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The Vinyl Industry to Address Trade at the 2017 Fly-in

Apr 2017

Congress and the Trump administration are considering a number of changes to our nation’s trade policies in an effort to improve the competiveness of US manufacturing and business growth.  Two of the changes being considered are the renegotiation of trade deals like NAFTA and the implementation of a Border Tax Adjustment (BAT).

As the new administration prepares to renegotiate trade deals like NAFTA, VI and industry leaders are calling on policy makers to consider the potential impact of rule changes to successful and mature American businesses and their supply chains.  Entire industries have developed under the current trade rules and any renegotiation is likely to affect the supply chains of many industries. 

For example, U.S. vinyl resin manufacturers are net exporters with America’s largest trading partners, contributing to an industry trade surplus with Canada, Mexico and China.  Additionally, U.S. vinyl resin exports account for approximately 35% of total sales and the number is expected to grow by more than 30% by 2019.  These factors must be given careful consideration as the administration and Congress work to renegotiate trade deals. 

By expanding exports through favorable trade policies the U.S. will create more well-paying domestic jobs. While America boasts the largest single domestic consumer market, ninety-five percent of the world’s consumers live outside our borders.  Manufacturers here need policies and trade agreements in place that help us reach these consumers.  To grow domestically, U.S. product manufacturers must compete successfully in an increasingly challenging global economy.

Contrary to populist talking points, well-negotiated trade agreements eliminate tariffs, reduce regulatory obstacles, lower service barriers, and increase transparency.  They also increase competitiveness by instituting stronger intellectual property rights protection and establishing enforceable labor and environmental obligations. 

The second major policy being considered, the BAT, would essentially tax imports and rebate, or reward companies for their exports.  Proponents argue the new tax system would level the playing field for U.S. manufacturers against international trading partners who subsidize exports in their countries.  Most of America’s major trading partners employ a value added tax or VAT, whereas U.S. companies are taxed at 35 percent of worldwide profits.  Under the new plan, companies would only be taxed on their U.S. operations.

Supporters also say the new system would result in raising the value of the dollar, thus increasing purchasing power and making up for the new tax on imports.

Opponents argue the BAT would increase costs for consumers, cut profits for some businesses, and lead to potential retaliation from other countries that would stifle trade across the board.  Retailers and businesses that rely on imported goods and components have expressed particular concern.

As the Trump administration and Congress consider trade policy changes and renegotiating trade deals like NAFTA, VI is working with our industry partners to monitor the negotiations and provide assistance as they progress. Please join us for the 2017 Vinyl Industry Congressional Fly-in on May 17th and 18th to discuss this, and other important issues, with policy makers in Washington.