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Sat 5 Nov 2005 04:00 AM

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EU to scrap import tax on Gulf aluminium products

The current 6% duty is expected to go after the next round of free trade talks in the region

THE EU is expected to abolish tax on aluminium product exports from the Gulf at the next round of free trade talks with the GCC.

The EU currently imposes a 6% duty on primary aluminium exports from the Gulf, which represents a significant cost for local producers.

More than a million tonnes of aluminium is produced from smelters in the GCC, representing around 5% of the world’s total. Aluminium exports to the European market accounts for around 30% of the Gulf’s total aluminium exports.

The latest round of EU-GCC free trade talks took place in Abu Dhabi last week and will reconvene in Brussels on 24th and 25th November, when the two sides are expected to resolve outstanding issues. A final deal could be signed by the end of the year, finalising more than 25 years of talks.

“I’m confident that the EU will agree to scrap tax on aluminium at the next meeting,” said an official with the Bahraini delegation.

“We’re optimistic that we will reach a conclusion to the outstanding issues in Brussels, and hopefully this will be the last meeting before signing an initial agreement by the end of this year.”

Local aluminium producers say that the move would ease a significant cost burden on local companies but that it would also step-up competition.

Aluminium extrusion firm Gulf Extrusions has been operating in the UAE for over 10 years and currently exports up to 10% of its product to the EU.

“We can sometimes get a discount on the tax and pay around half of the amount levied, but even 3-4% is quite a large amount to pay, so not paying any tax at all would have a big impact on our business,” said Robert Holtkamp, director of sales and markets at Gulf Extrusions.

“But, at the same time, it would make the industry much more competitive.”

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