Tariffs 'a bad formula' for chemicals sector

Worried about disruptions in global markets from the Sino-US trade conflict, the American Chemistry Council's CEO is calling on the Trump administration to back away from its unilateral implementation of tariffs on products from China and other countries.

"The tariffs implemented by both countries are harming chemical manufacturing in both China and the United States," said Calvin Dooley, president and chief executive officer of the American Chemistry Council, during the ICCA-UN Environment symposium on sound management of chemicals and waste and the circular economy held in Chengdu, Sichuan province, on Thursday.

"The member companies of the council are very strong supporters of free and fair trade and we have been working with a coalition with manufacturing and agricultural groups who share our concerns with the administration's implementation of tariffs."

The second round of US and China tariffs, each comprising 25 percent on $16 billion in imports, going into effect on Aug 23, is expected to seriously hit US commodity chemical exports to China.

According to John Richardson, senior Asia consultant at ICIS, it is estimated that China will account for 51 percent of global net high density PE and linear low density PE net imports across the major deficit regions and countries in 2018-25.

This means that over the shorter term, this year and 2019, China will have a similarly dominant role as the world's biggest importer, and it is mathematically impossible for the US to enjoy big increases in production without exporting to China, he said.

Dooley said the chemical industry is the country's leading exporter and chemical industry exports account for more than 10 percent of all the country's exports.

"We have a current net positive trade balance of $33 billion, and with our increased investment and chemical manufacturing in the US, the trade balance is expected to increase $75 billion by 2025," he said.

"The council has been engaging in bilateral (and) multilateral negotiation to express our concerns about market disorder..."

The "circular economy" describes a business philosophy in which products are reused, designing out waste and minimizing the negative impact of manufacturing on society. According to Dooley, China has been advancing the concept amid its implementation of stricter environmental restrictions, and the Chinese government's efforts in advancing a circular economy in recent years have been substantial, with sound and innovative regulations.

Marco Mensink, council secretary of the International Council of Chemical Associations, echoed Dooley's comments, saying the circular economy is a key opportunity for China, and it is a business opportunity for both multinational corporations and domestic companies.

European and other Western companies will lead in the beginning and China will participate through joint ventures, he said.

"The waste treatment technology is developing fast (and) many domestic companies will follow soon," he told China Daily during the symposium hosted by the ICCA and UN Environment, and supported by the China Petroleum and Chemical Industry Federation.

In addition to waste management, the logistics to collect and sort the waste and use it in industry plays an equally important role, as those companies know the country best and get the circular economy running.