A new free-trade agreement (FTA) between 15 Asia-Pacific countries will phase out tariffs on a range of biofuels and feedstocks, Argus Media reported on 16 November.

However, existing trade flows would limit the immediate market impact, Argus Media said.

The Regional Economic Comprehensive Partnership (RCEP) was signed on 15 November by China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations (Asean) group.

Most biofuels trade by these countries was done externally rather than within this bloc, Argus Media said, and a lack of regulatory support in most Asian countries meant biodiesel and feedstocks were generally sold to Europe.

Ethanol, meanwhile, was mostly imported from the USA, Brazil or Pakistan, which were likely to remain largely the lowest-cost suppliers, limiting the impact of the RCEP on trade flows within the region, Argus Media said.

The FTA would see China winding down import tariffs on undenatured and denatured ethanol, from 40% and 30% respectively to zero, by 20 years after the agreement came into force. Biodiesel duties would drop to zero from 6.5% after 10 years but used cooking oil (UCO) rates would be unaffected by the FTA, remaining at 10%.

As an exporter of biodiesel and UCO, Argus Media said any tariff reductions would have little impact in China, which had scrapped plans to roll out a nationwide 10% ethanol mandate.

In Japan, ethanol tariffs on supplies from Australia, New Zealand and the Asean countries would be phased out while tariffs from China or South Korea would remain unchanged. Undenatured ethanol rates would be cut from the current 10% and denatured ethanol rates from 27.2% by the 16th year after the RCEP’s introduction.

South Korea would also cut denatured ethanol duties from 8% and reduce most undenatured ethanol grades excluding those under customs code HS2207109090 from 30% by year 15.

Indonesia would completely phase out UCO and biodiesel duties by the first and 15th years respectively from the agreement’s implementation, both from current levels of 5%. Ethanol import tariffs would remain at 30%. However, import volumes of these products were currently negligible and, to date, the government had shown little interest in pursuing its E10 mandate, Argus Media said.

In Malaysia, rates were already at zero for most products, however, some HS codes that incorporated UCO would be cut to zero from 5% one year after the agreement came into effect.

Ethanol import tariffs into the Philippines would similarly be cut from 10% in the first year. The country had an E10 mandate but imports were heavily reliant on the USA, which remained the lowest-cost supplier.

The combined factors indicated that the RCEP would be unlikely to lead to any major changes in trade routes for the products, Argus Media said, unless stronger biofuels mandates were implemented in the region.