In real world affairs, chemical weapons, by international consensus (Geneva Protocol) are forbidden to produce or use. They fall under the category of WMD or Weapons of Mass Destruction. As a result, developing chemical weapons, successful or not, or using chemical weapons will reduce your country's reputation. Continuous usage/production of chemical weapons will get you to Axis of Evil, and may result in a reset. So it's best to use it never. Only idiots use chemical weapons
Creating Chemical Weapons Edit
Chemical weapons are just 1 of 2 weapons of mass destruction in the game. Development costs 500k per level and must be done in the Military Policies page. There is a moderate chance the chemists are able to progress toward usable chemical weapons, and an equally moderate chance of their failing to do so. However, there is a slight chance of getting bombed by a stealth bomber, which will set back chemical weapon progress to 0. Successful or not, each development negatively impacts your reputation, and it takes 5 successful developments (or maxing out the chemical weapon progress) to create usable chemical weapons.
Using Chemical Weapons Edit
You must have your chemical weapon progress maxed out in order to do so. Once the chemical weapon is usable, you can then use it in war, causing great damage to your enemy while taking a hit on reputation(-3). It can be very useful in war, but only as a last resort. There is a chance it may reduce your enemy's stats and draw the war into your favor or convince your enemy to stop hostilities and offer peace. However, it is more likely to anger and motivate your opponent to win at all costs and spare you no mercy, draw your opponent's alliance against you and/or retaliate with chemical weapons against your nation.
When developing chemical weapons too quickly, there is a high risk of lowering reputation to Axis of Evil, which has a 50/50 chance of your nation being invaded by the UN each turn (12 hours), thus causing your nation to reset.
Best Time for use Edit
It is generally regarded as foolish to use chemical weapons within the opening moves of a war. They should be regarded as a deterrent or a last ditch weapon to use when desperate in a war or for retaliation of your enemy's use of chemical weapons. Producing as well as using chemical weapons will negatively impact your reputation. Against a large number of enemy troops, chemical weapons are very effective when combined with air strikes as they will reduce 5% of your enemy's strength.