The Council of the Eurasian Economic Commission (EEC) supported the initiative proposal of the Russian Federation on the allocation of certain types of ethylene polymers in primary forms (Group 3901 TN VED) not produced in the EAEU, as well as low density ethylene polymers ( LDPE), which are produced in sufficient quantities, a source in the department said.
For the first category of goods, the import duty rate will remain at zero, and for the second, the level of tariff protection will increase to 6.5% for a period of one year. The size of the temporary duty rate of the Eurasian Economic Union (EAEU) Common Customs Tariff for low density ethylene polymers is limited to the maximum possible in accordance with the tariff obligations of Russia and Kazakhstan under the WTO by the level of binding. The decision of the EEC Council will enter into force 10 calendar days from the date of its official publication.
“The decision made is aimed at creating favorable conditions for the development of production – low-density ethylene polymers and increasing the share of consumption in the domestic market of goods produced by EAEU enterprises, as well as promoting import substitution of foreign analogues,” said Vaagn, Director of the Department of Customs Tariff and Non-Tariff Regulation of the EEC Ghazaryan.
According to the EEC, low-density ethylene polymers are widely used in the production of both finished goods (various types of films, liner bags, general-purpose containers, geomembranes, mixtures and composite materials) and for the production of products by injection molding. The share of the cost of low-density ethylene polymers in the cost of final products is, depending on the type of product, from 5–30% (multilayer films) to 40–87% (stretch films, containers, compounds).
The commodity item under the TN VED code 390110 includes polyethylene with a specific gravity at 20 ° C of less than 0.94 and with a density of less than 0.92 g / cm3, namely low density polyethylene (LDPE) under code 3901109000 and linear low density polyethylene (LLDPE ) under code 3901101000. Since the import duty on LDPE is already in effect and is equal to 6.5%, it means that the change in the import duty applies only to LLDPE for which it rises from 0 to 6.5%.
According to Plastinfo.ru, the Russian LLDPE market in 2019 amounted to 378 thousand tons, while the share of imported brands accounted for about 47% of consumption. Only TAIF Group (Kazanorgsintez and Nizhnekamskneftekhim) produced LLDPE in Russia until 2020 with an annual production volume of up to 220 thousand tons.
After the commissioning of the ZapSibNeftekhim plant (part of SIBUR Holding) in 2020, where four polymerization units were commissioned for the production of various grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) with an aggregate capacity of 1.5 million tons per year , local producers are able to fully meet domestic demand. Among the EAEU countries, LLDPE production is also available in Uzbekistan at the Shurtan Gas Chemical Complex (ShGCC) with a capacity of 125 thousand tons per year.
The Russian Union of Plastics Processors (SPP) had previously opposed the introduction of an import duty on LLDPE and stressed that the introduction of the duty would increase the selling price of LLDPE from local producers. “The rise in prices for raw materials along the chain, through plastics processors, will lead to an increase in prices for finished products and building materials, which will nullify the measures taken by the Russian government to support the processing industries and will inevitably increase the rate of inflation,” said SPP CEO Pyotr Bazunov.
The Association of Packers of Kazakhstan also opposed the introduction of an import duty on LLDPE (see Plastinfo.ru from 03.09.2020).
“For our enterprise, which produces LLDPE barrier films, Russian polyethylene producers do not have the brands we need in the assortment that we have to import. The duties will certainly lead to higher prices for packaging, which will affect the entire chain of consumers, ending with food buyers. I believe that such changes should have been made only taking into account the interests of all participants in this market, and not only producers of raw materials, ”commented the General Director of the Desnogorsk Polymer Plant (DPZ), Alexander Preferansov, on the introduction of the duty.
Specific gravity means the value of the ratio of the weight of the required material to the volume and is measured in N / m3, however, in the English version of the description of the Commodity Classification of Foreign Economic Activity, “Specific gravity” is called Specific gravity (or relative density), which is equal to the ratio of the density of the substance to the density of water at 4 ° C and is a dimensionless quantity (approx. Plastinfo.ru).
Lobbying is understood as facilitating the adoption of certain decisions by the authorities, not related to bribery of state officials.