GCC exports tariff hike will damage Europe industry: GPCA

13 November 2013 15:44  [Source: ICIS news]

LONDON (ICIS)--Increases to tariffs on Middle East exports of polymers to Europe will increase feedstock costs and damage the competitiveness of Europe’s downstream industries, the Gulf Petrochemical Association (GPCA) said on Wednesday.

Levies on chemicals and polymers exported from the Gulf Cooperation Council region will be more than doubled to 6.5% from 1 January 2014, from the current level of 3%, as changes to the EU's Generalised System of Preferences (GSP) come into effect.

Europe imports up to 90% of its linear low density polyethylene C4 (LLDPE C4) requirements from the Middle East, especially Saudi Arabia, according to market sources. LLDPE C4 is butene based and represents the biggest share of the LLDPE market.  

The region also imports increasing volumes of high density polyethylene (HDPE).

The GPCA is not happy about the decision to increase tariffs, arguing that it goes against the EU’s stated aim of lowering trade barriers globally as well as hitting Europe’s competitive position. 

GPCA general secretary, Abdulwahab Al Sadoun, told ICIS: “The more limited access to chemicals and inflation in production costs resulting from the tariff increase will undermine production capacity in Europe. The Gulf chemical industry will not adjust its export prices to allow European downstream industries to remain competitive.”

He argues that Europe currently benefits from access to competitively priced products from the GCC region and by making these more expensive “downstream industries in Europe will suffer the most from the increase in tariffs.”

He urged European downstream industries and consumers to take action to request a lowering of applied tariffs.

The EU is on the one hand arguing for the lowering of trade barriers globally, but on the other, raising taxes on trade from the Gulf to Europe, said Dr Sadoun, adding: “The EU decision to end GSP benefits for imports from GCC states is a protectionist measure that will not even benefit the European industry as the resulting increase in costs will further affect its competitiveness, both locally and on export markets.”

Linda Naylor contributed to this article

By: Will Beacham
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