REVIEWS/PREVIEWS

EUROPE'S ECONOMY STRONGER THAN EVER

British Cargo of Butadiene Heads for Foreign Port Tariff reductions by European Common Market and European Free Trade Association countries are helping to promote their chemical trade. Here, a tanker is leaving a British port with cargo of butadiene produced by Imperial Chemical Industries. Compound will go into making synthetic rubber

Whatever 1961 brings for Europe, it almost certainly won't be a union be­tween the Inner Six and the Outer Seven. The two European economic groupings, the European Common Market (France, Germany, Italy, Bel­gium, Luxembourg, and the Nether­lands) and the European Free Trade Association (United Kingdom, Swe­den, Norway, Denmark, Switzerland, Austria, and Portugal), are firmly en­trenched. Each group seems to be much more interested in justifying its own existence than in worrying about the problems of the other.

While 1960 was a year of possibles, 1961 will, more hopefully, be a year of probables. One very big question-now that hopes of getting the ECM and EFTA together are remote—is whether Britain can be induced to join ECM. Just about every ECM member, except perhaps France, would welcome British membership. However, the British Commonwealth countries have been sharply critical of the idea ("What about Imperial pref­erence!"). Although the British ap­pear to be concerned about these prob­lems, a suspicion keeps nagging Europe's economic planners that Brit­ain may be torn by indecision indefi­nitely.

It has fallen to the West Germans to suggest a way for Britain to extricated herself from the mesh of Imperial pref­erence. The president of the Federa­tion of German Industry, Fritz Berg, has suggested that Britain establish import quotas for goods made in the Commonwealth. Anything above these quotas would be subject to the same duties as those charged by ECM members.

Needless to say, Britain does not appear to be working overtime on the Imperial preference impasse. Cer­tainly, no one in Britain has come up with an attractive solution to the problem.

If Britain allowed herself to be swept up in the "wind of change" and plunged into ECM, her EFTA partners almost certainly would soon follow. A European customs union of 13 countries (the old ideal) would ap­pear almost immediately. If something

40 C&EN JAN. 2, 1961

'60 '61

Trade stimulated as nations make stepwise cuts in tariffs

should happen in 1961 to precipitate Britain's joining ECM, many of Europe's current problems could be kicked into oblivion.

If 1960 was an augury, 1961 will see a continuation in the crippling tariff reduction race between ECM and EFTA. In 1959, this was regarded as an impending danger, to be avoided at all cost. Now it is happening.

In 1960, ECM and EFTA outdid each other with plans for faster and faster tariff reductions. In March, the ECM Commission recommended that, by December 1961, the common in­ternal ECM tariff be reduced by 50%, instead of the originally planned 307c It also suggested changes in the com­mon external tariff.

EFTA, realizing the danger of fall­ing behind ECM's tariff reduction schedule, made a huge 20% first cut in tariffs on July 1, 1960. Thus, it matched ECM's two tariff reductions of 10% to that date. At a London conference in November, some EFTA leaders suggested that EFTA abolish all tariffs within five years.

While the Six-Seven problem seems to be getting more intractable, the two European economic blocs will be add­ing to their membership. Greece is expected to become the first associate member of ECM. Finland is ready to join EFTA, provided she can con­tinue to trade with the Soviet Union on a most-favored-nation basis. Many EFTA members, particularly Britain, are against Finland's membership in EFTA on this basis, since it would give the Soviet Union a very favorable entry into the markets of the EFTA countries. Although the other Scan­dinavian countries (all of which are EFTA members) are anxious for Fin­land to become an EFTA member, they must, like Britain, recognize the danger of allowing one of their mem­bers to trade with the Soviets as a most favored nation.

Whatever happens, 1961 should be a year for issuing more ECM member­ship cards. Turkey and Spain, follow­ing Greece's example, may be the next to sign application blanks for associate ECM membership. But, as to Britain's

joining ECM, it is anybody's guess. Meanwhile, Europe's chemical in­

dustry is enjoying greater prosperity than ever. In Britain, total sales of Imperial Chemical Industries, the larg­est European chemical company, were $864 million for the first half of 1960-up from $750 million for the same period of 1959. Germany's chemical industry is likewise thriving. As a side effect, it has run head-on into an acute labor shortage. To boost its labor supply, Germany is bringing in large numbers of workers from Spain, southern Italy, and Greece.

U.S. chemical companies, which long ago recognized Europe's growth potential, have been moving in at a great rate. During the past few years, the Common Market countries have been their big targets. Before that, the United Kingdom, which still is at­tracting a great many transatlantic in­vestors, drew the bulk of U.S. chemi­cal investments.

