Trade and Innovation: Report on the Chemicals Sector

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.