Dec 14, 1984

EEC-ARAB TALKS TO FOCUS ON PETROCHEMICALS EXPORTS.

BRUSSELS, DECEMBER 11 (IPS-IFDA/YOJANA SHARMA) -- The talks set for Wednesday in Kuwait between the European Community and the Organisation of Arab Petroleum Exporting Countries (OAPEC) were to focus on Arab petrochemicals exports to Europe, EEC officials said here.-

The meeting is held annually to discuss general trade matters, but "the EEC will not be able to avoid discussions on imports of Arab petrochemicals", an EEC official said.-

Arab tempers soared in June when the EEC imposed a 13.5 percent common customs tariff on Saudi methanol entering Europe, because the Saudis had exceeded their duty-free allowance under the EEC’s Generalised System of Preferences.-

The decision was the first of its kind since 1979, even though petrochemical quotas have been exceeded several times by Venezuela, Colombia and Kuwait.-

Matters came to a head in Paris December 5, when the Arab-European chamber of commerce issued a statement saying "if such policies are to continue, Arab countries may play reciprocal measures towards their imports from the EEC".-

The statement added that Arab countries would look elsewhere for their purchases, but this thinly veiled threat was accompanied by an appeal for dialogue.-

Arab states are indignant that the EEC is blocking its exports when the industrialised countries themselves encouraged them to bring petrochemicals production nearer the source of hydrocarbons, Arab officials maintains.-

The Saudis imposed last month a new 20 percent tariff on cables imported from the EEC.-

But the EEC wants to avoid a costly and damaging trade war with the Gulf countries, officials say, because EEC exports to Saudi Arabia alone are worth some 20 billion U.S. dollars a year.-

Despite the fears of European chemical producers that Arab suppliers will undercut EEC prices, some experts say Saudi exports now coming on stream are unlikely to harm EEC industries as long as they are not pumped into one particular market to the exclusion of others.-

The Brussels-based EEC industry lobby, CEFIC (European Council of Chemical Manufacturers Federations) presented a position paper to the EEC executive commission here last week, taking a moderate, low-key stance on the Arab imports question.-

The paper contrasted sharply with the statements of industry alarmists who predict an economic bloodbath once Arab products enter the market.-

The CEFIC paper recognises that "significant quantities of petrochemicals and derivatives will flow from the Arab Gulf".-

But it "assumes that European industry will adjust where appropriate with the backing of effective trade defence measures".-

The CEFIC paper, however, rejects protectionism measures.-

Instead, it calls upon the Commission to:

-- Monitor and survey imports closely (to foresee market disturbance),

-- Use existing trade mechanisms such as the General Agreement on Tariffs and Trade (GATT) where appropriate, and

-- Act speedily if injury occurs.-

CEFIC also points out that measures already exist under GATT to counter unfair trade. But it opposes the extension of favourable duty treatment to the Arab states on a bilateral basis.-

Gulf supplies to Europe of polyethylenes methanol and ethylene glycol alone will soar 20-fold by the end of the decade, to reach some two million tonnes, according to industry estimates.-