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Global changes and their impact on the chemical industry
René van Sloten
Trade policy today and tomorrow
SCHP ČR conference , Prague, 23 May 2006
2
European Chemical Industry Council (Cefic)
• about 28,000 small, medium and big chemical companies in Europe
• about 1.2 million employees
• about 32% of worldwide chemical production (2004)
• headquarters of Cefic is Brussels, Belgium
• homepage: www.cefic.be
4
The Challenges for Europe:Structural Shifts
• Transformation from Industry Society into Service Society
• Changes by Information and CommunicationTechnologies
• Demographic Trends• Sustainable Development• Global Competition• EU Enlargement• EU Governance
The Challenges for Europe:Structural ShiftsThe Challenges for Europe:Structural Shifts
5
Chances and Risks for the European Chemical Industry
European Chemical Industry 2015
Market& CustomerOrientation
Sustainability
Asian Competitors
Middle EastCompetitors
GlobalGlobalEconomyEconomy
CustomerCustomerIndustriesIndustries
European Authorities
BalancedChemical Policy
Incentives forInnovation
Non-bureaucraticregulations
NewTechnologies
(Opportunities&Threats)
Restructuring
Innovation
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Market Trends Globalization
• “World-scale” plants
• High degree of standardization
• Increase in trade volume
• Production in non-traditional countries
• Sourcing, production and trade is global
8
World Chemical Sales & Trade (euro billion)
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
Sa
les
200
300
400
500
600
700
800
Ex
po
rts
Output Exports
Average growth p.a. (1991-2004)Output: 5%, Export 8.2%
Source: Cefic, ACC, VCI and Global Insight
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1990 2000
Developed countries’ share of world chemical exports
83.5% 79.3%
Developing countries’ share of
world chemical exports16.5% 20.7%
World chemical exports
(billions)$308.8 $570.2
Source: UNCTAD
Change in Share of World Chemicals Exports
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Objectives Cefic
Provide a favourable trading environment to
European Chemical Industry by
• Improving market access to third country markets• Ensuring a balanced trade-regulatory
environment• Ensuring fair trade
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Improving market access
Multilateral in the Doha Round• Reduction of tariffs
• Reduction of non-tariff barriers
• Negotiations on trade facilitation
• Improvement of the WTO dispute settlement system
Bilateral and regional trade negotiations• EU-GCC, EU-Mercosur
WTO Accession negotiations
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Balanced trade controls
• Chemical industry subject to many trade and production control regimes (Chemical Weapons Convention, Australia Group, drug precursors, Montreal Protocol)
• Cefic agrees with controls provided these are instrumental and proportionate to the objectives pursued, not overly burdensome and least trade restrictive
• Cefic strongly stresses the need for global level playing field
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Ensuring fair trade
Cefic positions: • Cefic fully supports the principles of free and fair trade
• Industry needs trade instruments against unfair trade practices
• The WTO rules should be implemented in a more uniform and harmonised manner
• EU Chemical Industry should seek support from Cefic if internationally agreed trade rules are breached (Cefic trade policy service)
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Role of Cefic
1. Advise Community producers
2. Ensure respect of legal rules
3. Legal/economic analysis of the case
4. Act on behalf of the Community producers
5. Monitoring of the anti-dumping measures in place (i.e.
circumvention action, interim review request…)
6. Advocacy activity with the support of the national chemical
federations and the EU companies concerned
16
International Council of Chemical Associations (ICCA)
• Council of chemical industry associations from: Australia, New Zealand, Japan, Europe, North and South America, and South Africa
• Represent approximately 75% of global chemicals production
• World chemical production is $1.3 trillion annually and 40% of this is traded internationally
• Develop industry positions and programs on international issues: health, safety, and the environment; international transport safety; intellectual property; trade policy; elimination of chemical weapons
• Promote and coordinate Responsible Care® and other voluntary chemical industry initiatives
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Chemical Industry Sectoral Proposal
Chemical Tariff Harmonization Agreement (CTHA)– Voluntary agreement in Uruguay Round– Reduce tariffs to 5.5% and 6.5%, some lines to 0– 51 participants, including new EU members– Pharmaceutical zero-for-zero
Doha Round: Elimination of chemical tariffs– Chemicals classified under HTS chapters 28-39– Maximum flexibility in staging
Non-tariff barriers– Export taxes, import licensing, quotas, trigger price
mechanisms, discriminatory standards – Regulatory divergence
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Chemical Industry Sectoral Proposal
Country coverage• Countries with a viable chemical industry• Chemical production of $3 billion or more per year
Product coverage• HTS Chapters 28-39 with no exceptions
Staging• Current CTHA participants: 5 years• Others
• Bind all unbound tariff lines• Eliminate from bound rates
Tariff Level Time Frame25% or less 10 yearsmore than 25% 15 years
• Maximum flexibility for sensitive products
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Why Chemical Tariff Elimination?
Tariff liberalization benefits chemical industriesworldwide• Due to the globalized and capital intensive nature of this
sector, chemical industries are globally competitive wherever they are located
• Competitive chemical industries rely on chemical inputs. Countries with low chemical tariffs make themselves more attractive for investment in the chemicals sector
Tariff liberalization benefits all sectors• Chemicals are inputs into all manufacturing and agricultural
production. Lower chemical tariffs reduce input costs and prices of intermediate and finished goods.
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Why Chemical Tariff Elimination? (cont’d)
Tariff liberalization supports economicdevelopment• Improves access to products that can increase
agricultural crop yields and control animal and plant diseases.
• Improves the competitiveness of downstream producers in domestic and foreign markets.
• Improves affordability of and access to consumer goods for more people worldwide.
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