SINGAPORE: China unveiled a new list of import tariff exemptions for six chemical and oil products from the US on Thursday, days after the world’s two largest economies announced a Phase 1 trade deal.
The exemptions will be for one year from Dec. 26, the Finance Ministry said, without providing a value for the imports excluded from duties.
Duties already imposed on US products would not be refunded, the ministry added.
The tariff waivers will apply to four chemical products, such as metallocene high-density polyethylene (HDPE) and a special grade of linear low-density polyethylene (LLDPE), and refined oil products that include white oil and food-grade petroleum wax.
Kelly Cui, principal analyst with consultancy Wood Mackenzie, said the exemptions on the chemical products would benefit companies such as Dow Chemical Co, Exxon Mobil Corp. and Chevron Phillips Chemical Co, which have since 2017 been adding shale-based ethylene production facilities and targeting China as the prime export market.
Cui also pointed out that the listed products, metallocene HDPE and LLDPE, were high-end special grade plastic raw materials used for packaging and pipes. China is the world’s largest importer of polyethylene.
“The exemptions could see China resume buying more HDPE and LLDPE from the US, reversing the trade flow, as the US supplies have been diverted to Latin America and Europe while China has been importing mostly from the Middle East,” said Cui.
In 2018, China imported some 6.86 million tons of HDPE and 4.46 million tons of LLDPE, according to Cui, who cited Chinese customs data. The data does not provide a breakdown for different grades of each polymer.
These imports had a combined total value of about $14 billion, according to Reuters calculations based on the delivered cost for these two products.
For petroleum wax, China imported from the US 1,108 tons, worth only $3.2 million in the first 10 months of 2019, one-tenth of China’s total imports of the product, according to Chinese customs data and consultancy JLC Network Technology.
White oil imports from the US were 3,490 tons or worth only $8.7 million during the same period, roughly 6 percent of China’s total imports.
China waived import tariffs for some soybeans and pork shipments from the US on Dec. 6, before the two sides reached a Phase 1 trade deal to cancel tariffs planned to take effect on Dec. 15.
China said it will continue to work on the product exemptions and release the second batch of waivers at an appropriate time.
The Sino-US trade war has been a major headache for global policymakers as it slowed economic growth worldwide and chilled business investment and confidence.
US Trade Representative Robert Lighthizer last week acknowledged there remained hard work ahead in the next phase of negotiations.
He gave no specific timetable, but said US President Donald Trump did not want to wait until after the 2020 presidential election to wrap up a more comprehensive agreement.
