2 100 (2

)

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,842 1 62 (2

)

Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,027 (2

) 21 (2)

Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 (2

)7 (2)

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 (2

)4 (2) 1

 Not applicable.

2

 Less than 0.5 percent.

Note.–Because of rounding, figures may not add to the totals shown.

Comment.–NAFTA suppliers Canada and Mexico are two of the leading U.S. import sources of mufflers

and exhaust pipes, accounting for 54 percent ($261.4 million) of total U.S. imports. These imports are likely

destined for the OEM (automakers) market because of the integrated nature of the North American automotive

industry. Japan is the second-leading source of these imports, accounting for 22 percent ($105.4 million) of U.S.

imports. Imports from Japan are likely destined for Japanese transplant automakers in the United States and for

use as replacement parts for the large number of Japanese vehicles operating in the United States. Imports from

other countries lacking a large base of certified OEM suppliers, such as China, are likely destined as replacement

parts for the U.S. aftermarket.
Digest No. 8708.92.50

38Information for this section compiled from sources of the National Association of Automotive

Components and Allied Manufacturers, found at http://www.naacam.co.za/midp.htm.

65

IV. Competitiveness profile, South Africa

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes _ No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate _ Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–The motor vehicle industry in South Africa has gradually shifted from an insular, highly

protected sector to an export-oriented industry with the enactment of the Motor Industry Development Program

(MIDP) in September 1995. The essential component of MIDP is the slow reduction of import tariffs to allow the

domestic industry to adjust to world market conditions and gain manufacturing efficiencies. South Africa is an

attractive manufacturing base for motor vehicle and parts producers because of its low costs for short production

runs, competitive tooling costs, and manufacturing flexibility, which help to offset its geographic disadvantage visà-vis its export markets. As a result, many of the world’s leading motor vehicle parts manufacturers have

established operations in South Africa to supply local vehicle making facilities because of just-in-time delivery and

local content requirements, and to export to Europe and Asia, in part to meet global sourcing needs. U.S.

producers command a premium in the U.S. market because of their ability to meet automakers’ supply

requirements. Less than 2 percent of South Africa’s production of mufflers and exhaust pipes was exported in

2002, with Germany, the Netherlands, the United States, and the United Kingdom the leading export markets in

2001.38
Digest No. 8708.92.50

39U.S. Department of State telegram, “Philippines: 2004 National Trade Estimate Report,” message

reference No. 06503, prepared by U.S. Embassy, Manila, Dec. 2003.

66

IV. Competitiveness profile, Philippines

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–The Philippine automotive parts industry, which totals about 250 firms, is dominated by

Japanese suppliers because of the extensive inroads made by Japanese vehicle producers in the Philippine

market. U.S. and European parts producers, however, are increasing investments in the local industry, in part

because of Philippine government initiatives to improve the economic and business environment. For example,

under the Commercial Vehicle Development Program, tariffs on imports of automotive parts were reduced to

3 percent in April 2001 from 10 percent in an effort to rationalize the automotive industry and encourage

development of the Philippines into a regional production hub.39 The Philippines is also an active participant in the

AICO industrial cooperation program under ASEAN that promotes joint manufacturing among eligible ASEANbased corporations through preferential tariff rates. Moreover, the automotive components industry is considered

to be an investment priority sector with incentives granted under the Omnibus Investments Code. Investment in

the Philippine automotive industry allows suppliers to meet the local/regional content and just-in-time delivery

requirements of Philippine-based automakers. U.S. producers command a premium in the U.S. market because

of their ability to meet automakers’ supply requirements. 
Digest No. 8708.92.50

40U.S. and Foreign Commercial Service and U.S. Department of State, “Market for Auto Parts: 

Automotive & Ground Transportation in the Czech Republic, Industry Sector Analysis,” Feb. 20, 2003, found at

http://www.stat-usa.gov, retrieved Feb. 24, 2004.

