Small Businesses Oppose Petition Over Imported Shopping Bags

U.S. small businesses that supply the branded shopping bags for retailers and foodservice businesses across the country have denounced a petition by Novolex—a private-equity owned, multi-billion-dollar packaging giant, saying it misuses U.S. trade laws to drive them out of the market.

The Alliance for Responsible Trade in Paper Bags, representing hundreds of U.S. workers in the specialty paper bag market, is opposing a trade petition from a group calling itself ‘The Coalition for Fair Trade in Shopping Bags’ requesting that the Department of Commerce and U.S. International Trade Commission impose antidumping and countervailing duties on imported shopping bags from nine different countries. The targeted imports range from restaurant carryout bags to high-end retail shopping bags.

‘The Coalition for Fair Trade in Shopping Bags’ is led by Novolex—a $6 billion, highly automated producer of stock paper bags owned by Apollo Global Management and the Carlyle Group, two of the largest private equity firms in the world. Already the dominant player in the U.S. packaging industry, Novolex controls an estimated 75 percent of U.S. production of paper bags.

“U.S. trade law is intended to protect American companies and workers from unfair foreign trade, not drive out competitors that offer more appealing product choices,” said Terri Ethridge, Partner at AnnJoy, a Florida-based supplier of custom branded packaging. “Novolex is not a reliable supplier and refuses to meet the needs of small- and medium-sized businesses. American small businesses like ours provide superior customer service, dependability, quality, and variety compared to Novolex. They only brought this case because they don’t want to compete against us in the marketplace.”

Novolex’s trade petition targets imported product from no fewer than nine countries—Portugal, Turkey and Colombia to producers in southeast Asia—while notably excluding Mexico, from which Novolex itself imports products.

“This trade petition is really about one company trying to knock its competitors out of the market so it can force retail and restaurant customers to accept its mass-produced stock paper bag offerings,” said Andrew Straitman, CEO of Commonwealth Packaging Co., a third-generation, family-owned custom-packaging provider based in Harrisburg, Pa. “Novolex doesn’t even make many of the types of bags that they are trying to shut out of the market. They can’t keep up with what their competitors are offering, so they’re asking the U.S. Government to do their dirty work by imposing duties that give them an unfair advantage while sticking consumers with higher prices.”

Just last month, Novolex announced a price increase of 19 percent amid declining raw material prices—highlighting the unparalleled pricing dominance it already exerts over the U.S. market. Meanwhile, the highly automated company’s hoped-for market gain from its trade ploy would come at the expense of lost jobs for hundreds of U.S. workers.

“Novolex is complaining about low-priced imports, but everyone in this industry knows that they are the dominant market player with tremendous pricing power, which only gets stronger if they get a successful outcome in this case,” said Gordon Summerfield, senior VP of sales and marketing at Trevose, Pa.-based S. Walter Packaging Group, which has supplied packaging products to the retail industry for over 120 years. “Trade law should not be used to reinforce anticompetitive behavior in the U.S. marketplace.”

The USITC will hold a hearing on the Coalition for Fair Trade in Shopping Bags petition on Thursday, March 14. Later this spring, the Commerce Department will issue a final decision on duty levels and the ITC will determine whether injury actually exists.

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