Barely a few months old, the China-ASEAN Free Trade Agreement — known as CAFTA — is making its presence felt among plastics manufacturers with operations in China and the rest of Asia. International players with manufacturing in the region are benefiting, finding it easier to move goods from one part of the region to another.
“Suddenly we've got customers who used to order from Europe, placing orders from our China factory,” said Steven Chai, managing director at ColorMatrix Plastic Colorant (Suzhou) Co. Ltd. “This is definitely going to help our business.”
Chai estimates his customers save about 6 percent in duties now that import taxes have been lifted. “Six percent means a lot, especially if your competitors are doing it,” Chai said in an interview at Chinaplas, held April 19-22 in Shanghai.
Measured by population, CAFTA is the world's largest free trade agreement, linking China with the 10 nations included in the Association of Southeast Asian Nations, a group that includes Malaysia, Vietnam, the Philippines and several other trading partners of growing importance to China.
The agreement has been under way since 2005, which is when China and ASEAN started phasing out tariffs on certain goods, and was final Jan. 1.
DuPont Co.'s Performance Polymers division has not felt much of much an impact since tariffs on nylon products have long been phased out, said Philippe Hanck, who heads the unit's sales and development for emerging economies in Asia Pacific. Other firms, however, are seeing benefits even within their own operations.
“It makes it that much easier for us to cover the whole region,” said Rainer Rettig, senior vice president, Asia Pacific, for Bayer MaterialScience AG's polycarbonates and advanced resins. While there is overlap in what BMS' four regional manufacturing plants in Asia are making, some have unique manufacturing capabilities. Now, BMS can ship products from its plant in Thailand to India or China with no consequences. “We can bring in the raw material duty-free,” he said.
Teoh Siew Tien, at Clariant Shanghai Masterbatches Ltd., said his firm also is seeing benefits from the agreement. “Moving materials back and forth between countries is cheaper and easier,” said the head of Clariant's segment additives for Asia Pacific.
The policy is particularly important in light of the growing volume of Chinese exports headed toward Southeast Asian nations. According to Chinese customs figures, China-ASEAN trade made up 9.6 percent of China's trade activity during 2009. Trade with the U.S. made up 13 percent.
“CAFTA is really in line with our plan,” said Chai. “When we picked a location in Asia, we chose China because of its important market.
“Our aim all along was to serve all of Asia, and this complements our strategy.”
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