Trade Issues

 

To access SOCMA's Policy Statement on International Trade, click here.

For more information or updates, please contact Justine Freisleben.


Free Trade Agreements

Since the early 1990s, nations in the Western hemisphere have been pursuing numerous economic integration efforts through the development of free trade areas and customs unions. Examples include the Mercosur, NAFTA, MEFTA, APEC, CAFTA-DR and ASEAN. Numerous bilateral free trade agreements have also been initiated, especially within the past eight years. The United States now has bilateral agreements with Australia, Bahrain, Chile, Colombia, Israel, Jordan, Malaysia, Morocco, Oman, Panama, Peru and Singapore. Pending approval by the Korean National Assembly, the bilateral agreement with Korea will also go into force.

The negotiation and potential expansion of the Trans Pacific Partnership agreement is also being monitored as it is a springboard for increased trade in the region. Having just concluded the ninth round of negotiations in Lima, Peru, the United States, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam are making considerable progress on chapters involving "21st century issues," such as regulatory coherence, competitiveness, trade facilitation, state owned enterprises, and small and medium-sized enterprises.

Bilateral investment treaties (BITs) and trade and investment framework agreements (TIFAs), precursors to free trade agreements, are in place with many more countries. Currently the U.S. continues to work on changes to a model BIT text. We look forward to continuing BIT negotiations with countries like China and India, which may produce some concrete benefits to both sides such as more transparent laws and regulations and non-discriminatory treatment of foreign investments.

Letter to Congress by SOCMA President Larry Sloan Urging Approval of Korea, Colombia, and Panama FTAs, July 1, 2011.

SOCMA Fact Sheet: How the Panama, Korea, and Colombia FTAs Benefit the Chemical Industry, July 2011.


Industry Trade Advisory Committee for Chemical and Allied Products (ITAC-3)

The Trade Act of 1974 established a private sector advisory system to ensure that U.S. Trade policy and trade negotiation objectives adequately reflect U.S. Commercial and economic interests. The advisory system is comprised of three levels. The top tier is the Advisory Committee for Trade Policy and Negotiations (ACTPN). The ACTPN provides overall trade policy advice and is comprised of industry and non-governmental organizations and other special interest groups. The second tier is comprised of various Trade and Environmental Policy Advisory Committees (TEPAC). TEPACs combine representatives of special interest groups with industry representatives on specific issue areas such as labor, agriculture etc.

The third tier is comprised of Industry Trade Advisory Committees (ITAC). ITACs were developed to represent the interests of specific industry sectors that tend to be impacted by trade agreements. Membership on the ITACs is limited to those with roots in specific industry sectors. There are currently 17 ITACs including ITAC-3 which represents the chemicals and allied products industry sectors. For over 25 years, the ITACs have reviewed pending trade agreements and provided valuable input to government negotiators. ITAC involvement helped with negotiations approving the North American Free Trade Agreement (NAFTA) and the Uruguay Round of international trade negotiations which led to the creation of the World Trade Organization (WTO). ITACs also provide valuable information regarding tariffs and temporary duty suspensions.

In 1999, environmentalists sued the Department of Commerce alleging that since the ITACs representing the lumber and paper products industries were comprised solely of industry representatives, its memberships were not balanced in accordance with the Federal Advisory Committee Act of 1972 (FACA). The FACA requires that all advisory committees established or utilized by the Executive Branch be "fairly balanced in terms of point of view represented and the functions to be performed." The court ruled in favor of the environmentalists and required that the ITACs include environmental representatives.

In the spring of 2000, one environmental group brought suit against ITAC-3 on the same grounds as the other cases. The government decided not to defend the case and unsuccessfully solicited twice for the application of an environmental representative for ITAC-3. In spite of this, no environmental group submitted an application to join the committee. The ITAC-3 was also not permitted to meet from early 2000 until April 4, 2001. During that time, the United States entered into a Free Trade Agreement (FTA) with Jordan and began negotiating FTAs with Chile and Singapore. To date, ITAC-3 has been unable to review and provide comment on these FTAs.

As a result of the pending environmental lawsuit and the Administration’s willingness to appoint environmental representatives to ITAC-3, the chair and vice chair of ITAC-3 filed suit in federal court to prevent the appointment of environmentalists to ITAC-3 charging that such appointments are in violation of of the Trade Act of 1974. The case has been dismissed and an interim environmentalist has been appointed.

The ITACs are an effective forum for promoting the interests of batch manufacturers. The ITAC-3 is made up of approximately thirty individuals who advise the Office of the United States Trade Representative (USTR) on a number of issues. Current issues being followed by the committee are the Generalized System of Preferences (GSP) program, the Doha Round, free trade agreements, enforcement of trade agreements and intellectual property protection, REACh, Anti-Counterfeit Agreement, Bilateral Investment Treaties, Lacey Act Amendments, Strategic Economic Dialogue (SED) with China, Joint Committee on Commerce and Trade (JCCT) with China, and Transatlantic Economic Committee (TEC) with the European Union.


