In an increasingly interconnected global economy, the chemical industry stands at the crossroads of innovation, sustainability, and geopolitics. Environmental and quality-control regulations, once primarily tools for safeguarding health and the planet, are now often intertwined with protectionist motives. These measures aim to elevate standards while subtly—or not so subtly—shielding domestic producers from foreign competition.
The result? A reshaping of international supply chains, particularly in sectors like chlor-alkali, PVC, and related chemicals.
India's Bureau of Indian Standards (BIS) certification has become a prime example of regulations that straddle the line between quality control and protectionism. Required for a growing list of imported chemicals, BIS mandates that foreign suppliers meet Indian standards before entering the market. For polyvinyl chloride (PVC), this has created significant hurdles. The government has repeatedly extended the implementation deadline—the latest extension pushing it to December 24, 2025—amid pushback from importers and global suppliers. This delay highlights the tension: while the BIS aims to ensure product safety and quality, it effectively limits imports, especially from cost-competitive sources such as China and the US.
The impact is clear in trade data. Without BIS certification, suppliers risk losing market share, forcing them to seek alternatives or face higher costs. For instance, US producers of PVC and polypropylene (PP) could face reduced exports to India if they fail to comply, potentially redirecting volumes elsewhere and disrupting global pricing. Critics argue this protects domestic capacity, aligning with India's push for self-sufficiency in chemicals.
A similar story unfolds in butyl acrylate, a key monomer used in paints, adhesives, and textiles. Since early 2025, BIS requirements have curtailed Chinese imports into India. Chinese producers, despite applying for certification, encountered obstacles, resulting in a decline in their market share. This vacuum was filled by higher-cost suppliers from Taiwan and Japan, driving up domestic prices.
The timing coincided with the commissioning of new capacity by Indian Oil in Vadodara, where two butyl acrylate lines came online in mid-2025 (with production ramp-up through August and September). By curbing cheap imports, the government created a more favorable environment for these domestic startups, supporting India's journey toward self-reliance in petrochemicals. Even Saudi producers have seen lower sales volumes as India prioritizes its own manufacturers, like BPCL and Indian Oil.
Extending beyond chlor-alkali, India's Quality Control Orders (QCOs) have ripple effects in the textile sector. Compliance requirements for filaments and yarns have eliminated a significant portion of the sourcing basket, eroding margins and threatening supply chain continuity. Industry associations have called for relief, but the measures persist, ostensibly for quality but effectively acting as barriers to imports. For polyester continuous filament yarns, QCOs implemented in 2024 (effective July 18, 2024, with amendments) have led to higher costs and reduced competition, benefiting local producers while posing challenges to downstream users.
Across the Pacific, the US has expanded its Uyghur Forced Labor Prevention Act (UFLPA) to target forced labor in China's Xinjiang region, with implications for chemical trade. In August 2025, the act added caustic soda—a staple in chlor-alkali production used for paper, textiles, and detergents—to its high-priority enforcement list, alongside steel, copper, lithium, and jujubes. This expansion builds on the 2022 law, which requires importers to prove that their supply chains are free of forced labor, with presumptive detention for non-compliant goods.
Multiple Xinjiang-based entities in the caustic soda sector have been linked to forced labor schemes, prompting heightened scrutiny. While the primary goal is human rights protection, the measure also serves US trade interests by restricting Chinese exports, potentially boosting domestic or allied production. Supply chains for chemicals like caustic soda, often intertwined with global manufacturing, face increased compliance costs and delays. Importers must now meticulously map out origins, reshaping trade flows away from high-risk regions.
In Europe, the Carbon Border Adjustment Mechanism (CBAM) exemplifies how climate goals can double as trade barriers. Fully operational since 2023 (with transitional reporting through 2025 and the definitive phase starting in 2026), CBAM charges importers for embedded carbon emissions in goods like fertilizers, hydrogen, organic chemicals, and polymers—sectors critical to the chemical industry. By leveling the playing field against countries with less stringent emissions standards, the EU protects its industries from "carbon leakage" while promoting global decarbonization.
For chemicals, the impact is profound. Exporters to the EU, particularly those from Asia, face higher costs unless they adopt low-carbon production methods, which could potentially reduce their competitiveness. Studies show CBAM reduces leakage by about half when free allowances are phased out, but it also shifts trade patterns, favoring EU producers. In the petrochemical industry, combined with the EU Emissions Trading System (ETS), it drives up costs, prompting innovation but challenging imports.
Complementing CBAM is the EU Deforestation Regulation (EUDR), which bans the import of commodities linked to deforestation, including palm oil, rubber, and soy—feedstocks for many chemicals, such as surfactants and polymers. The EUDR requires due diligence to prove the deforestation-free origins of products, thereby reconfiguring supply chains. Effective December 30, 2025, for large firms, it disproportionately affects exporters from developing nations, acting as a non-tariff barrier that bolsters EU sustainability credentials at the expense of global trade equity.
Another layer emerges in the ongoing restrictions on bisphenol A (BPA), a chemical linked to health concerns in food contact materials. As regulations tighten globally, companies like Sherwin-Williams have stepped in with alternatives: coatings based on acrylics, polyesters, and non-BPA epoxies for cans and packaging. Their valPure® line provides slot-in solutions, sustaining offtake for these chemicals amid BPA restrictions. In the EU, where demand for acrylics surges due to weak markets elsewhere, this supports local sourcing and stabilizes the troubled chemical sector. What starts as a safety measure evolves into a trade advantage, favoring producers of compliant alternatives.
Other examples abound. The US Toxic Substances Control Act (TSCA) restricts imports of hazardous chemicals, often requiring extensive testing that disadvantages foreign suppliers. In the EU, REACH registration demands detailed data on substances, creating barriers for non-EU exporters. These regulations, while environmentally sound, can lead to adverse trade effects, including reduced exports and shifts in plant locations.
The overlap of regulation and protectionism forces chemical companies to adapt. Supply chains are becoming more localized, which increases the risks of fragmentation and higher costs. For sectors like chlor-alkali and PVC, this means diversified sourcing, investment in compliance, and potential innovation in green alternatives. Yet, it also raises questions of fairness: do these measures truly advance global sustainability, or do they entrench advantages for developed economies?
As chemical trade evolves, stakeholders must balance ethical imperatives with economic realities. Policymakers could foster transparency and international cooperation to minimize unintended trade barriers. For businesses, staying ahead means closely monitoring regulations and building resilient, traceable supply chains.