67

IV. Competitiveness profile, Czech Republic

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–The automotive industry is a key economic sector of the Czech Republic, accounting for

13 percent of Czech industrial production. The Czech industry benefits from its proximity to major European

markets, its established reputation for successful R&D and quality manufacturing, and its qualified, low cost work

force.40 The Czech Republic is the largest producer of automobiles in Central and Eastern Europe. This

production base supports more than 270 automotive component firms, many of which are leading European,

Japanese-based, and U.S.-based parts producers that have established manufacturing operations to meet such

requirements as just-in-time delivery, greater local content, and global sourcing. U.S.-based producers command

a premium in the U.S. market because of their ability to meet automakers’ supply requirements. 
Digest No. 8708.92.50

68

IV. Competitiveness profile, all GSP suppliers

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes X No 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–The globalization of the automotive industry has led U.S., European, and Japanese

automotive parts producers to invest in production facilities near automakers’ U.S. and foreign assembly plants to

meet such requirements as just-in-time delivery, global sourcing, and local content. U.S. producers generally

command a premium in the U.S. market because of their ability to meet automakers’ supply requirements.
Digest No. 8708.92.50

69

V. Position of interested parties

Petitioner.–The Government of the Argentine Republic and Conforma S.R.L. petitioned for the addition of

mufflers and exhaust pipes (HTS 8708.92.50) as a GSP-eligible item. Conforma, which manufactures stainless

steel exhaust systems, claims that the Argentine economic crisis is impacting its production and export

capabilities, and that granting GSP eligibility for this product would have an insignificant effect on the U.S. industry. 

The Government also cites the economic crisis in Argentina as having a detrimental impact on Argentine industry,

with financial restrictions and lack of credit contributing to industry’s inability to increase exports to world markets. 

Argentina currently accounts for less than 0.05 percent of total U.S. imports under this HTS subheading. The

Government also indicates that GSP eligibility would enhance access to the U.S. market and contribute to

improved economic activity in Argentina.

No statements were received in support of or in opposition to the proposed modifications to the GSP

considered in this digest.
Digest No. 8708.92.50

70

VI. Summary of probable economic effects advice-Addition

* * * * * **
Digest No. 8708.92.50

71 

Table 1.--Mufflers and exhaust pipes for motor vehicles other than tractors suitable for agricultural use: U.S. 

imports for consumption, by principal sources, and U.S. exports of domestic merchandise, by principal markets, 

1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Canada ........................ 101,292 113,205 147,601 160,722 193,189 39.9%

 Japan........................... 64,593 72,083 85,534 94,631 105,439 21.8%

 Mexico ......................... 18,525 26,961 39,423 62,822 68,220 14.1%

 Germany...................... 21,526 20,739 31,377 31,011 40,630 8.4%

 China ........................... 2,283 3,338 6,912 13,200 17,471 3.6%

 Italy .............................. 4,220 5,109 7,473 10,151 13,065 2.7%

 Korea ........................... 6,766 6,796 7,815 9,480 9,936 2.0%

 Taiwan ......................... 5,518 5,234 6,863 11,033 9,714 2.0%

 South Africa ................. 3,600 6,003 7,723 7,716 5,842 1.2%

 United Kingdom ........... 4,467 4,404 5,677 5,811 4,906 1.0%

 All other ....................... 12,150 13,542 14,400 16,614 16,356 3.4%

Total ................................. 244,940 277,412 360,798 423,190 484,768 100.0% 

Imports from GSP-eligible 

nations:

 South Africa ................. 3,600 6,003 7,723 7,716 5,842 61.6%

 Philippines ................... 1,102 1,104 1,428 1,567 2,027 21.4%

 Czech Republic............ 48 45 292 275 623 6.6%

 All other ....................... 1,506 1,850 2,375 1,803 995 10.5%

Total from GSP-eligible 

nations............................. 6,255 9,002 11,818 11,361 9,488 100.0%

Export market:

 Canada ........................ 272,101 273,111 258,235 278,561 291,910 80.0% 

 Mexico ......................... 25,789 37,430 35,501 28,894 42,510 11.7%

 Belgium........................ 1,447 1,210 3,151 15,178 12,412 3.4%

 Germany...................... 7,787 7,055 4,586 1,594 3,745 1.0%

 Japan........................... 5,477 15,490 11,464 7,350 2,926 0.8%

 United Kingdom ........... 2,293 10,304 14,509 2,505 1,857 0.5%

 Brazil............................ 484 1,706 351 1,965 1,220 0.3%

 China ........................... 128 97 925 1,073 1,197 0.3%

 Australia....................... 2,395 2,838 859 864 897 0.2%

 Korea ........................... 138 555 66 173 657 0.2%

 All Other....................... 12,519 16,814 19,843 6,481 5,491 1.5%

Total ................................. 330,556 366,610 349,491 344,636 364,822 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Digest No. 8714.92.10

73

Wheel Rims for Bicycles

I. Introduction

 X Addition

HTS subheading Short description

Col. 1 rate of

duty (1/1/04)

Like or directly

competitive article

produced in the

United States on

Jan. 1, 1995?

