13 December 2013 15:04 [Source: ICB]
Momentum is building for the elimination of trade barriers worldwide. Chemical trade groups are jumping on board as the sector is poised to reap huge benefits
One key theme gaining momentum for 2014 is world trade. It’s been an eventful end of the year with the World Trade Organization announcing its first multi-nation trade deal since its creation over 20 years ago in early December, and Iran reaching a deal with six nations agreeing to halt its nuclear programme for a temporary and partial lift of economic sanctions.
While these are not huge sweeping deals quite yet, clearly the momentum is building. And chemical trade groups are getting on board, pushing harder for measures to facilitate trade and eliminate tariffs in particular.
European chemical group Cefic and the International Council of Chemical Associations (ICCA) have requested the elimination of chemical import duties by all countries with a viable chemical industry. This would cut Europe’s annual tariff bill be €2bn, they said.
“FTAs are very important to the US chemical industry, and in particular to small- to medium-sized companies,” said Bill Almond, vice president of government and public relations at SOCMA. “The US FTA with South Korea, Colombia and Panama saved hundreds of millions of dollars in duties for US exports.” The US signed this FTA in October 2011.
On the import side, SOCMA is also pushing for tariff relief for US companies that import chemicals that are not available locally. Those provisions, in the Miscellaneous Tariff Bill (MTB), expired at the end of 2012 and the MTB has not been taken up by Congress since.
Duties on chemical imports can add 5-25% to raw material costs, said SOCMA president and CEO Larry Sloan.
For the US chemical sector, global trade will become ever more important in the coming years as it ramps up its massive shale gas driven build-out of petrochemical and polymers capacity.
The US chemical trade balance is expected to rise from $2.7bn in 2013, to $30bn by 2018, driven by a surge in exports, according to American Chemistry Council chief economist Kevin Swift.
By 2018, US chemical exports are projected to jump 45% to $279bn versus 2013 levels, he noted.
Additional contribution by Nigel Davis in London
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