Predatory Pricing, Tariff Loopholes, & Government Subsidies
Polyethylene Terephthalate Film is a thermoplastic polymer that is used in the manufacturing of many goods such as: clothing, bottles, packaging, solar cells, ribbons, and more. Although it has many uses, the overwhelming majority of PET film is used for plastic bottles.
Up until the mid 2000’s, the Polyethylene Terephthalate (PET) Film market was dominated by a few major players, such as: DuPont Teijin USA, Toray Plastics, SKC Inc., and Mitsubishi Polyester Film of America. These three companies charged relatively the same prices, worldwide for PET film.
However, all of this changed during the early part of the 21st century when Chinese manufacturers entered the United States PET market.
After a few years of selling abroad, Chinese manufacturers had managed to take roughly 25% of the entire PET film market in the United States. They didn’t accomplish this feat through strength of marketing or quality of product. Instead they took the market share by selling PET film far below what it costs to make.
Put another way: Chinese manufacturers of PET were dumping the product into the US, far below cost, to take market share. To combat this predatory pricing, an anti-dumping petition was filed on the behalf of the group of DuPont Teijin Films (VA); Mitsubishi Polyester Film of America (SC); SKC, Inc. (GA); and Toray Plastics (America), Inc. (RI).
After an investigation, the Department of Commerce found the People’s Republic of China guilty of dumping PET film into the US.
Specifically, these Chinese manufacturers were selling PET Film in the United States for 46.82% to 76.72% below fair value!
As a result of the DOC’s ruling, those Chinese companies looking to sell PET film in the US would need to pay a tariff if they wanted to continue to import this PET film into the US.
With their competitive edge taken away from them, these Chinese manufacturers simply decided to stop selling PET film in the US all together.