Percent ad

valorem

8714.92.10 Wheel rims for bicycles and other

cycles

5.0 Yes

Description and uses.–Wheel rims for bicycles are metallic rings (usually of aluminum or steel alloys for

low-end and carbon fiber or composite materials for high-end equipment) upon which wheel spokes, tires, and

inner tubes are mounted. The flared sides of the rim also provide a surface upon which the brake pads of caliper

braking systems can make contact with the wheel assembly and, through friction, slow or stop the forward

progress of the vehicle. Rims are typically extruded or cold rolled from strips of metal to produce a concave or “cshaped” profile and then rounded into a circular shape. The ends of the metal piece are then joined, commonly by

butt welding, to form a circle. Subsequently, holes are formed in the rim to accommodate the wheel’s spokes and

inner tube valve stem. The wheel assembly is completed with the addition of wheel spokes, hub assembly (with

which the finished wheel is attached to the vehicle), and inner tube and tire. Most wheel rims for adult riders are

either 26 or 27 inches in diameter, while those for juvenile riders typically range between 12 and 24 inches. 
Digest No. 8714.92.10

74

II. U.S. market profile

Profile of U.S. industry and market, 1999-2003

Item 1999 2000 2001 2002 2003

Producers . . . . . . . . . . . . . . . . . . . . . . . . 10 8 7 6 6

Employment (1,000 employees) ...... (

1

) (1) (1) (1) (1)

Shipments (1,000 dollars) ........... 26,000 25,000 21,000 14,000 18,000

Exports (1,000 dollars) ............. 21,457 20,441 17,591 11,863 15,162

Imports (1,000 dollars).............. 12,465 12,796 7,684 9,163 7,479

Consumption (1,000 dollars) ......... 17,008 17,355 11,093 11,300 10,317

Import-to-consumption ratio (percent) .. 73 74 69 81 72

Capacity utilization (percent) ......... (

1

) (1) (1) (1) (1) 1

 Not available.

Comment.–The U.S. industry producing bicycle rims has, over the last 10-11 years, gradually shifted or

ceded production of these parts to low cost foreign suppliers, notably Taiwan and China. Much of the production

that remains in the United States is for aftermarket (replacement) sales in U.S. and foreign markets.

III. GSP import situation, 2003

U.S. imports and share of U.S. consumption, 2003

Item Imports

Percent of

total

imports

Percent of

GSP

imports

Percent of

 U.S.

consumption

1,000

dollars

Grand total . . . . . . . . . . . . . . . . . . . . . . . . . 7,479 100 (1

) 72

Imports from GSP countries:

GSP total . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (2

) 100 (2)

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (2

) 50 (2)

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (2

) 33 (2)

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 (2

) 17 (2) 1

 Not available.

2

 Less than 0.5 percent.

Comment.–Imports from designated GSP beneficiary countries, notably South Africa and Indonesia, have

fallen dramatically since 1999, in large part due to the increased competitiveness of suppliers in China and Italy. 

In addition, as production operations on finished bicycles have shifted from the United States to Asian and

European markets, rim production has tended to follow.
Digest No. 8714.92.10

75

IV. Competitiveness profile, Brazil

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High X Moderate Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above X Equivalent Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above X_ Equivalent Below 

Comment.–Compared with the major suppliers of bicycle rims in the Pacific Rim, the petitioning Brazilian

company indicates that suppliers of rims in Brazil face higher transportation costs associated with getting their

products to U.S. purchasers. The U.S. market for rims is also contracting as more U.S. companies outsource

production operations to low cost foreign suppliers, notably China, Mexico, and Taiwan.
Digest No. 8714.92.10

76

IV. Competitiveness profile, India

Ranking as a U.S. import supplier, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above X Equivalent Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–Although Indian rim production capabilities have gradually increased since 1997, U.S. industry

sources indicate that producers in India are still not quite on par with those in Asia or Europe but are equivalent to

some other GSP suppliers. 
Digest No. 8714.92.10

77

IV. Competitiveness profile, all GSP suppliers

Aggregate demand elasticity (price elasticity of U.S. demand for the product from all sources, foreign and 

domestic):

