ACC urges US to roll back tariffs from Chinese trade dispute

HOUSTON (ICIS)–The American Chemistry Council (ACC) urged the US to ease the tariffs faced by the industry, including the ones the country imposed as part of its trade dispute with China.

The recommendation was among several the ACC made in its updated list of trade priorities and in a letter that it sent to the US Trade Representative.

The ACC acknowledged the trade issues that lay at the heart of the dispute with China, such as competition with state-owned enterprises (SOEs), industrial subsidies and unfair trade practices.

In response to these policies, the US began imposing tariffs on Chinese imports in mid-2018, many of which covered shipments of plastics and chemicals. China responded with its own batch of tariffs, which also covered many plastics and chemicals from the US.

While acknowledging the issues behind the dispute, the ACC also recognised the value of of engaging in the Chinese market, which supports US production and exports. Such engagement also encourages innovation.

In a summary of the ACC’s trade priorities, it urged the US to follow up its phase-one trade deal with China with a second agreement that would repeal additional tariffs imposed by both countries and that would lower China’s most-favoured-nation tariffs.

The US and China signed the phase-one trade agreement in early 2020. Its hallmark was China’s commitment to increase imports of US agriculture, energy, services and manufactured goods. So far, China is far from fulfilling that commitment.

TARIFF RELIEF AND TRADE PRIORITIES
Addressing the trade dispute in China is among the steps the US can take to lighten the burden of tariffs faced by the chemical industry, according to a letter that ACC CEO Chris Jahn wrote to Katherine Tai, the new US Trade Representative.

The letter comes on the eve of congressional hearings that will discuss the agenda of the trade policy of President Joe Biden.

Other steps the US can take include renewing the Generalised System of Preferences (GSP) programme and passing the Miscellaneous Tariff Bill (MTB), which allows companies to file petitions that request a reduction or suspension of tariffs on specific products.

“When US tariff rates are low, our industry is more competitive and grows and thrives,” Jahn said in his letter.

Tariff reduction is among the five trade priorities that Jahn highlighted.

Those priorities are as follows:

• Open new markets for US exports of plastics and chemicals.
• Reduce tariffs for US companies and consumers.
• Reduce and prevent other barriers to trade besides tariffs through greater regulatory cooperation in key regions and markets.
• Cultivate resilient and strategically integrated global supply chains, particularly with key trading partners.
• Modernise the World Trade Organization (WTO) and the rules-based international trading system.

The chemical industry reported a trade surplus of $29bn in 2020 and it is poised to expand that in upcoming years, Jahn said. He urged Tai to develop a new long-term strategy that would open up US exports to growing markets around the world. Many of those markets have high tariffs and opaque regulations that put US exports at a disadvantage.

“If these markets adopt and implement the high standards embedded in US free trade agreements, US chemical manufacturers will benefit from a more transparent, certain and level playing field that lowers our costs and increases our competitiveness,” Jahn wrote.

In the ACC’s summary, it encouraged the US to start negotiating new free-trade agreements with key trading partners and emerging markets. The nation should consider joining existing trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership.