Think Tank: Industry bemoans Davos progress

28 February 2014 09:51 Source:ICIS Chemical Business

European chemical sector wants countries to think big and focus on major trade deals

“Make no small plans,” European chemical trade group Cefic said in a statement in February bemoaning the thrust of an agreement made at the World Economic Forum in Davos, Switzerland, to liberalise trade in environmental goods.

 

 Copyright: Rex Features

The industry is clearly concerned that the plurilateral trade proposal – between the US, Japan, the EU and 10 other World Trade Organization (WTO) member nations – probably makes it even more difficult to make real progress on wider multilateral deals.

Multilateral trade talks foundered time and again in the Doha round of negotiations, which began in 2011, and prompted a resurgence in bilateral agreements that some see as divisive and ultimately detrimental to global trade. The breakthrough in Bali, Indonesia in 2013, however, was recognised as a welcome positive step for the WTO.

However, there is particular concern in the chemical industry now that a deal on environmental goods would be based on a controversial list of 54 products agreed at the Asia Pacific Economic Forum (APEC) in 2012. That list includes bamboo floor panels, municipal incinerators, chlorine dioxide generators, solar heaters, waste treatment machinery, and wind power equipment, but no chemicals.

“We would expect the WTO to free up trade across the board,” said Cefic’s director general Hubert Mandery. “Bolder steps are needed by them to regain their lead in trade liberalisation.”

The chemical industry believes that any list of so-called environmental goods risks “being arbitrary, discriminatory and clouding the tariff classification system”. Polystyrene (PS), for instance, may be classified as a packaging material but in producers’ eyes it is “green” because it is used in insulation.

“This initiative does not reflect the reality of global value chains,” VCI director general Utz Tillmann said. “For example, no plant for renewable energy generation would be possible without inputs from the chemical industry. Tariffs need to be eliminated along entire value chains.”

The list focuses on finished goods so the chemical industry rightly feels short-changed by what the VCI has called a “one-sided approach”.

“Such a race of particular individual interests usually discriminates against other products and necessitates work and cost-intensive adaptations, over and again,” Tillmann added.

A more ambitious approach to trade liberalisation is needed, said Cefic, “given the increased intertwining of economies through global value chains”.

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