Is the product a finished product for final sale to consumers? . . . . . . . . . . . . . . Yes No X 

Is the product an intermediate good used as an input in the production

of another good? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Is the product an agricultural or food product? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the aggregate price elasticity of U.S. demand? . . . . . . . . . High Moderate Low X 

Substitution elasticity:

What is the similarity of product characteristics (such as quality, physical specifications, shelflife, etc.) between imports from this supplier and:

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

What is the similarity of conditions of sale and distribution (such as lead times between order and

delivery dates, payment terms, product service, minimum order size, variations in availability,

etc.) between imports from this supplier and: 

Imports from other suppliers? . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

U.S. producers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate Low X 

What is the substitution elasticity? . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Supply elasticity for affected imports:

Can production in the country be easily expanded or contracted in the

short term? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes X No 

Does the country have significant export markets besides the United

States? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

Could exports from the country be readily redistributed among its

foreign export markets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No X 

What is the price elasticity of supply for affected

imports? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High Moderate X Low 

Price level compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent Below X 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above X Equivalent Below 

Quality compared with--

U.S. products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Other foreign products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Above Equivalent X Below 

Comment.–GSP-eligible countries account for less than 0.5 percent of total U.S. imports of the products

covered in this digest.
Digest No. 8714.92.10

78

V. Position of interested parties

Petitioner.– The petitioner, Brazilian manufacturer Eninco Engeharia, Industria e Comercio Ltda.,

indicates that due to high freight costs between Brazil and the United States compared with those incurred by

suppliers in Asia, the company is not in a good position to export to U.S. customers. The company states that the

granting of duty-free entry for bicycle rims from Brazil under the GSP would enable the company to realize its full

plant capacity for rims, enable it to hire new workers, and increase its annual sales of rims.

No statements were received in support of or in opposition to the proposed modifications to the GSP

considered in this digest.
Digest No. 8714.92.10

79

VI. Summary of probable economic effects advice-Addition

* * * * * **
Digest No. 8714.92.10

80 

Table 1.--Wheel rims for bicycles: U.S. imports for consumption, by principal sources, and U.S. exports of 

domestic merchandise, by principal markets, 1999-2003 

Nation 1999 2000 2001 2002 2003 

Share of 

total, 2003 

--------------------------------- Value (1,000 dollars) ------------------------------

Import source: 

 Taiwan ......................... 2,846 3,671 1,974 2,051 1,979 26.5%

 France ......................... 4,307 3,806 2,782 2,855 1,813 24.2%

 China ........................... 311 1,393 736 1,382 1,675 22.4%

 Italy .............................. 806 502 660 1,492 788 10.5%

 Australia....................... 2,279 826 372 338 372 5.0%

 Spain ........................... 63 0 129 339 314 4.2%

 Netherlands ................. 198 349 342 236 115 1.5%

 United Kingdom ........... 40 24 22 17 102 1.4%

 Switzerland .................. 0 0 2 0 95 1.3%

 Malaysia....................... 0 0 0 30 67 0.9%

 All other ....................... 1,616 2,226 664 423 159 2.1%

Total ................................. 12,465 12,796 7,684 9,163 7,479 100.0% 

Imports from GSP-eligible 

nations:

 Brazil............................ 31 0 0 23 15 50.0%

 India............................. 0 2 3 7 10 33.3%

 South Africa ................. 240 1,044 3 15 5 16.7%

 All other ....................... 117 143 168 71 0 0.0%

Total from GSP-eligible 

nations............................. 388 1,189 173 117 30 100.0%

Export market:

 Canada ........................ 2,497 2,513 1,967 1,035 2,354 15.5% 

 Mexico ......................... 7,284 8,409 4,977 2,751 1,792 11.8% 

 Taiwan ......................... 1,588 1,317 873 564 1,700 11.2% 

 United Kingdom ........... 308 340 970 816 1,166 7.7% 

 Japan........................... 3,733 1,787 2,483 1,554 1,166 7.7% 

 Australia....................... 550 380 308 361 1,161 7.7% 

 Italy 182 219 604 974 603 4.0% 

 China ........................... 0 40 382 173 548 3.6% 

 Netherlands ................. 794 364 407 311 414 2.7% 

 Germany...................... 183 355 422 399 409 2.7% 

 All Other....................... 4,337 4,717 4,198 2,925 3,849 25.4% 

Total ................................. 21,457 20,441 17,591 11,863 15,162 100.0% 

Note.--Because of rounding, figures may not add to totals shown.

Source: Compiled from official statistics of the U.S. Department of Commerce. 
APPENDIX A

U.S. Trade Representative’s Request Letter





APPENDIX B

U.S. International Trade Commission’s Notice of Investigation



APPENDIX C

Calendar of the Public Hearing, March 31, 2004

C-3

 CALENDAR OF PUBLIC HEARING

Those listed below appeared as witnesses at the United States International Trade

Commission’s hearing:

Subject: Advice Concerning Possible Modifications to the U.S.

Generalized System of Preferences, 2003 Review

Inv. No.: 332-459

Date and Time: March 31, 2004 - 9:30 a.m.

Sessions were held in connection with this investigation in the Main Hearing Room (room

101), 500 E Street, S.W., Washington, D.C.

ORGANIZATION AND WITNESS: PRODUCT:

PANEL 1 Polyethylene Resins

in Primary Forms

Shook, Hardy & Bacon L.L.P.

Washington, D.C.

on behalf of

Polialden Petroquimica S.A.

Cleantho de Paiva Leite Filho, Export Director,

Polialden Petroquimica S.A.

Peter D. Bernstein ) – OF COUNSEL
C-4

ORGANIZATION AND WITNESS: PRODUCT:

PANEL 1 (continued) PET Bottle-Grade

Resins in Primary Forms

The PET Users Coalition

Washington, D.C.

Drew M. Davis, Vice President, Federal Affairs,

the PET Users Coalition (representing

the National Soft Drink Association)

Dan Mullock, Vice President, Purchasing, the PET

Users Coalition (representing Constar

International)

John F. McDermid, President, International

Business-Government Counsellors

Coudert Brothers LLP

Washington, D.C.

on behalf of

Indo-Pet Limited

Thai Shinkong Industry Corporation Ltd.

P.T. Indorama Ltd.

Matthew J. McConkey ) – OF COUNSEL
C-5

ORGANIZATION AND WITNESS: PRODUCT:

PANEL 1 (continued) PET Bottle-Grade

Resins in Primary Forms

Howrey Simon Arold & White LLC

Washington, D.C.

on behalf of

The U.S. PET Resin Producers Coalition

Mark Adlam, Americas Commercial Manager,

M&G Polymers USA LLC

John Cullen, Commercial Manager, DAK

Americas LLC

Michael Dewsbury, Vice President, PET

Resins, Wellman, Inc.

Robert Taylor, Business Operations Manager,

Wellman, Inc.

Hans Kinner, Business Director, Polyester

Products North America, Voridian,

a division of Eastman Chemical Co.

Christopher Peterson, Assistant Section Manager,

Nan Ya Plastics Corp. America

Susan H. Manning, Economist, The CapAnalysis

Group LLC

Michael A. Hertzberg )

) – OF COUNSEL

Juliana M. Cofrancesco )
C-6

ORGANIZATION AND WITNESS: PRODUCT:

PANEL 1 (continued) PET Film

Wilmer Cutler & Pickering LLP

Washington, D.C.

on behalf of

Dupont Teijin Films

Mitsubishi Polyester Film of America

Toray Plastics (America), Inc.

SKC America, Inc.

Todd Eckles, Director of Sales, Toray Plastics

Ronald I. Meltzer ) – OF COUNSEL

PANEL 2 Certain Stamped

Aluminum Cookware

Calphalon Company

Perrysburg, Ohio

Jay Toomey, Vice President, Supply Chain,

Calphalon Company

St. Maxens & Company

Washington, D.C.

on behalf of

Meyer Corporation

Norman Schoenfeld, Executive Vice President,

Meyer Corporation

Dean L. Krause, General Counsel, Meyer Corporation

Thomas St. Maxens, II, Consultant, St. Maxens & Company
ORGANIZATION AND WITNESS: PRODUCT:

PANEL 3 Adipic Acid

Williams Mullen

Washington, D.C.

on behalf of

Rhodia Poliamida Ltda

Rhodia, Inc.

Steven R. Powis, Business Director, Polyamide

Intermediates – North America, Rhodia, Inc.

Jose Borges Matias, Vice President, Purchasing and

Government Relations, Rhodia Latin America

William N. Farran III, Assistant General Counsel; and

Director, Government Relations, Rhodia, Inc.