PIC and POPs

On December 10, 2000, negotiation of the Stockholm Convention on Persistent Organic Pollutants (POPs) was completed. With 122 negotiating countries represented, the treaty hopes to eliminate or severely restrict production and use of nine pesticides, polychlorinated bi-phenyls (PCBs) and their byproducts. The treaty also requires national action plans for its implementation and the utilization of management and reduction of chemical waste while also providing funding for the participation of developing countries. As a result of the treaty, trade of POPs is allowed only for the purpose of environmentally sound disposal, or in other limited circumstances. The dirty dozen substances named and covered by the treaty are: aldrin, chlordane, DDT, dieldrin, endrin, heptachlor, HCB, mirex, toxaphene, PCBs and byproducts dioxin, furans, HCB and PCBs. The treaty includes methods to add new chemicals.

The Treaty was signed May 21-23, 2001 and entered into force May 17, 2004. The U.S. Senate has still not ratified the treaty. The development of implementing legislation will then provide industry the opportunity to advocate a reasonable approach to POPs regulation.

SOCMA supports the POPs treaty, but strongly endorses a chemical by chemical process for adding chemicals to the list.


Chemical Tariff Harmonization

During the Uruguay Round of Multilateral Trade Negotiations, the chemical industries of Australia, Canada, Japan, the United States and the European Union crafted a joint framework agreement for tariff harmonization. The framework, the Chemical Tariff Harmonization Agreement (CTHA), was agreed to on October 28, 1991 and became the basis for the chemical sector negotiations in the Uruguay Round.  The agreement led to significant reduction and harmonization of chemical tarrifs among signatories.

At the conclusion of the Uruguay Round, a group of countries producing significant amounts of chemicals had not agreed to fully participate in the CTHA. The economies of many of the "free riders" are growing at a faster rate than the more mature U.S. Market chemical output in the "free rider" countries is also large and increases every year. The U.S. chemical industry needs fair access to these markets to ensure opportunities for U.S. growth.  Chemicals are inputs in a broad range of sectors and high tariffs can affect the price of finished goods.  Therefore it is important to continue to work toward tariff reduction.  The support for a chemical sectoral in the Doha Round supports this point.

SOCMA supports a chemical sectoral initiative in the Doha Development Round with participation from WTO members who are key traders and producers of chemicals.  The sectoral initiative would build on the success of the CTHA and make significant progress toward the goal of eliminating tariffs on chemicals worldwide.

Especially during times of economic difficulties throughout the world, special attention to trade liberalization should be paid so that all countries participating could see a decrease in the cost of chemical inputs, resulting in lowering the cost of doing business throughout the supply chain.


Temporary Duty Suspensions

The U.S. Congress passes bills biennially to temporarily lift the duty applied to certain imports that are not produced in the U.S. Duty suspensions generally last four years, and once the duty suspension is granted, it may be renewed if there are no objections. In order to have the duty of a particular product lifted, the product must not be manufactured in the U.S. and there must be no opposition to the suspension.

Click here to read a letter to Congress, dated April 3, 2009, urging the passage of duty suspensions.


Generalized System of Preferences (GSP)

The GSP program attempts to promote economic growth in the developing world by allowing duty-free entry into the U.S. for over four thousand products from 144 beneficiary countries and territories. The GSP was instituted in 1976, after being authorized in the Trade Act of 1974. The Trade Act was most recently reauthorized in 2002 by President Bush. The International Trade Advisory Committee for Chemicals, Pharmaceuticals, and Health/Science Products (ITAC-3) commented to the United States Trade Representative (USTR) on the reauthorization of the GSP in 2006. In their comments, the ITAC-3 recommended that the USTR modify the GSP program to ensure that developing country beneficiaries are justified in being part of the program. The comments expressed the sentiment that too many advanced developing countries are reaping the benefits of a program that is in fact aimed at the least developed countries. ITAC-3 stressed that participating countries in the GSP program should implement key environmental compliance measures and should not disregard intellectual property rights.

Click here to see the comments of the ITAC-3 on reauthorization of the GSP.

On October 16, 2008 President George W. Bush signed H.R. 7222, whcih amended and extended several preference programs, including GSP. The new deadline is December 31, 2009.


Regulatory Barriers to Trade

Trade improves the economic well-being of Americans, advances freedom around the world, and promotes our nation's security. The U.S. government, principally through the United States Trade Representative (USTR), is committed to promoting trade and reducing or eliminating barriers that prevent or hamper trade between the U.S. and other countries. The persistence of trade barriers applied to chemical manufacturing affirms the need for SOCMA to remain actively engaged on multiple fronts. A primary example of a commonly-used strategy to hamper trade is the promulgation of overreaching regulation, such as the European Union’s REACH legislation.

SOCMA testimony to the U.S. International Trade Commission regarding European Union regulatory barriers to trade for small and medium-sized U.S. chemical manufacturers, November 2013.

SOCMA’s statement of support for Congressman Turner’s (OH-3) Trade Law Enforcement Act of 2011.

Click here to view SOCMA’s presentation on REACH as a trade barrier given to the Asia-Pacific Economic Cooperation (APEC) forum August 11, 2008 in Cuzco, Peru.


SOCMA’s Export Promotion Pledge

Click here to find out what the US Commercial Service can do for your company.