January 13, 2020

The Honorable Robert Lighthizer
Office of the United States Trade Representative
600 17th Street NW
Washington, DC 20508
Docket No. USTR-2019-0003

Via regulations.gov submission

RE: SOCMA Comments Concerning Review of Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute

Ambassador Lighthizer:

Thank you for the opportunity to comment regarding the Office of the U.S. Trade Representative’s (USTR) review of action being taken in the Section 301 investigation involving the enforcement of U.S. World Trade Organization (WTO) rights in the Large Civil Aircraft dispute.

The Society of Chemical Manufacturers and Affiliates (SOCMA) is the only U.S.-based trade association solely dedicated to the specialty and fine chemical industry – a $300 billion industry that is fueling high paying jobs in local economies across the United States. SOCMA members play an indispensable role in the global chemical supply chain, providing specialty chemicals to companies in markets ranging from aerospace and electronics to pharmaceuticals and agriculture.

I. SOCMA Supports Delisting Chemical Categories in HTS Chapters 28-39 from Proposed Action

SOCMA respectfully requests that USTR exempt Harmonized Tariff Schedule (HTS) subheadings in HTS chemical chapters 28-39 from the proposed rate increases. Specifically, SOCMA respectfully requests that USTR delist the following European Union (EU)-origin chemical categories in Annex II currently under consideration for the imposition of additional ad valorem duties of up to 100 percent:

  HTSUS subheading Product description  
1 2814.20.00 Ammonia in aqueous solution  
2 3102.10.00 Urea, whether or not in aqueous solution  
3 3102.21.00 Ammonium sulfate  
4 3301.29.51 Essential oils other than those of citrus fruit, other, nesoi
5 3301.90.50 Concentrates of essential oils; terpenic by-product of the deterpenation of essential oils; aqueous distillates & solutions of essential oils  

SOCMA shares concerns with the Administration regarding an uneven playing field for U.S. manufacturing and supports efforts to ensure trading partners comply with WTO rulings. However, the proposed action risks materially diminishing the international competitiveness of chemical companies operating in the U.S. While larger, multinational companies may have the ability to shift operations to avoid additional tariffs, smaller companies, which make up much of SOCMA’s membership, often do not have the same ability and ultimately cannot compete with increased duty costs.

Imposing additional duties on the above-mentioned product categories of one or more specific EU member states would not be appropriate to enforce U.S. WTO rights or to obtain the elimination of the EU’s WTO-inconsistent measures. SOCMA believes that there is inadequate linkage between tariffs on the chemicals sector and the Section 301 Large Civil Aircraft dispute as adjudicated by the WTO. Imposing such tariffs will harm U.S. manufacturing, is unlikely to impact EU aircraft subsidy policy, and will negatively impact U.S. industrial competitiveness.

II. SOCMA Supports U.S.-EU Negotiations Towards a Comprehensive Transatlantic Free Trade Agreement

SOCMA supports the Administration’s desire for a free trade agreement covering all industrial goods, including chemicals, between the U.S. and EU. In order to move forward decisively and ambitiously toward a broad, multi-sector agreement, SOCMA supports constructive dialogue towards an agreement that provides increased economic integration, eliminates unnecessary barriers, upholds strong standards of transparency, predictability, and fairness, and protects and enforces intellectual property rights. In addition, SOCMA supports reduced complexity, increased trade facilitation, rules of origin that are commercially meaningful, flexible, and predictable, and new supply chain, customs, and regulatory coherence commitments.

The transatlantic economic relationship is the world’s largest, accounting for approximately one-third of total goods and services trade and nearly half of global economic output. With such large trade flows between these economies, eliminating tariff and non‐tariff barriers would benefit both economies and SOCMA members.

III. SOCMA Recommendations for Greater Regulatory Harmonization

The U.S. and EU take divergent approaches toward regulating chemicals. As a result, trade barriers have been erected that disadvantage U.S. chemical manufacturers, particularly small- and medium-sized companies. However, there are opportunities for improved future regulatory cooperation.

SOCMA fundamentally supports approaches to regulating chemicals that are based on sound science and risk. Such approaches factor the hazard, or intrinsic characteristics, of a chemical with the potential for exposure. In contrast, approaches based on the precautionary principle would be detrimental to the specialty chemical manufacturing industry and not achieve shared goals of facilitating transatlantic trade while enhancing the protection of human health and the environment.
Additionally, regulations should not disproportionately burden small- and medium-sized manufacturers. The impact of trade barriers like the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) is not limited to U.S. manufacturers; REACH also affects the accessibility of chemicals and innovative products in the EU market.

The following recommendations outline opportunities for greater regulatory cooperation:

  • Permissible use of data that has been generated for regulatory purposes and information sharing, provided that Confidential Business Information (CBI) is adequately protected. The U.S. Environmental Protection Agency (EPA) and the European Chemicals Agency (ECHA) should establish a formal data sharing agreement, given the breadth of information being submitted under REACH and likewise for the U.S. to share domestically-conducted work;
  • Increased transparency on chemical information and evaluation processes with the understanding that protection of CBI is critical to promoting innovation and the vitality of SOCMA members’ businesses. Since the EPA and ECHA do not have comparable practices, this is an area that will need to be further explored;
  • Seeking regulatory harmonization on emerging issues and new regulations in areas where relevant;
  • Utilizing mutual recognition of standards where relevant;
  • Prioritizing chemicals in commerce in a rigorous risk‐based and transparent fashion;
  • Reducing or eliminating duplicative standards and protocols by using uniform definitions and guidelines, such as Organization for Economic Cooperation and Development (OECD) definitions and test guidelines, and International Organization for Standardization (ISO) standards;
  • Sharing of cost‐benefit‐risk assessment methods; and
  • Globally Harmonized System (GHS) classifications set in sound science.

SOCMA encourages continued conversations between regulatory bodies in the U.S. and EU, and in particular, between the U.S. EPA and ECHA. Additionally, any future coordination on regulations should be transparent and allow for input from U.S. and EU stakeholders.

In conclusion, SOCMA has concerns that maintaining or imposing additional ad valorem duties of up to 100 percent on HTS chemical subheadings will not achieve the Administration’s objectives and will harm SOCMA members, employees, and customers. New tariffs would have significant financial impacts on U.S. companies and consumers that will not only constrain manufacturing growth within the chemicals industry but also increase the possibility of U.S. job losses.

SOCMA respectfully requests that the Administration exempt all individual 8-digit categories in HTS chemical chapters 28 through 39 from the proposed rate increase, and in particular, forgo rate increases on above-listed HTS subheadings 2814.20.00, 3102.10.00, 3102.21.00, 3301.29.51 and 3301.90.50.

Thank you again for the opportunity to comment on USTR’s review of action being taken in the Section 301 investigation involving the enforcement of U.S. WTO rights in the Large Civil Aircraft dispute. SOCMA looks forward to providing further input into the U.S.-EU negotiation process.

Respectfully submitted,

Matthew Moedritzer, Esq.
Manager, Legal and Government Relations
1400 Crystal Drive, Suite 630
Arlington, VA 22202

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