James R. Cannon, Jr. ) – OF COUNSEL

Hogan & Hartson

Washington, D.C.

on behalf of

Invista, Inc.

Kevin Kenaley, Global Marketing Manager,

Invista, Inc.

Omari S. Simmons, Senior Counsel, Invista, Inc.

Warren H. Maruyama )

) – OF COUNSEL

Erika L. Moritsugu )

-END-

APPENDIX D

Model for Evaluating Probable Economic Effect of Changes in GSP Status

 1

 For derivations, see Paul S. Armington, “A Theory of Demand for Products Distinguished by Place of

Production,” IMF Staff Papers, vol. 16 (1969), pp. 159-176, and J. Francois and K. Hall, “Partial Equilibrium

Modeling,” in J. Francois and K. Reinert, eds., Applied Methods for Trade Policy Analysis, A Handbook

(Cambridge: Cambridge University Press, 1997). 

MODEL FOR EVALUATING THE

PROBABLE ECONOMIC EFFECT OF CHANGES IN GSP STATUS

This appendix presents the method used to analyze the effects of immediate tariff

elimination for selected products from GSP suppliers on total U.S. imports of affected products,

competing U.S. industries, and U.S. consumers. First, the method is introduced. Then the

derivation of the model for estimating changes in imports, U.S. domestic production, and

consumer effects is presented. These processes are discussed in chapter 1 of the text. 

Introduction

Commission staff used partial equilibrium modeling to estimate probable economic

effects (PE) of immediate tariff elimination on total U.S. imports, competing U.S. industries, and

U.S. consumers. The model used in this study is a nonlinear, imperfect substitutes model.1

Trade data were taken from official statistics of the U.S. Department of Commerce. U.S.

production data were estimated by USITC industry analysts. Elasticities were estimated by

industry analysts in consultation with the assigned economist based on relevant product and

market characteristics. Trade and production data used were for 1999, and tariff rates used were

for 2000. 

The following model illustrates the case of granting a product GSP duty-free status. The

illustration is for a product for which domestic production, GSP imports, and non-GSP imports

are imperfect substitutes, and shows the basic results of a tariff removal on a portion of imports. 
Sb

S′

b

Db

Q

P

Qb Q′

b

A

B

Sn

Dn

Q

P

Q′

n Qn

Pn

B A

D′

n

Sd

Dd

Q

P

Q′

d Qd

B A

D′

d

Pd P′

b

P′′ b

Pb

Figure D-1

U.S. markets for GSP beneficiary imports (panel a), domestic production (panel b), and

nonbeneficiary imports (panel c)

Consider the market for imports from GSP suppliers illustrated in fig. D-1, panel (a). 

The line labeled is the U.S. demand for imports from GSP suppliers, the line labeled is Db Sb

the supply of imports from GSP suppliers with the tariff in place, and the line labeled is the S′

b

supply of imports from GSP suppliers without the tariff (i.e., the product is receiving duty-free

treatment under GSP). Point A is the equilibrium with the tariff in place, and point is the

equilibrium without the tariff. and are equilibrium quantities at and , respectively. Qb Q′

b

P and are equilibrium prices at and , and is the price received by GSP suppliers b P′

b P′′ b

producers when the tariff is in place. The difference between and denotes the tariff, . Pb P′′ b t

In the model, a tariff reduction leads to a decrease in the price of the imported good and

an increase in sales of the good in the United States. The lower price paid for the import in the

United States leads to a reduction in the demand for U.S. production of the good, as well as for
 2

 The product grouping consists of similar goods from different sources. For example, goods i, j, and k would

indicate three similar goods from three different sources. See Armington (1969) for further discussion of the

concept.

 3

 Armington (1969), p. 167.

 4

 Ibid., p. 168.

imports from non-GSP countries. These demand shifts, along with supply responses to the lower

demand, determine the reduction in U.S. output and non-GSP imports. 