Business for these companies is go­ing well. For example, Monsanto, Ltd., which has long been established

Europe's Largest Chemical Company Continues to Expand

Sales of Imperial Chemical Industries rose to $864 million for the first half of 1960, compared to $750 million for the same period of 1959. ICI's growth is also reflected, in part, in the increasing output of its heavy organic

chemicals plant at Wilton. This plant has for some time produced ethylene oxide and ethylene glycol by the chlorhydrin route. It now also uses this method to manu­facture propylene oxide and propylene glycol

JAN. 2, 196 1 C&EN 41

REVIEWS/PREVIEWS

in the U.K., showed sales of $31 mil­lion in the first six months of 1960, compared to $55 million for all of 1959.

A new trend developed in Europe in 1960. For the first time, a sizable number of U.S. firms have started up companies in the smaller countries around the edge of the Common Mar­ket. Scandinavia and Spain are be­ginning to attract some U.S. invest­

ments. Interest in Greece is picking up.

Petroleum refineries are now ap­pearing in European countries that have had little or no refinery capacity before. These plants, by providing the raw materials for petrochemicals, are often the forerunners of other chemical plants.

Sweden's first petrochemical inHus-try will be located at Stenungsund,

north of Gothenburg. There, an Esso subsidiary, Svenska Esso, will make ethylene, propylene, and butadiene. Sweden's largest electrochemical op­eration, Fosfatbolaget, and Union Car­bide plan a jointly owned polyethylene plant in the area. The Swedish com­pany, Mo and Domsjo, whose normal line of business is forest products, will put up an ethylene oxide plant. So far, the investment for this entire com­plex is estimated at about $40 million. The plants should be operating by 1963.

Gulf has been exploring the possi­bility of building a refinery in Den­mark or Sweden to supply its market­ing companies there. Tidewater Oil has also shown an interest in Denmark.

But U.S. companies aren't confining themselves to petrochemicals. Glidden set up a jointly owned company to make polyester boats in Norway, which has modified its laws to encourage foreign investments. Spain is also re­vising some of its laws to make out­side investment easier.

Growth in Northern Ireland

The plants that Northern Ireland has attracted during the past few years have removed it from the ranks of "new" areas for the chemical industry. British Petroleum plans to put up Northern Ireland's first oil refinery. Adjacent to it, Imperial Chemical In­dustries will build a polyester fiber spinning plant. ICI will also have an interest in fertilizer plants to be built nearby. Chemstrand's acrylic fiber plant has been operating for some time in Northern Ireland. Du Pont's neoprene synthetic rubber plant started up there during the year. With the oil refinery added to the ros­ter of existing facilities for making acetylene from carbide, the country's raw material base should become in­creasingly attractive for further chem­ical expansion.

In Wales, British Hydrocarbon Chemicals (jointly owned by British Petroleum and Distillers Co., Ltd.) will build a $30 million petrochemical complex. At its Grangemouth, Scot­land, plant, the company will launch a $14 million program to double its butadiene capacity and add new plants for methanol and ethylene di-chloride. Esso, which opened its sec­ond British refinery at Milford Haven, will start a butyl rubber plant near its

JAN. MAR.

4 3

MAY 3

MAY

MAY

16

20 MAY 20

Europe Makes Strides Toward Economic Unity in 1960

European Free Trade Association (EFTA) Convention signed.

European Common Market (ECM) proposes that tariffs be reduced faster to bring internal ECM tariffs down to 50% of their original level by December 1961.

EFTA Convention goes into force.

U.S. approves EFTA Convention at General Agreement on Tariffs and Trade (GATT) meeting in Geneva.

ECM approves proposals for faster tariff reductions.

EFTA Ministerial Council meets in Lisbon and decides to study whether tariffs might be eliminated sooner.

JUNE 9 The 21-member Trade Committee meets in Paris, decides to re­view the difficulties caused by the tariff adjustments of ECM and EFTA.

JULY 1 ECM's second tariff reduction of 10% brings its total reduction to 20%. EFTA makes its first tariff reduction of 20%.

JULY 22 Ministerial conference is held in Paris on the reorganization of the Organization for European Economic Cooperation (OEEC), in which the U.S. is an associate member without voting rights. Thorkil Kristensen is appointed secretary general of OEEC and secretary general designate of the future organization to be known as the Organization for Economic Cooperation and Development (OECD).

AUG. 10 Britain's Prime Minister Harold Macmillan visits West Germany's Konrad Adenauer in Bonn to discuss Europe's trade problems and the possibility of Britain's joining ECM.

SEPT. 1 GATT tariff conference begins in Geneva and will continue until June 1961.

SEPT. 27 Council of Europe meets in Strasbourg. Ways are sought to avoid European economic disunity. Motions adopted to make the Council of Europe the instrument for uniting the economies of the ECM and EFTA countries.

