Taiwan’s prospect of Zero-tariff agreement for petrochemicals likely with China by year-end

22-Sep-09

The Taiwanese petrochemical industry is hoping for a zero-tariff agreement with China by the end of the year concurrently with China’s free trade agreement (FTA) with Association of South East Asian Nations in 2010. This deal could result in annual savings of NT$ 3 mln (US$92,506). Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand and Vietnam comprise the ASEAN. If China’s MOU with 10 ASEAN members materialises and brings down trade barriers for easier flow of goods, Taiwan will be at a disadvantage is its deal with China does not succeed. Government delegates from Taiwan and China will meet shortly to discuss the issue in October and have the agreement on a priority basis so as to not lose trade volumes with the important Chinese market. The China-Taiwan ECFA could, however, cause a flood of cheaper Chinese products into Taiwan that can potentially kill other industries. Taiwan exports 10 mln tons of petrochemicals to China, on which an average of 6.5% import duties apply. Taiwan’s petrochemical exports to China includes five major commodity plastics - namely polyvinyl chloride, polyethylene, polypropylene, polystyrene and acrylonitrile butadiene styrene (ABS) - as well as some intermediate materials such as phenol, acetone and synthetic fibres