The UAE has filed a complaint to the World Trade Organization (WTO) against its main trading partner the European Union for its recent decision to impose new customs duties on the country’s plastics exports, an official has said.
Abdullah Al-Fin, Industry adviser at the Ministry of Economy, described the EU decision as unfair and said it could hurt ties between Europe and the six-nation Gulf Cooperation Council (GCC), of which the UAE is a member.

Al-Fin rebuffed EU claims that the UAE, one of the world’s largest hydrocarbon producers, is subsidizing its plastics production and said the country would take further action in case the WTO does not succeed in reversing that decision.

“We have filed a complaint to WTO which has started investigating the issue..the UAE is a member of WTO and has the right to complaint against any measure taken by another member against it,” he told Emirat Alyoum newspaper.
“The UAE is studying other options including filing another complaint to the Grievance Committee in the EU this move by the EU is unfair and will harm economic and trade links with the Europeans.”

He said the Ministry had also opened negotiations with the Europeans, adding the UAE has found understanding of its position within the EU.

“All diplomatic options are open to us…we are considering moving on all available diplomatic fronts to persuade the EU to drop its decision to impose new duties on our plastics exports…in case all these moves fail, we will seek another option…our moves are only intended to find a solution to this problem.”

The EU said in September that it had imposed new duties on plastics from the UAE, Iran and Pakistan, saying the three were illegally subsidizing exports to Europe. The decision means Polyethylene Terephthalate from the UAE, Iran and Pakistan  -- used for bottles and food packaging -- will face EU import duties of 44.02 euros, 139.70 euros,  and 42.34 euros per tonne respectively until 2015.

The bulk of the UAE’s Polyethylene output is produced by Borouge, Abu Dhabi’s main petrochemicals company which is jointly owned by the government-controlled Adnoc (60 per cent) and Austria’s Borealis (40 per cent).

In a recent statement, Borouge said it was pursuing expansion projects to meet growing demand by its Asian customers despite the global financial crisis.

 Borouge Chief Executive Officer Abdul Aziz Al Hajri said expansion plans would nearly triple the company’s production to 4.5 million tonnes in 2013 and further expansions beyond that date remains on the cards.

The GCC and the EU have been locked in negotiations for more than 20 years on a free trade agreement (FTA) that could remove most of the European duties on Gulf petrochemical exports and open the door for an industrial investment influx to the oil-rich region to support its economic diversification programmes.

In turn, the agreement will give the EU greater access to GCC markets and ensure its members stable and secure oil supplies in the long term.

The deal has been bogged down by political rifts and GCC officials have blamed the EU for making what they describe as unacceptable demands.

“The EU conducts a periodical review of its tariffs on foreign imports, which will open the door for the abolishment of these duties on our exports,”Al-Fin said.

Emarat Alyoum quoted a GCC official as saying member states have affirmed to the EU that the UAE does not subsidize its polyethylene products.

“We have told them (EU) that all facilities available to this industry in the UAE is also available to other industries…these facilities are also available to both UAE and foreign customers without any discrimination,” said Rehan Mubarak, director general of the Dumping Secretariat at the Riyadh-based GCC.

The paper also quoted GCC assistant secretary general for economic affairs, Mohammed Al Mazroui, as saying all member states support the UAE in its efforts to have the EU annul duties on its plastics exports.

“We have asked our Dumping office to fully back the UAE in this…we have succeeded in previous cases in tackling issues related to dumping between the GCC and other parties through WTO.”