Korean petrochemical industry concerned about free trade agreements

Jun 29, 2004 02:00 AM

South Korea's pursuit of free trade agreements (FTAs) with Singapore and Japan have sent petrochemical companies scrambling to seek countermeasures ahead of possible further market openings, industry sources said.
Singapore, whose petrochemical industry accounts for 22 % of gross domestic product (GDP), is pressing for full market liberalization in its FTA talks with South Korea. Japan also has reversed its position and become aggressive in pushing for the inclusion of the petrochemical industry in the bilateral trade pact with South Korea, according to the Korea Petroleum Association (KPA).

KPA and other petrochemical industry officials demanded that the Korean government exclude gasoline, diesel, kerosene and air fuel from the FTA, citing the 2003 pact between Japan and Singapore. But Japan's recent about-face put them on high alert. Japan imports 85 % of its oil, but believes it has a comparative advantage in the trade with South Korea, according to them. Almost all of South Korea's oil is from abroad.
"Starting from 2006, car emission standards will be strengthened, so petrochemical companies are heavily weighed by large-scale facility investment needs," said an industry official. "The industry will be dealt a heavy blow if the government opens the way for full market liberalization via FTAs."

The government plans to apply Euro-III and Euro-IV emission standards to Korean-made diesel-engine passenger cars from 2005. Euro-III and Euro-IV are internationally-accepted emission standards set by the European Union. Under the guidelines, Korean carmakers are required to produce diesel-fuelled cars satisfying Euro-III or Euro-IV standards by 2005. But they have to meet Euro-IV by 2006.
The emission guidelines also propose that permissible levels of sulphur contained in diesel be slashed to 30 ppm in 2006 from the current 430 ppm.

Source: AsiaPulse
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