Asian Polyolefin Trade Slows on Free-Trade Muddle



By John Richardson

Polyolefin shipments have been held up in ports by lack of awareness among customs officers at some ports in Southeast Asia over how to implement new free-trade deals, an industry source told us.

It seems highly likely that the same applies to other chemicals and polymer cargoes.

The Association of Southeast Asian Nations Free Trade Area or AFTA agreement came into force on 1 January, as did the China-ASEAN deal or ACFTA deal.

They involve zero import tariffs on shipments of most goods between ASEAN’s founding members – Indonesia, Thailand, Singapore, Malaysia the Philippines and Brunei, and between these same six countries and China.

“Lots of containers of polyolefins have been stuck in ports because customs officials are not aware of how the new trade agreements work,” claimed the industry source.

“The muddle over how the new trade-agreements are supposed to work does, on the face of it, seem extraordinary when you are consider that they have been many years in the making. For example, the terms of the ACTFA were agreed eight years ago.

But a well-informed source told us: “What is needed is more well-trained staff to help with the implementation, but the budget for the ASEAN Jakarta-based secretariat is only $15m a year.

“The reason it’s so low is that contributions are pegged for each country at what can be afforded the poorest members, such as Laos and Cambodia.”

Equally strange seems to be the complaints from Indonesia’s polymer producers and from the country’s manufacturers in general over the impact of the agreements.

“The industrial sectors in Indonesia and the Philippines, and to a lesser extent Malaysia, vehemently objected to greater market access and greater competition – not when the agreements were being negotiated but during the waning days of 2009,” wrote Edmund Sim, a Singapore-based trade lawyer, in a recent article.

In an interview, Sim – partner with the Singapore branch of international law firm Appleton Luff – added: “The delays were partly because all the details of the deals are easily available on the internet.

“Government officials therefore assumed that industry executives would be fully across the implications.

“This wasn’t the case until the actual effects of the FTAs became more apparent as the implementation date drew near.

“Another problem in Indonesia was that people were distracted by the presidential and legislative elections, which took place last year.”

Sim had told us before that those who are complaining will pretty much have to, as we say in Britain, “like it or lump it”, because the likelihood of these deals being renegotiated is very low.

And so, as he explains in this ICIS news article from yesterday , we can expect more antidumping cases in 2010 from disadvantaged countries such as Indonesia and the Philippines.



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