The chemical industry is one of Europe’s most competitive industrial sectors and the EU is the world’s largest producer of chemicals.
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- EU chemical exports in 2009: €118 billion
- EU chemical imports in 2009: €75 billion
- Biggest markets for EU chemical exports: USA, Canada, Switzerland, Asia (China, India, Japan and ASEAN countries).
The sector’s work is focused on the manufacture of chemicals and the chemical transformation of materials into new substances or products. It covers a huge range of operations from basic organic and inorganic chemical products, through fertilizers, basic plastics, synthetics, rubbers, paints and varnishes to highly specialized consumer chemicals and polymers.
Accounting for around 30% of the total world chemicals production, the European Union is the world’s most important producer of chemicals. In 2008 it produced €566 billion worth of chemicals. More than one third of world’s top thirty chemical companies have their headquarters in the EU. The largest European producer of chemicals is Germany, which accounts for about 25% of EU production. Around 30,000 chemical companies employ a total staff of about 1.2 million people in the EU. Another three million employees work in sectors using output of the chemical industry and thus depend on its competitiveness.
In 2008, the EU chemical industry contributed to improve the EU’s trade balance with a trade surplus of nearly €43 billion. The EU trades now more than 40% of all chemicals traded globally, compared with circa 15% for the NAFTA countries and circa 30% for Asia.
EU Trade policy helps maintain and develop a successful chemical industry in Europe by tackling the many barriers to trade that European chemical companies still face in some of their biggest markets. Some of the large emerging economies continue to maintain prohibitively high tariff barriers for chemicals. EU exporters are also often confronted with a number of non-tariff obstacles, including complex and discriminatory standards and technical regulations governing chemicals, weak Intellectual Property Rights protection, and unnecessary, burdensome or costly testing, registration, licensing and certification procedures.
EU companies can also find themselves disadvantaged by the double pricing of raw materials, in which raw materials are provided to local producers for lower prices than they are to foreign companies. This provides an obvious unfair competitive advantage and is of particular concern to the EU chemicals industry. Through its bilateral trade negotiations the EU is pushing for the ending of such discriminatory treatment.
By contrast, the EU market is generally very open for chemicals, with comparatively low tariffs. EU tariffs for chemicals are harmonised at 0%, 5.5% and 6.5% under the Chemical Harmonisation Tariff Agreement reached during the Uruguay Round of world trade negotiations.
In order to address the issues above, the European Commission, the Member States and industry representatives concerned, together with other stakeholders (civil society and the academic world) have been deliberating on specific recommendations, among others in the trade policy field, to preserve and enhance the sectors’ global competitive position. These recommendations, adopted in February 2009, put forward action in areas such as the further multilateral and bilateral decrease of tariffs (including export duties), the enhancing of access to third countries’ markets and products (including raw materials), or the impact of the regulatory and customs environment on the external competiveness of the chemical business.
The financial crisis has also affected the chemicals industry, since the sector is at the upstream of other manufacturing processes. Various chemical sub-sectors were hit to a different degree, some strongly. Overall, the downturn in economic aggregates seems to have reached the bottom in December 2008, and since that time, production has been experiencing a recovery, with some subsectors still faring worse than others.