* Industry leader urges push for "trade promotion authority"
* Pact could save producers $1.5 billion annually
By Doug Palmer
WASHINGTON, Feb 15 U.S. chemical companies,
already riding a wave of lower production costs because of the
United States' natural gas boom, see additional gains from
proposed U.S. trade deals with the European Union and
Cal Dooley, president of the American Chemical Council, said
a free trade pact that eliminates EU tariffs on U.S. chemical
exports would save U.S. producers $1.5 billion per year.
"The potential savings from regulatory cooperation would be
significantly greater than that," although the industry group
does have an estimate yet, Dooley told Reuters on Thursday.
U.S. and EU leaders this week announced plans to negotiate
an agreement that would cut remaining tariffs across the
Atlantic and address regulatory barriers that hamper trade.
American chemical companies have complained for years about
an EU regulation, known as REACH, which imposes extensive
registration, testing and data requirements on tens of thousands
The U.S. chemical industry does not expect those rules to be
overturned as a result of the U.S.-EU talks, but sees
opportunities for reform that could significantly reduce the
cost of compliance, Dooley said.
However, to get those and other concessions from the EU, the
White House needs to push Congress to renew legislation known as
"trade promotion authority," Dooley said.
That law, which expired in 2007, allows the White House to
submit trade pacts to Congress for a straight up-or-down vote
without any amendments.
It long has been considered essential to persuading
countries to put their best offers on the table in trade talks
with the United States.
Dooley said he hoped the White House would announce plans in
coming weeks to pursue the legislation.
The U.S.-EU trade talks are expected to begin by June and
could take at least 18 to 24 months to complete.
Western Europe is already the largest regional export market
for U.S. chemical companies, taking in $52.8 billion worth of
products in 2012. The Asia-Pacific region was a close second at
$51.8 billion, while Canada and Mexico imported a combined $49.6
billion of U.S. chemical products.
The United States, Canada, Mexico, Vietnam, Australia and
six other countries in the Asia-Pacific region hope to finish
talks on a proposed "Trans-Pacific Partnership" (TPP) pact by
the end of the year.
That agreement could boost U.S. chemical exports by $1.2
billion annually, Dooley said.
Both the EU pact and the TPP would help U.S. chemical
producers capitalize on a dramatic fall in production costs over
the past five years because of lower prices for natural gas.
"Natural gas is to the U.S. chemical industry as flour is to
a bakery" because about 85 percent of chemicals manufactured in
the United States use natural gas as a feedstock, Dooley said.
Globally, chemical producers are indifferent to using
natural gas or naptha, a hydrocarbon derived from oil, as a
feedstock when prices for natural gas and oil are at a ratio of
around one to four, Dooley said.
The price ratio in the United States currently is closer to
1 to 20 or 1 to 25 in favor of natural gas, which has made the
U.S. chemical industry probably the lowest cost producer in the
world, with the possible exception of the chemical industry in
the Middle East, he said.
(Reporting By Doug Palmer; Editing by Vicki Allen)