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EU to eliminate Gulf aluminum, petrochemical tariffs

A 6% tariff on the import of aluminum to the EU will be eliminated when a proposed free-trade agreement with the six-nation Gulf Cooperation Council is introduced this year, a European Commission official said.

„We will open our aluminum market in Europe,” Karl-Friedrich Falkenberg, deputy director general for trade in the European Commission, said today in an interview in Abu Dhabi, United Arab Emirates. „We will eliminate the 6% tariff” when the agreement comes into force, he said. „Basic petrochemicals products will go to zero.” A lowering of the tariffs would reduce protection for aluminum producers within the EU, including Alcoa Inc. and Alcan Inc., Norsk Hydro ASA, Glencore International AG and Rio Tinto Plc, and petrochemicals producers, including Bayer AG, Dow Chemical Co. and BASF AG. The world's biggest aluminum producers are closing units in Europe and the US to move to the Middle East, where labor and energy are cheaper. Power accounts for one-third of the cost of making aluminum. European companies „are interested in producing aluminum here,” Falkenberg said. Emirates Aluminum is planning to build the world's largest aluminum smelter in the UAE with an annual capacity of 1.4 million tons. Technical negotiations may be completed at a meeting in Brussels at the end of this month, and the agreement will be approved by ministers by the second half of this year, Falkenberg said. A free-trade agreement between the 27-nation EU and the GCC has been in negotiation for more than 15 years. It has gathered pace in the last year as energy prices have soared and trade between the two blocks has increased. Remaining issues for the EU include changing rules that stop foreign companies from holding majority stakes in GCC companies. „We want equity restrictions to be reduced or eliminated,” Falkenberg said. (Bloomberg)