Duty barriers continue to rise on chemical exports

nylon 6.jpgThe chemical industry has been one of the great beneficiaries from globalisation over the past 25 years.

Today, it is hard to remember just how restricted markets used to be. Tariffs often applied within Regions, as well as between them. In his early years as a product manager, the blog would often spend days trying to find the optimal cost and routing for a shipment.

Sadly, the continuing economic downturn is starting to take us back to those times. Many major countries are now trying to depreciate their currencies against each other, to gain export business. This is disruptive on its own, as it makes planning very difficult. Equally, duty barriers have begun to reappear.

Last year, China imposed duties on US nylon suppliers. Then, in the summer, it imposed them on long-standing suppliers of PTA in S Korea and Thailand. And just to prove this is part of a trend, India has now confirmed its decision to impose 6.5% duties on Saudi polypropylene.

Most governments have now moved away from the stimulus programmes agreed at the G-20 Summit in April 2009. Instead, Western economies are more worried about rising debt levels, whilst emerging economies are concerned about rising inflation and asset price bubbles.

The leadership of the chemical industry, with the exception of the Gulf Petrochemical Association, has been strangely quiet on this key issue. The blog hopes they will begin to raise their voices, before the trend becomes irreversible.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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