Sustaining Innovation

Protection of Trade Secrets, Elimination of Trade Barriers are Key for U.S. Chemical Industry’s Growth

14.05.2012 -

Balancing Transparency and Confidentiality - One of the biggest challenges facing chemical companies in the United States is one that isn't making major headlines but is being discussed in boardrooms everywhere. The issue is the proposal by the U.S. government to require greater public access to company trade secrets.

While there have been widespread reports that China allegedly stole trade secrets from DuPont, most people don't know that the U.S. Environmental Protection Agency (EPA) may soon facilitate these types of activities by changing existing rules regarding confidential business information (CBI). Nowhere would an action like this have a greater effect than on specialty chemical manufacturing, which is one of the most innovative manufacturing sectors in the U.S.

Chemical Identity Drives Innovation

Under the Obama administration, the EPA has stepped up its efforts to increase transparency of chemical substances falling under the Toxic Substances Control Act, a 35-year-old statute governing chemicals management. As the leading trade association for the batch, custom and specialty chemical industry, the Society of Chemical Manufacturers and Affiliates (SOCMA) has supported the agency's efforts to increase access to information on chemicals. However, the association believes that cases like DuPont's would be far more commonplace if EPA's proposed rule on chemical identity came to fruition.

Industrial espionage is a serious and omnipresent threat to American manufacturing. Disclosing chemical identity would serve only as an opportunity for competitors, many of which are overseas, to mine U.S. intellectual property. Given the narrow applications for which specialty chemicals are used and the niche markets they serve, disclosure of chemical identity may be all it takes to give away a competitive advantage and result in less innovation in the U.S. In many cases, the confidentiality of chemical identity is all a specialty chemical producer has to remain in business.

As EPA pursues its goal to increase the public's understanding of the potential risk posed by chemicals, it should make every possible effort to strike the right balance between informing the public and promoting innovation. The incentive to develop greener chemicals largely disappears if prospective manufacturers know the risk is high of having their idea revealed. One SOCMA member recently told a group of government agency watchdogs that innovation is what keeps her company in business.

Breaking Down Trade Barriers

While there are clear challenges on the horizon for U.S. chemical manufacturers, such as EPA's proposal, there are also opportunities to further business growth. Last year, after much work and negotiation, President Obama signed free trade agreements with Colombia, Korea and Panama. The Korea agreement entered into force in March, but similar progress has not yet been made with Colombia and Panama.

SOCMA also supports further integration and reducing barriers between the U.S. and EU and would support a U.S.-EU free trade agreement and any efforts aimed at breaking down barriers between the world's largest trading partners. The High-Level Working Group on Jobs and Growth established at the Transatlantic Economic Council between the United States and the European Union last November is developing policy recommendations to eliminate regulatory barriers, grow jobs and strengthen the economies on both sides of the Atlantic. SOCMA is looking forward to the working group's recommendations, which are expected in June and December.

As the Obama administration continues to promote U.S. manufacturing, SOCMA will continue to push for fair and practical laws and regulations both domestically and internationally that benefit the chemical manufacturing sector. This will help ensure that specialty chemical makers can continue to manufacture innovative products and capitalize on emerging markets overseas. SOCMA applauds the administration on the things it is doing right, such as pushing free trade agreements and fighting to eliminate barriers to trade, but it is highly concerned about positions that undermine American manufacturing, such as mandating trade secret disclosure.


SOCMA Society of Chemical

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