Asia to see more anti-dumping cases in 2010 - leading lawyer

08 February 2010 07:56  [Source: ICIS news]

By John Richardson

SINGAPORE (ICIS news)--Asia is likely to see more anti-dumping cases during 2010 as a result of free-trade deals, the global economic crisis and big increases in commodity chemicals and polymer capacity, said leading Singapore-based trade lawyer Edmund Sim on Monday.

“We are likely to see more cases, both in chemicals and polymers and downstream industries. But we are not going to see a flood of cases immediately because paperwork can take a while to prepare,” said Sim, who is a partner with the Singapore practice of international law firm Appleton Luff.

The two big free-trade deals that came into place on 1 January this year are those within ASEAN (Association of South East Asian Nations) and between ASEAN and China.

The deal within ASEAN, the ASEAN Free Trade Area (AFTA), and the ASEAN-China deal, the ASEAN-China Free Trade Agreement (ACFTA), involve zero import tariffs for shipments of most goods.

This affects shipments between ASEAN’s founding members – Indonesia, Thailand, Singapore, Malaysia, the Philippines and Brunei – and between these same six countries and China.

But Indonesia’s polymer producers are pressing for a five-year deferment, to 1 January 2015, on zero polyolefin tariffs under AFTA, ICIS news was told last November.

A senior official at the Indonesian Employers’ Association said that as many as 7.5m jobs of the country’s total 30m manufacturing jobs could be under threat as a result of both the free-trade deals, according to local media reports in December.

The chances of successfully renegotiating AFTA and ACFTA were very slim because of the cost and complexities involved, added Sim.

This left short-term trade protectionist measures, such as anti-dumping and safeguard duties, as the only realistic routes to protect domestic industries, he said.

“How it affects each country varies. Indonesia is disadvantaged in petrochemicals as it faces long-standing issues such as lack of common ownership and lack of investment in assets.”

Indonesia's only ethylene supplier, Chandra Asri, for example, has one set of shareholders with PT Titan, the downstream polyethylene (PE) producer. TriPolyta, one of the country’s polypropylene (PP) producers, is under separate ownership.

Plans to expand Chandra Asri’s sub-world-scale cracker had been frequently stalled due to lack of confidence in the investment climate, despite Indonesia being a major importer of monomers, said petrochemical industry observers.

“As for the downstreamers, Indonesia is a huge domestic market and, as a result, is going to face stiff price competition from imports from, for example, China’s BOPP (biaxially oriented PP) film producers,” said Sim

China has very modern and world-scale capacities in BOPP film and is oversupplied.”

Malaysia is in big deficits on petrochemicals but its assets are more competitive. It also has a strong export-based plastics processing sector that should be in a better position thanks to the trade deals.

Thailand has big petrochemical and polymer surpluses as a result of the economic crisis, and so it stands to gain as it will be better able to export. It also has strong downstream sectors, including packaging,” said Sim.

The Philippines' petrochemicals industry was poorly integrated because the country lacked a cracker, industry observers said.

“Downstream industries in the Philippines also have weak economies of scale compared with some other ASEAN members, and particularly China,” said Sim.

Singapore had a very small domestic market, and so the focus had always been on exports, both upstream and downstream, he added.

To discuss issues facing the chemical industry go to ICIS connect
Read John Richardson and Malini Hariharan’s Asian Chemical Connections blog

By: John Richardson
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