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EU to Abolish Gulf Aluminum Tariffs, Shrink Protection for Producers

Tuesday, Mar 20, 2007

A trade agreement between Gulf Cooperation Council ( GCC ) and European Union ( EU ) would lead to the abolition of tariffs on basic petrochemicals and aluminum imports to Europe, according to the Deputy Director for trade in EC, Karl Friedrich Falkenberg.

The 6% duty on the aluminum import to EU will be removed when a proposed free-trade agreement with the 6-nation GCC bring in this year.

A reduction in the tariffs would contract the protection for aluminum manufacturers within EU, including Alcan Inc., Alcoa Inc., Glencore International AG, Rio Tinto Plc., and Norsk Hydro ASA.

The world's largest aluminum makers are shutting down their units in US and Europe to shift to the Middle East, a region with cheap energy and labor. Around one-third of the aluminum making cost is accounted by power only.

Falkenberg says European companies are interested in producing aluminum here? reported Bloomberg. Emirates Aluminum is making plans to construct the largest aluminum smelter of the world in UAE that would produce 1.4 million tons of aluminum annually.

A free-trade deal between the GCC and 27-nation EU has been in negotiations for over 15 years. Last year's heated energy prices and increased trade between the two blocks has given the much-needed momentum to the negotiations.

The Gulf Times, on February 20, 2007, reported Falkenberg in Dubai on the sidelines of an aluminum conference saying, I hope we will be able to conclude the negotiations in the first half of the year. ( But ) it is fairly clear to everyone that we need to see a little bit of movement by the GCC in the areas of services and investments.

According to RNCOS report, European Aluminum Market ( 2007 ) Europe saw a slump in the production capacity of primary aluminum due to strengthening power prices. This resulted in certain smelters having to shut down their operation facilities when contracts terminate, as the operations stop churning out profits. Considering such heightened prices, coupled with stringent legislation in Europe, Aluminum makers opt to shift their production facilities to other regions of the world.

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