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INTERNATIONAL COUNCIL OF CHEMICAL ASSOCIATIONS CHEMICALS AND THE DOHA ROUND Monday, June 13, 2005 World Trade Organization Geneva, Switzerland 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 $1.9 trillion annually and 40% of this is traded internationally • Develop industry positions and programs on international issues: health, safety, and the environment; international transport safety; intellectual property; trade policy; elimination of chemical weapons • Promote and coordinate Responsible Care® and other voluntary chemical industry initiatives 2 Size of Regional Chemical Industries, 2003 ($ billion) $505.8 $650.3 $70.8 $541.5 $74.9 $101.1 3 Value of Chemical Inputs in Consumer Products 12% Computers 12% 14% Handbags Optical equipment Household appliances 16% 16% Wood household furniture 21% 22% Office furniture Sporting goods 28% 30% Clothing Agricultural production 33% 34% Semiconductors Batteries 35% 37% Footwear Curtains & draperies 44% 47% CDs & tapes Rugs & carpets 68% Cosmetics & toiletries 75% Cleaning compounds 84% 0% 20% 40% 60% 80% Medicines 100% 4 World Chemical Output & Trade ($ billion) $900 $1,900 $800 $1,700 $600 $1,300 $500 $1,100 $400 $900 $300 $700 $200 $500 $100 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 Output $1,500 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. 5 Exports $700 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 . 6 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 exports 16.5% 20.7% World chemical exports (billions) $308.8 $570.2 Source: UNCTAD 7 Global Chemical Industry Rankings, 2001 $ billions, employees thousands 1 EC 2 United States 3 Japan 4 China 5 Korea 6 Brazil 7 India 8 Taiwan 9 Russia 10 Switzerland 11 Canada 12 Mexico 13 Argentina 14 Australia 15 South Africa 16 Turkey 17 Singapore Output 484.7 454.1 213.0 108.8 53.4 38.3 36.8 32.8 29.1 27.7 23.9 12.5 11.5 11.4 10.5 10.0 8.8 Exports 125.6 80.2 33.7 14.0 12.5 3.5 3.8 7.2 5.3 24.2 13.0 3.3 3.8 2.8 2.0 1.1 9.6 Imports 74.2 78.9 23.1 32.0 12.9 10.5 5.6 15.6 9.1 15.2 20.4 9.2 3.8 6.9 3.1 7.8 8.0 Sales 433.7 452.8 202.4 126.8 53.8 45.3 38.6 41.2 32.9 18.7 31.3 18.4 11.5 15.5 11.6 16.7 7.2 Employees 1,900 1,022 366 3,288 129 280 727 126 729 62 94 66 59 44 175 40 13 8 Global Chemical Industry Rankings, 2001 $ billions, employees thousands 18 Malaysia 19 Saudi Arabia 20 Israel 21 Thailand 22 Philippines 23 Indonesia 24 Colombia 25 Venezuela 26 Ukraine 27 Pakistan 28 Chile 29 Egypt 30 Bulgaria 31 Peru 32 Belarus 33 New Zealand 34 Romania Output Exports Imports Sales Employees 8.1 7.3 7.0 6.1 5.8 5.6 5.6 4.6 4.0 3.8 3.7 3.0 2.4 2.4 2.1 1.8 1.5 3.8 4.8 4.5 2.7 0.3 1.8 1.7 1.9 0.9 0.2 0.5 0.3 1.0 0.3 1.2 1.0 0.5 5.9 3.0 3.3 5.6 2.5 5.9 4.0 1.7 3.6 1.8 1.3 1.5 0.8 0.9 1.7 1.7 1.1 10.2 5.5 5.8 9.0 8.0 9.7 7.9 4.4 6.7 5.4 4.5 4.2 2.2 3.0 2.6 2.5 2.1 36 40 25 65 45 165 51 40 165 50 24 110 40 26 65 10 75 Sources: ABIQUIM, ANIQ, CEFIC, Statistics Canada, United Nations, American Chemistry Council estimates 9 Top 25 Destinations for U.S. Chemical Industry Direct Investment Switzerland 740% Ecuador 474% Trinidad and Tobago 325% United Kingdom 264% SaudiArabia 253% HongKong 246% Netherlands 225% Ireland 198% Singapore 187% Sweden 178% Argentina 168% Guatemala 154% Austria 152% Eastern Europe 143% Finland 135% Malaysia 109% Taiwan 109% Korea 105% All countries 80% CostaRica 77% Germany 65% Peru 62% Brazil 61% Canada 54% Thailand 51% Spain 48% Mexico 47% 0% 100% 200% 300% 400% 500% 600% 700% 800% % Growth in Direct Investment Position (1994-2000) 10 World Employment in the Chemical Industry thousands 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% 10,067 100% Total World Employment 11 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 12 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 25% or less more than 25% Time Frame 10 years 15 years – Maximum flexibility for sensitive products 13 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. 14 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. 15 World Summit on Sustainable Development August 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) 16 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 17