The changes that take place in panel (a) lead to the changes seen in panels (b) and (c),

where the demand curves shift from and to and , respectively. Equilibrium Dd Dn D′

d D′n

quantity in the market for domestic production moves from to , and in a similar manner Qd Q′

d

for the market for nonbeneficiary imports, equilibrium quantity falls from to . Qn Q′

n

Derivation of Import, U.S. Production, and Consumer Effects

The basic building blocks of the model are shown below. Armington shows that if

consumers have well-behaved constant elasticity of substitution (CES) utility functions, demand

for a good in a product grouping can be expressed as follows:

q bq p

p

i i

i = 



 





−

σ

σ

where denotes quantity demanded for good in the U.S. market;2 is the price of good in

the U.S. market; is the elasticity of substitution for the product grouping; is the demand for

the aggregate product (that is, all goods in the product grouping); is a price index for the

aggregate product (defined below); and is a constant.3 As Armington states, the above

equation “... can be written in a variety of useful ways.”4 One of these useful ways can be

derived as follows. The aggregate price index is defined as p
p bp i i

i

= 













 − −

∑ σ σ σ 1

1

1

. (2)

q kpA A = η (3)

Kp bk p

p

si i i A si

A

ε σ σ η

σ − =

+

0. (4)

In addition the aggregate quantity index can be defined as q

where is a constant and is the aggregate demand elasticity for the product grouping kA η A

(natural sign). Substituting equation (3) into equation (1) yields

q bkp p

p

i iA A i = 



 





−

σ η

σ

.

Further manipulation and simplification yields

q bk p

p

i iA

i

A

=

+ σ σ η

σ

( )

,

which establishes the demand for in terms of prices, elasticities, and constants. qi

The supply of each good in the product grouping is represented in constant supply

elasticity form:

q Kp i si i si = ε ,

where is a constant and is the price elasticity of supply for good . Ksi ε si

Excess supply functions are set up for each good in the product grouping with the

following general form:

The model is calibrated using initial trade and production data and setting all internal prices to
p p

p

i

i

si

A

ε

σ η

σ − =

+

0 . (4N)

unity in the benchmark calibration. It can be shown that calibration yields for the K bk si i A = σ

i good so that equation (4) can be rendered as th

If there are goods, the model consists of equations like (4 n n N) plus an equation for the price

aggregator , which are solved simultaneously in prices by an iterative technique. p

For the case of adding a product to the list of products eligible for GSP duty-free

treatment, the equations are as follows:

[ ] p t for imports from GSP beneficiary countries, p

p

b

b

sb

A

( ) 1 0 +− =

+ ε σ η

σ

p for imports from nonbeneficiary countries, p

p n

n

sn

A

ε

σ η

− = σ

+

0

p for U.S. domestic production, and p

p

d

d

sd

A

ε σ η

σ − =

+

0

for the price aggregator. p bp i i

i bnd

= 



 



 −

=

−

∑ σ σ σ 1

1

1

, ,

The prices obtained in the solution to these equations are used to calculate trade and production

values, and resulting percentage changes in total imports and domestic production are computed

relative to the original (benchmark) import and production values. 

Consumer effects

Consumer effects are estimated in terms of the portion of the duty reduction that is passed

on to U.S. consumers on the basis of the import demand and supply elasticity estimates. The

formula for determining the division of the duty savings between U.S. consumers and foreign

exporters is approximated by , where is the percentage of duty savings SV ii

ii si

= −

η

( ) η ε
 5

 At any given vector of prices, such as at the benchmark equilibrium, is the own price ηη σ ii i A i = −− S S ( ) 1

elasticity of demand from imports from source , where is the share of total expenditures on the product

grouping spent on good at that vector of prices. See Armington, p. 175. 

retained by exporters from source , is the own price elasticity of demand,5 η and is the ii ε si

price elasticity of supply from source . An “A” code indicates that more than 75 percent of the

duty savings are retained by foreign exporters , and less than 25 percent η

η ε

ii

ii si − >





 

 0 75 . 

passed through to U.S. consumers. A “B” code covers the range between 75 percent and 25

percent . A “C” code covers the case where less than 25 percent of the 0 75 0 25 . . > − >





 



 η

η ε

ii

ii si

duty savings are retained by foreign exporters and more than 75 percent of the savings are passed

through to U.S. consumers . η

η ε

ii

ii si − <





 

 0 25 . 

The default assumption for the probable effect on consumers is a “B” code. This

assumption reflects the possibility that short-run supply elasticities may be less than perfectly

elastic and the world supply price may rise in the short run in the face of increased demand when

U.S. duties are reduced. In the long run, unless there are extraordinary market structure

circumstances, supply elasticities are likely to be perfectly elastic for any one product considered

in isolation, implying that a “C” code for the consumer effects is probably more appropriate in

the long run in most cases. “A” and “C” codes for consumer effects are assigned when analysts

have information indicating that they are appropriate.