Everyone in Washington talks about the importance of preserving American industry, protecting US workers and creating new domestic manufacturing jobs. This political rhetoric is sometimes backed up by meaningful policy, though there are still critical oversights the federal government needs to address.Â
One of the most important (and frankly very simple) fixes would be to enforce regulations meant to protect American industry. When the government fails to perform this law-enforcement responsibility, things can go wrong very quickly.
Case in point: subsidized by their own governments, industries across the world export their products to the US at artificially low prices and evade anti-dumping duties that were designed to prevent unfair competition. The federal government has the authority to punish this anticompetitive behavior, though frequently the offending parties donât face any consequences for their law breaking.
Fortunatelyâwith a little prodding from Republicans and Democrats in Congressâthe government is poised to put a stop to this abuse in at least one vital case: the thermal-paper industry.
An overlooked industry
Thermal paper is a critically important but underappreciated product. Every time you receive a receipt at a gas pump, ATM or grocery store, itâs printed on thermal paper. The product is so widely used that it has come in for the kind of media and activist fear-mongering reserved for only the most ubiquitous consumer goodsâspeculation that scientists have mocked as baseless.Â
The thermal paper industry supports thousands of US jobs and supplies businesses big and small in sectors ranging from retail to healthcare and shipping. Itâs for this reason that the federal government imposed antidumping and countervailing duties on thermal paper imports from several countries between 2008 and 2011. Thermal paper manufacturers in these countries continue to benefit from tax breaks, favorable loans, and export assistance provided by their governments.
Evading the law
Despite the sensible measures enacted to protect American manufacturing, US importers are increasingly buying thermal paper from these nations without paying the prescribed duties. Foreign manufacturers enable this evasion by routing (transshipping) their products through countries not subject to the restrictions, effectively disguising their point of origin.Â
Customs and Border Protection (CBP) has investigated this scheme but hasnât been able to fully control it, as a coalition of bipartisan senators recently explained in an open letter:
âThrough the Paper Receipts Converting Association, thermal paper converters filed six petitions with U.S. Customs and Border Protection (CBP) under the 2016 Enforce and Protect Act, covering 19 total importers. After thorough investigations, CBP concluded that, in all six cases, importers had evaded AD/CVD orders.Â
Despite these findings, duty evasion on thermal paper imports remains a persistent issue. A particular concern is that when CBP identifies such evasion, the primary remedy is the retroactive collection of unpaid duties. This approach may inadvertently incentivize importers to evade duties, relying on the fact that duties are only applied if evasion is detected.âÂ
Importantly, the eight-member coalition in the Senate includes several prominent DemocratsâRaphael Warnock, Sherrod Brown, Robert P. Casey, Jr. and Tammy Baldwinâindicating that this isnât a partisan or ideological effort to protect some special interest. Rather, itâs a group of elected leaders who are willing to collaborate for the benefit of their diverse constituents, a rarity these days in polarized Washington, as the Paper Receipts Converting Association (PRCA) noted. Â
Parallels to ENGO campaigns
The distortionary effect of this duty evasion is similar to the impact of environmental NGO campaigns against domestic industry. As weâve previously reported, when the billionaire-backed Natural Resources Defense Council (NRDC) erroneously attacks North American forestry, it openly encourages US companies and consumers to source their paper products from foreign suppliers. This policy wouldnât yield any environmental benefits, but it would definitely harm domestic forestry and paper production. Â
In some cases, there is even evidence of Western NGOs collaborating with foreign governments to disparage American drug makers, energy companies and even food producersâwhich of course benefits the counterpart industries subsidized by those governments. Â
Solving the problem
The US government has on multiple occasions taken steps to protect American companies from the deceptive influence of foreign governments and industries. For example, the US State Department has sanctioned Russian-funded media outlets that attack US energy production. Similarly, the bipartisan coalition in the US Senate has called on Customs and Border Protection to help ensure âthat importers of thermal paper are in full compliance with U.S. customs laws and are paying all required duties.âÂ
CPB has a number of powerful tools at its disposal to correct the trade imbalances that have been created in the paper industry over the last two decades. For starters, the agency could require live entry and single entry bonds (STBs) for thermal paper imports from all sources, and ship merchandise back to the exporting country when STBs arenât provided.Â
More intensive efforts could be implemented as necessary, such as physical cargo exams of entries suspected of transshipment as well as audits of thermal paper importers. CPB could then assess penaltiesâranging from $5,000 to $250,000âin cases where it identifies duty violations. Individuals and businesses that purchase fraudulently imported goods could also be fined.
ConclusionÂ
The US manufacturing sector continues to face serious challenges in a global economy, but that doesnât mean the end is nigh. Coming out of the COVID pandemic, the US began to regain some of the manufacturing capacity it gradually lost over the last five decades, and private investment in the sector continues to growâitâs up 90 percent since the end of 2022. Â
One obvious way to bolster those positive trends: enforce the law against foreign and domestic actors who undermine American companies. As the thermal paper case should illustrate, the entire country benefits when the US protects its industries.  Â