INSIDE VIEW: US must foster policies to further competitiveness

25 February 2013 19:55  [Source: ICIS news]

Editor’s note: This article is an opinion piece, and the views expressed are those of the author and do not represent those of ICIS.

By Lawrence D. Sloan, President & CEO
Society of Chemical Manufacturers and Affiliates

As chemical industry representatives convene this week for the annual Global Chemical Regulations Conference, the Society of Chemical Manufacturers and Affiliates (SOCMA) believes it is essential the US pursue policies that help chemical manufacturers expand their markets and be more competitive.

In order for chemical makers to continue to meet the world’s demands, Washington must remove obstacles that hinder our growth, such as overregulation and preventing fair access to foreign markets.

Some 95% of the world’s consumers reside outside of our borders. However, through trade barriers and costly tariffs, trade is more difficult for specialty manufacturers, especially small and mid-sized companies, than for large multi-national firms. Trade agreements, therefore, are powerful tools for economic growth and help open our industry’s products to the global marketplace. 

We have an enormous opportunity before us to expand trade with Europe, our second-largest trade partner behind Canada and Mexico. According to a study by Bloomberg Government, the US chemical industry paid more than $1bn (€760m) in tariffs exporting to Europe in 2011, $600m of which was paid by organic chemical manufacturers. With such large trade flows between these economies, eliminating tariffs and addressing some of the challenges posed by non-tariff barriers would benefit both economies. Furthermore, it could help restore trade among SOCMA members that abruptly but reluctantly ceased trade with Europe due to the unreasonable costs as a result of REACH.

Another way in which our government can help us remain competitive is through smart regulation. Heavy-handed policies aimed at prevention ignore innovation and are the antithesis of competition. In 2010, the specialty chemical industry spent more than $55m to comply with regulations, which is roughly $815,000 per company. This is an enormous sum for such a small sector of the broader chemical industry, particularly when factoring in the characteristics of specialty chemical firms. These companies continually need ready capital to invest in designing new chemistries, and less so on interpreting regulations that often conflict with one another. In many cases, their ability to innovate is what keeps them in business.

We must also leverage regulatory efforts and increase regulatory cooperation with the EU in areas where appropriate. Such efforts can facilitate trans-Atlantic trade while enhancing protection of human health and the environment. But these efforts must be grounded in sound science and be risk-based. In contrast, approaches based more on the precautionary principle would be detrimental to our industry and not achieve the shared goals of the US and EU.

Our conversations at GlobalChem wouldn’t be complete without a discussion on reforming the Toxic Substances Control Act (TSCA). SOCMA believes the public needs confidence that the products they purchase are safe for their use. We remain encouraged by the consensus that the 37-year-old statute governing our nation’s chemical control laws needs to be updated. However, Congress has yet to put forth an achievable bipartisan solution. To make progress in this politically charged, partisan environment in which Congress operates, stakeholders need to identify areas where there is some consensus and move those ideas forward. Until we do, the prospect that there will be support from Democrats and Republicans alike will remain out of reach.

Washington can and should do more to help us better compete by strengthening, and in some cases reforming, policies that make growth and innovation a top priority. We remain committed to making sure they do.

Author: ICIS staff

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