[Congressional Record Volume 142, Number 96 (Wednesday, June 26, 1996)]
[Extensions of Remarks]
[Page E1173]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  SUSPEND TARIFF ON PARA ETHYL PHENOL

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                        HON. JOHN M. SPRATT, JR.

                           of south carolina

                    in the house of representatives

                        Wednesday, June 26, 1996

  Mr. SPRATT. Mr. Speaker, today I am introducing legislation to 
suspend for 3 years the tariff on a chemical called Para ethyl phenol 
(PEP--HTS-2907.19.20 00). This bill is critical to saving the jobs of 
50 of my constituents who work at Hodgson Chemicals, Inc., in Rock 
Hill, SC.
  The Hodgson plant produces two chemicals called Butylated hydroxy 
ethyl benzene [BHEB] and Mono butyl ethyl phenol [MBEP]. PEP is a 
critical component in producing both BHEB and MBEP. Enactment of the 
bill will ensure that Hodgson can compete against a Japanese company 
which is the only other manufacturer of BHEB. BHEB is used as an 
antioxidant in low and high density polyethylene and is sold to 
chemical producers. MBEP is used as an intermediate to produce an 
antioxidant. Hodgson informs me that there are no domestic sources for 
Para ethyl phenol [PEP]. Hodgson must therefore import and pay a 10.7 
percent tariff on all the PEP it uses. This extra cost is reflected in 
the retail price Hodgson charges for BHEB and MBEP. The cost is 
substantial since over 50 percent of the finished product for both BHEB 
and MBEP is PEP.
  The Japanese company exports BHEB to the United States, but not the 
PEP itself. This means that it avoids a tariff on PEP and therefore 
enjoys a significant cost advantage over Hodgson. Unless the tariff 
suspension is passed, Hodgson may be forced to discontinue production 
of BHEB and MBEP.
  Hodgson plans on beginning production in the United States of PEP 
within 3 years. That is why Hodgson is only seeking a 3-year tariff 
suspension. Although I do not believe the cost of this suspension is 
great, we will be seeking a cost estimate from CBO to determine the 
bill's price tag. We will also seek to confirm that there are no 
domestic sources at present for PEP. Assuming that the only sources for 
PEP are foreign and that the cost is modest, I hope that the Congress 
will pass this bill in a timely manner. The jobs of many of my 
constituents depend on it.

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