CHEMICALS AND THE DOHA ROUND

Monday, June 13, 2005

World Trade Organization

Geneva, Switzerland

INTERNATIONAL

COUNCIL OF

CHEMICAL

ASSOCIATIONS

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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 $1.9 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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$505.8

$101.1

$650.3$70.8

$74.9

$541.5

Size of Regional Chemical Industries, 2003($ billion)

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Value of Chemical Inputs in Consumer Products

84%

75%

68%

47%

44%

37%

35%

34%

33%

30%

28%

22%

21%

16%

16%

14%

12%

12%

0% 20% 40% 60% 80% 100%

Computers

Handbags

Optical equipment

Household appliances

Wood household furniture

Office furniture

Sporting goods

Clothing

Agricultural production

Semiconductors

Batteries

Footwear

Curtains & draperies

CDs & tapes

Rugs & carpets

Cosmetics & toiletries

Cleaning compounds

Medicines

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World Chemical Output & Trade ($ billion)

$500

$700

$900

$1,100

$1,300

$1,500

$1,700

$1,900

Ou

tpu

t

$100

$200

$300

$400

$500

$600

$700

$800

$900

Ex

po

rts

Output Exports

• During the 1980s, world chemicals exports grew 1.3 times as fast as world chemicals output.

• During the 1990s, world chemicals exports grew 2.5 times as fast as world chemicals output.

• 35% of this world trade is intra-company.

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Chemicals as Share of World Merchandise Exports(share based on value)

Source: WTO

1995 2003

Machinery and transp. equip. 17.5 17.0

Mining products 10.9 13.2

Office and telecom equipment 12.1 12.8

Chemicals 9.7 10.9

Automotive products 9.2 9.9

Agricultural products 11.7 9.2

Other consumer goods 8.6 8.8

Other semi-manufactures 7.9 7.2

Clothing 3.2 3.1

Iron and steel 3.1 2.5

Textiles 3.0 2.3 .

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Change in Share of World Chemicals Exports

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

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Output Exports Imports SalesEmployees

1 EC 484.7 125.6 74.2 433.7 1,900

2 United States 454.1 80.2 78.9 452.8 1,022

3 Japan 213.0 33.7 23.1 202.4 366

4 China 108.8 14.0 32.0 126.8 3,288

5 Korea 53.4 12.5 12.9 53.8 129

6 Brazil 38.3 3.5 10.5 45.3 280

7 India 36.8 3.8 5.6 38.6 727

8 Taiwan 32.8 7.2 15.6 41.2 126

9 Russia 29.1 5.3 9.1 32.9 729

10 Switzerland 27.7 24.2 15.2 18.7 62

11 Canada 23.9 13.0 20.4 31.3 94

12 Mexico 12.5 3.3 9.2 18.4 66

13 Argentina 11.5 3.8 3.8 11.5 59

14 Australia 11.4 2.8 6.9 15.5 44

15 South Africa 10.5 2.0 3.1 11.6 175

16 Turkey 10.0 1.1 7.8 16.7 40

17 Singapore 8.8 9.6 8.0 7.2 13

Global Chemical Industry Rankings, 2001$ billions, employees thousands

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Global Chemical Industry Rankings, 2001$ billions, employees thousands

Output Exports Imports SalesEmployees

18 Malaysia 8.1 3.8 5.9 10.2 3619 Saudi Arabia 7.3 4.8 3.0 5.5 4020 Israel 7.0 4.5 3.3 5.8 2521 Thailand 6.1 2.7 5.6 9.0 6522 Philippines 5.8 0.3 2.5 8.0 4523 Indonesia 5.6 1.8 5.9 9.7 16524 Colombia 5.6 1.7 4.0 7.9 5125 Venezuela 4.6 1.9 1.7 4.4 4026 Ukraine 4.0 0.9 3.6 6.7 16527 Pakistan 3.8 0.2 1.8 5.4 5028 Chile 3.7 0.5 1.3 4.5 2429 Egypt 3.0 0.3 1.5 4.2 11030 Bulgaria 2.4 1.0 0.8 2.2 4031 Peru 2.4 0.3 0.9 3.0 2632 Belarus 2.1 1.2 1.7 2.6 6533 New Zealand 1.8 1.0 1.7 2.5 1034 Romania 1.5 0.5 1.1 2.1 75

  

Sources: ABIQUIM, ANIQ, CEFIC, Statistics Canada, United Nations, American Chemistry Council estimates

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Top 25 Destinations for U.S. Chemical Industry Direct Investment

47%

48%

51%

54%

61%

62%

65%

77%

80%

105%

109%

109%

135%

143%

152%

154%

168%

178%

187%

198%

225%

246%

253%

264%

325%

474%

740%

0% 100% 200% 300% 400% 500% 600% 700% 800%

Mexico

Spain

Thailand

Canada

Brazil

Peru

Germany

CostaRica

All countries

Korea

Taiwan

Malaysia

Finland

Eastern Europe

Austria

Guatemala

Argentina

Sweden

Singapore

Ireland

Netherlands

HongKong

SaudiArabia

United Kingdom

Trinidad and Tobago

Ecuador

Switzerland

% Growth in Direct Investment Position (1994-2000)

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World Employment in the Chemical Industrythousands of people, 2001

Asia Pacific 4,975 49%

Western Europe 1,743 17%

North America 1,183 12%

Central/Eastern Europe 981 10%

Latin America 610 6%

Africa 365 4%

Middle East 210 2%

Total World Employment 10,067 100%

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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 industries worldwide– 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.

• Tariff liberalization supports economic development– 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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Responsible Care®

• Voluntary chemical industry initiative

• Started in Canada in 1985 and now in 52 countries

• Commitment to continued improvement in all aspects of health, safety and environmental performance and to open communication

• Rigorous system of checklists, performance indicators and verification procedures enables the industry to measure improvement

• Industry associations implement initiative in their countries. All programs are monitored and coordinated by ICCA.

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World Summit on Sustainable DevelopmentAugust 2002

• Action Plan on Chemicals

– By 2020, chemicals used and produced in ways that lead to minimization of significant adverse effects on human health and the environment based on sound science, risk assessment, and risk management

• ICCA supports the action plan through

– Responsible Care®

– Development of a global strategic approach to chemicals management by 2005

– Implementation of a global system for the classification and labelling of chemicals by 2008

– Participation in UN Environment Program (UNEP) and International Forum on Chemical Safety (IFCS)

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ICCA is committed to meeting WSSD’s sustainable development challenge

ICCA is making a significant contribution in these areas:

• Chemical safety: extending Responsible Care ®

• Innovation: developing new products and technologies

• Capacity building: improving knowledge about chemicals through training, education and communication and promoting health, safety and environmental standards worldwide

• Globalization: transferring efficient technologies throughout the world and improving education and training