The European Chemical Industry’s Imperative for Robust Free Trade Agreements

Free Trade Agreements - in article

The European chemical industry has long been called the backbone of the European economy, providing 19 million jobs through its supply chains and contributing significantly to the EU economy, yet high energy prices, raw material dependencies, declining market shares, are just some of the challenges facing the sector. As an export-oriented sector, free, fair and sustainable trade can hold the key to strengthening the chemical industry’s competitiveness. Our latest Digital Dialogue raised the question: how to best leverage the potential of Free Trade Agreements?

In this latest exchange, key voices addressed the need for trade agreements with other regions as an important means to build resilience in our chemicals industry, and therefore the European economy. Companies of all sizes manufacture the chemical molecules that make up Europe’s industrial backbone, which in turn helps the EU to achieve its  goal of an open strategic autonomy both today and tomorrow.

Setting the scene, Bernd Lange, Member of the European Parliament and Chair of the International Trade Committee (INTA), called to speed up the negotiations for new trade agreements and to also rethink their approach given the new geopolitical context.

“A new narrative of security and sustainability based on trade agreements is an answer to the current fragmentation [of globalisation].”

Mr. Bernd Lange, Member of the European Parliament

Judith Kirton Darling, Deputy Director General of industriALL, acknowledged the world-class exports of the chemicals industry, providing much-needed and highly skilled jobs. Yet she stressed that we are at a “critical moment” with high energy prices in Europe coupled with an extremely complicated geopolitical environment for many energy-intensive industries.

“Millions of jobs in Europe’s chemicals industry are highly dependent on open and fair trade. An integrated industrial-trade policy approach is vital and urgent. We believe that ensuring Good Industrial Jobs in Europe must be a compass for such an industrial plan. European workers need a level playing field with good jobs along global supply chains. Trade is the means and not the end.”

Ms. Judith Kirton Darling, Deputy Director General, industriALL

To combat the drop in the chemical industry’s global market share in past years, Denis Redonnet, Deputy Director General at the European Commission’s DG Trade, called on Free Trade Agreements, which support global rules-based trading system, as the key to maintain and even improve industry competitiveness.

“Maintaining the global competitiveness requires the right policies, including trade policies, in support of that effort…It means shoring up notably the World Trade Organisation, and it also means putting our trade agreements at the service of our globally competitive industries.”

Mr. Denis Redonnet, Deputy Director General and Chief Trade Enforcement Office, DG TRADE, European Commission

Alongside being export dependent, the EU chemical industry depends heavily on access to raw material supplies. Given Europe’s limited natural resources, speakers agreed that through Free Trade Agreements, we can reduce our structural disadvantages to diversify supplies and secure access to global markets.

“We believe that the promotion of the diversification of the EU supply chains and export markets is crucial, and critical raw materials are essential for a wide range of strategic sectors.”

Mr. Daniel Cascales Núñez, Deputy Director General, Deputy Directorate General for International Trade in Goods (Spain)

In this regard, Cefic’s Chair of Trade Policy Working Group, Jan von Herff, reaffirmed the serious need for open trade with key trading partners including USA, Mercosur, India, ASEAN and Africa. This should be complemented with a reduction of non-tariff barriers.

“Non tariff barriers create severe disadvantages for EU companies in FTA partners’ markets and beyond. This is, of course, a key part for European companies to access these markets”.

Jan von Herff, Chair of Cefic Trade Policy Working Group

In a world marked by crises, the EU chemicals industry stands at a crossroads. Our key speakers agreed on the need for a proactive and robust trade policy to navigate challenges, foster innovation, and secure a sustainable future for this vital sector and its European workforce. As the industry looks towards new horizons, the implementation of these recommendations is seen as instrumental in fortifying its position on the global stage.