JEDDAH - The GCC petrochemical industry is set to record an increase in exports in 2014 due to the World Trade Organization's Bali Package, predicts the Gulf Petrochemicals & Chemicals Association (GPCA).
The Trade Facilitation Agreement, adopted as part of World Trade Organization's (WTO) Bali Package at the end of 2013, creates binding commitments among member countries to increase customs efficiency and revenue collection by reducing bureaucratic procedures.
"The WTO's deal on trade facilitation, if implemented in its true spirit, will reduce the cost of all GCC petrochemicals exports, thus easing the flow of goods across borders and cutting delays in international shipments, especially in the countries where Gulf chemical exporters have encountered difficulties in the past," said Dr. Abdulwahab Al-Sadoun, GPCA's Secretary General.
According to the WTO, the benefits accruing to the world economy from the Trade Facilitation Agreement are estimated to be between $400 billion and $1 trillion as costs of trade are set to decrease by 10 percent to 15 percent, contributing to increased trade flows and higher revenues while creating a stable business environment.
The Gulf's petrochemical industry is an export-oriented sector, according to GPCA statistics. In 2012, the GCC's petrochemicals industry exported 60.7 million tons of chemicals, equivalent to 75 percent of its output valued at $52.7 billion.
"The Trade Facilitation agreement will provide GCC petrochemical exporters with an opportunity to reduce costs and time delays through simple and uniform customs procedures," Dr. Sadoun added. "The agreement removes major obstacles for petrochemical exporters from the Gulf, and will be directly responsible for the increased chemical trade, leading to the growth of the industry."
Export barriers against GCC petrochemicals will only be eased in the second half of the year, as the Bali Package is set to be ratified by the WTO General Council by July 2014. The GPCA, however, is hopeful for the future of the Gulf's petrochemical exports.
"The Bali Package was approved by all 159 members of the WTO, which means worldwide attitudes are swaying in favor of multilateral trade liberalization," Dr. Sadoun predicted. "As the GPCA advocates for free trade, we welcome the Trade Facilitation Agreement as it will surely open access to export markets for the Gulf's petrochemical producers."
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