Boosting U.S. Exports

The chemical industry is urging the Obama Administration to pursue new free-trade agreements, saying initiatives to open up foreign markets will help U.S. manufacturers capitalize on the dramatic drop in natural gas prices over the past few years.

“The U.S. chemical industry is now one of the lowest-cost producers in the world,” Calvin M. Dooley, chief executive officer of the trade group American Chemistry Council (ACC), noted at a Capitol Hill briefing last week.

The briefing marked the release of an ACC report that says the surplus of cheap natural gas recovered from shale formations—rich in the ethane needed for chemical production—has lowered input costs for U.S. producers and spurred demand in international markets for goods derived from chemicals.

Exports of U.S.-made chemicals and plastics have increased by 15% since 2010, resulting in a record $34.7 billion trade surplus for the industry last year, according to the report.

To further expand exports, ACC is calling for a “robust and comprehensive” trade pact with the European Union. U.S. and EU trade officials have held preliminary talks and are expected to give the go-ahead to begin formal negotiations, perhaps as soon as this spring.

“We are especially excited about a potential U.S.-EU trade agreement, which would yield huge benefits for our industry and the broader manufacturing sector,” Dooley remarked. Eliminating tariffs on trade in the chemical sector across the Atlantic would generate annual savings of around $1.5 billion, he said.

For companies with global operations, “free-trade agreements are absolutely essential” to the ability to export products from the U.S., added Craig O. Morrison, CEO of Momentive Performance Materials and chair of ACC’s board of directors.

The report also calls for a more cost-effective regulatory environment, expanded shale gas development, a lower corporate tax rate, and reduced freight rail transportation costs.

John J. Paro, CEO of ACC member HallStar, stressed that work to enhance U.S. export performance must begin by “enhancing competitiveness at the manufacturing ground floor and then be met up top with open trade policies and a level playing field for chemical companies looking to ship more products overseas.”