OCT. 11 At Strasbourg, the European Parliamentary Assembly of ECM ap­proves a report suggesting an ECM-EFTA combined customs union with tariff-free quotas for Commonwealth products. Plan is offered as a solution to the problem of uniting ECM and EFTA.

NOV. 1 Treaty confirming the economic union of the Benelux countries (Belgium, the Netherlands, and Luxembourg) goes into effect.

NOV. 7-9 EFTA conference in London recommends that all EFTA tariffs be abolished in five years. It also recommends that Commonwealth preferences be extended to all EFTA members.

NOV. 17 Western European Union assembly calls for full British member­ship in ECM, Euratom, and the Coal and Steel Community.

DEC. 14 At Paris meeting, OECD is officially set up to replace the OEEC. New organization includes the 18 members of OEEC, plus the U.S. and Canada. It will work to promote economic growth, maintain financial stability, and help expand world trade.

42 C&EN JAN. 2, 1961

'60 '61

Fawley refinery. This will be Eu­rope's second butyl plant; the other is in France.

Sicily is also attracting heavy in­vestment. Azienda Nazionale Idro-geiiazione Combustibili (ANIC), owned by the Italian government, is adding a large petrochemical complex at Gela to its chemical empire.

Petrochemical aromatics such as p-xylene are becoming increasingly im­portant in Europe. At present, most p-xylene is imported from the U.S. It's used to make dimethyl terephthal-ate, which, in turn, goes into making polyester fibers. British Petroleum and Standard Oil of California are jointly planning to make p-xylene on a large scale at two locations, one in Germany and the other in the U.K.

Technical Information at a Price

Synthetic fibers and plastics have figured prominently in some of the larger deals between western Euro­pean chemical companies and the U.S.S.R. and its satellites. Unlike the U.S. chemical industry, European companies have been selling a great deal of know-how to the other side of the Iron Curtain. ICI, for example, has sold licenses for polyester fiber production to Poland and Czechoslo­vakia. ICI is also discussing the sale of know-how for polyethylene produc­tion to a group of eastern European countries—Poland, Czechoslovakia, Ro­mania, and East Germany.

U.S. arguments against selling know-how to the satellite countries ( it helps put competitors into business and, by aiding them in building a consumer goods industry, enables them to keep their scientists on military projects) fall on deaf ears in Europe. The opin­ion most frequently expressed in Eu­rope is that, by the time the U.S.S.R. and the satellite countries reach the West's present levels of quality in con­sumer products, the western countries will also be farther ahead. The big lag, therefore, will continue.

Other Europeans believe that the more contacts there are between East and West the better. And some feel that building up the standard of living in the eastern countries might make for a more stable international situa­tion. Obviously, this is an issue on which the U.S. and European chemical industries do not agree.

Some petroleum companies are wor­ried about Soviet crude oil entering world markets. Ente Nazionale Idro-carburi (ENI) , the Italian govern­ment-owned oil company, has agreed to buy 12 million tons of oil from the U.S.S.R. in the next four years. Italy will give steel tubes, pipeline equip­ment, and synthetic rubber in return.

The shortage of fuels that harassed western Europe after World War II is no longer a problem—for the present, at least. Actually, oil and coal are in oversupply. Most European oil is still imported, of course. New fields in North Africa (in Libya and the French Sahara) promise to be a major alternative source to the Near East fields. But the area's political uncer­tainty is a continuing problem. Nevertheless, most European planners feel that petroleum and natural gas, transported in one way or another from North Africa to the European shore of the Mediterranean, will greatly assist southern Europe's indus­trial development.

In the investment field, many ob­servers believe that the flow of capital into Europe is bound to reverse. European companies will be investing more heavily not only in North Amer­

ica but also in other continents. Of course, European chemical companies already have fair-sized investments in Latin America, Australia, and the United States.

The managing director of the Inter­national Monetary Fund, Per Jacob-sen, recently pointed out that the con­struction boom in Germany, Great Britain, and many other European countries is absorbing a vast amount of capital. "But there are few," he said, "who think this boom will go on for many years to come. Once it is over, I think the movement of capital will begin to change direction, and I believe the outflow of funds from the U.S. will very likely be reversed in the not-too-distant future."

REPRINTS AVAILABLE Reprints may be obtained of this special C&EN section on progress in 1960 and the outlook for 1961. Prices: 1-100 copies . . . .$0.50 per copy Over 100 copies . . 0.35 per copy Order from: Reprint Department, CHEMICAL AND ENGINEERING NEWS, 1155 Sixteenth St., N.W., Washington 6, D.C.

Esso Slated to Make Butyl Rubber near Fawley In Britain, Esso plans to make butyl rubber near its Fawley refinery. View of refinery shows steam cracking furnaces (left), ethylene recovery and purifica­tion (center), and butadiene facilities (background)

JAN. 2, 196 1 C&EN 43