Trade and Innovation: Report on the Chemicals Sector

Abstract

This study analyses linkages between trade and innovation in the chemicals sector, building on past work at the OECD on trade and innovation. The chemicals sector has a long history of innovation and is a large trading item. It covers very diverse sub-sectors. This paper analyses and compares different trade and innovation linkages in basic industrial chemicals, speciality and fine chemicals and consumer chemicals. This sector has also been a subject of successive rounds of multilateral trade negotiations, and partly as a consequence tariff rates have been reduced over time. Nonetheless remaining tariffs are still non-negligible and constitute impediments to trade. Export restrictive measures on raw material inputs are also being highlighted on the trade negotiating agenda. Moreover, the chemicals sector is heavily regulated for health and environmental reasons and further legislative initiatives have been pursued, whose practical impact on innovation remains to be seen. Intellectual property has played a very important role in technology diffusion in this sector, and infringement of intellectual property continues to be a major problem.innovation, intellectual property, technical barriers to trade, emerging economies, financial crisis, Chemicals Tariff Harmonization Agreement, environmental regulations, chemicals, multilateral trade negotiations, export restrictive measures

Responses from the survey of governments and industry

“…Some of this increase has been due to the lower costs associated with production in the BRIICS, but also with the need for facilities to be closer to final markets and feedstock sources (OECD, 2012;UNEP, 2013). In addition, technology transfer from companies in developed countries to emerging economiesdue to, among other things, joint ventures and mergers and acquisitionshas helped emerging economies innovate and play a larger role in the global market (Kiriyama, 2010).…”

“…Chinese companies in particular are active in gaining access to advanced technologies in partnership with multinationals, alongside in-house research and development (Kiriyama, 2010). According to OECD estimates, China's share in global chemical production was 22% in 2011 and 26%with a total value of USD 2 188 billionin 2018 (OECD, 2019).…”