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Taiwanese petrochemicals need China trade pact to survive

Taiwanese petrochemicals need China trade pact to survive

About a year ago, the Taiwan Synthetic Resins Manufacturers Association (TSRMA) held a press conference for the first time in 20 years to ask the government to save the local petrochemical industry from "a life or death situation."
TSRMA Chairman F.Y. Hong described at the time Taiwan's export-oriented industries as being "hospitalized in intensive care" and said that without government rescue, the industries would "end up in the mortuary."
In a move to support a proposed economic cooperation framework agreement (ECFA) with China, Hong said that if Taiwan's petrochemical industry does not receive zero-tariff treatment under the trade pact, it will not be able to survive.
One year later, after petrochemicals were included on the ECFA early harvest list, Hong still has concerns about the progress of signing the trade deal.
"If Korea and Japan - Taiwan's two biggest competitors - sign free trade agreements with China ahead of us, China will no longer need to place their orders in Taiwan, so there will be no room for us to survive," Hong said in a recent interview.
At present, Taiwan's petrochemical exports to China are subject to a 6.5 percent import duty - already higher than the 5.5 percent import duty for Korea and Japan. However, the latter two will be granted zero-duty treatment from 2012.
"If we cannot grab the moment to secure the market, we are sending ourselves to the mortuary," said Hong.
Although a free trade area comprising China and six of the 10 members of the Association of Southeast Asian Nations (ASEAN) took effect Jan. 1 offering tariff-free treatment to the vast majority of products shipped within the bloc, it did not cause much impact on Taiwanese manufacturers, as those countries are not considered Taiwan's main competitors.
However, when the ASEAN Plus Three - China, Japan and South Korea - comes into effect in 2012, it will have a negative effect on the local industry.
Hong, who has also served as president of the Formosa Chemicals & Fibre Corp., pointed out that while China's imports of petrochemicals were up to about 25 million tons a year, the country was also developing its own petrochemical industry to meet its growing domestic demand.
China's demand will remain strong in the next few years, said Hong, explaining that the per capita consumption of plastic materials in the country is only a few kilograms but is expected to grow to about 20 kg in the future, compared to Taiwan's per capita consumption of around 100 kg.


Updated : 2021-05-17 12:13 GMT+08:00