Common Market nations, concerned that cheaper oil prices give U.S. chemical companies an unfair price advantage in their home markets, are considering new protectionist trade measures for chemicals.
To stave off dwindling profits and spiraling unemployment, some of the nine member-nations are pushing for trade protections against the United States, specifically antidumping measures against two major American chemical companies, Cyanamid Corp. and Dow Badische, by yearend.
Common Market officials will be in Washington next week to discuss with the Carter administration what they consider an artificial advantage U.S. chemical companies enjoy in European markets, particularly those firms in synthetic fibers and plastics, because of regulated oil prices in the United States. Petroleum is the basis for many chemical processes.
Oil price controls, which mean cheaper supplies of oil to American industry than are available to Europeans, distort competition between the Common Market and the United States in the chemical sector, European officials said. The European Economic Community's industrial affairs policy director, Etienne Davignon, said in New York last month that the "artificially low" U.S. oil prices are "an indirect subsidy to U.S. petro-chemicals."
According to one EEC trade official, U.S. exports in some product lines have increased "by as much as 400 percent" over the past year in certain regions of Europe. And industry sources in Europe expect American chemical companies to intensify their efforts here to offset declining demand domestically.
EEC officials, expecting the U.S. response to the delegation next week to be limited, are studying other means of attempting to offset chemical imports in the EEC. Besides the anti-dumping efforts, these measures are thought to include invoking international trade rules against American chemical imports and possibly calling for direct curbs.
Analysts' here expect Italian and British governments to support such moves strongly because their petro-chemical industries have been hit most directly by increased U.S. exports.
The other EEC countries, however, are likely to be cautious, not wanting to jeopardize the crucial concluding phase of the multilateral trade negotiations aimed at liberalizing trade policy.
In fact, many European policy-makers would be surprised if the EEC took it upon itself to wage "chemical warfare" against the United States and thus potentially compromise a global trade package that has taken almost a decade to piece together.
And the EEC has not strengthened its position by spending most of the year criticizing the United States for failing to implement the MTN package while not doing so itself.
There appars to be little doubt that the European chemical companies view the situation with American firms as a crisis. According to a confidential memo, the Common Market's leading firms warn that "plant closures cannot be ruled out" as a result of import pressure.
The European complaint was supported by some of the most influential corporate names in the European chemical industry, including Bayer and Hoechst of West Germany and Cortaulds of the United Kingdom.