By Eugene Gerden
Contributor

The U.S. technical textile and nonwovens producers must continue to look for good opportunities to avoid import duties, imposed by China’s government on their products, despite the recent compromise, which was achieved by the governments of both countries at the beginning of this year.

Despite the agreement, most analysts both in the U.S. and China believe these trade wars are far from over, although the U.S. producers should not abandon their earlier announced plans for the establishment of their production facilities in the territory of some former Soviet states, particularly those located in close proximity to China.

The agreement, which was signed between the U.S. and China at the beginning of January, has not resulted in the lifting of customs duties, approved by the Chinese government against U.S. imports, which continue to have a negative effect on the entire U.S.-China technical textile and nonwovens trade, making the Chinese supplies unprofitable for the majority of U.S. producers.

Currently, China remains a major importer of a wide range of nonwovens and nonwoven-based products from the U.S., while in some categories, such as nonwoven roll goods, the country has been maintaining leadership for many years.

In recent months, many U.S. nonwovens producers and importers are reportedly already facing longer customs inspections, additional checks and a delay in issuing licenses for Chinese supplies, by Chinese authorities, and, according to the majority of analysts, the current situation will continue to deteriorate.

In the meantime, one of the ways to avoid China’s duties for U.S. producers may involve the establishment of their production facilities outside of the U.S. and in close proximity to the Chinese market. These facilities would be oriented on the supply of their output to China, without payment of any customs duties and fees.

Most likely, the best option is associated with Kazakhstan, the world’s largest landlocked country and the former Soviet state, which is bordered with China in the east. In fact, this country is already considered as a Chinese economic satellite, taking into account that a significant part of its local business is controlled by the Chinese capital.

The recent change of power in the country and the retirement of the pro-Russian President Nursultan Nazarbaev, according to the majority of analysts, provide good opportunities for the expansion of Western businesses­—including those from the U.S.—to the country.

The establishment of production facilities within the territory of Kazakhstan could be beneficial for U.S. businesses, mainly in terms of logistics, as they will receive access to the northwestern provinces of China, such as Xinjiang, the largest administrative division in the country, where growth rates are currently highest among the other provinces in the country.

Historically, Xinjiang and other provinces in the Chinese northwest were less developed than eastern regions, which was mainly due to their lack of sea access and their traditional focus on agriculture. Still, the situation has changed in recent years, as development of the northwestern areas has been declared as one of the priorities for the Chinese national government.

In the meantime, representatives of the newly elected Kazakh president Kassym-Jomart Tokayev have already said that the Kazakh government will provide all the needed support and assistance to the U.S. and other foreign businesses seeking investment opportunities in Kazakhstan. This could lead to the abolishment of taxes and customs duties; further details will be discussed with each potential investor on an individual basis.

In the meantime, in addition to Kazakhstan, another option for U.S. business in the former Soviet region may be with Ukraine, which in recent years has also declared its intention to attract foreign meat and agricultural businesses, particularly those from the U.S., to localize their production capacities within the territory of the country.
In addition, several years ago, the Ukrainian governmental delegation, headed by former Ukrainian prime minister Vladimir Yatsenuk, visited the U.S., where he offered local businesses to acquire some of the country’s leading state-owned meat and agricultural producers at prices significantly lower than the average on the market.