‘Cumbersome’ EU rules spark bad chemical reaction

Date: 25/01/01

By Renée Cordes

EVEN for Europe's biggest chemical producers, bringing a new substance to market is almost not worth the effort.

Under current EU rules, all chemicals placed on the market after September 1981 must undergo a rigorous testing procedure before they can be introduced. This can take up to a year and cost companies up to h500,000.

"For the industry in general, if you lack some data for a chemical intended for a very specific use, produced in a low volume and with a narrow profit margin, it probably will not be tested," says

Walter Seufert, president in charge of environment, safety and energy at Germany's BASF, the world's largest chemicals maker. "This does not necessarily mean that it will be substituted by a better substance."

The firm cannot even send a substance developed at BASF labs three kilometres down the road for further tests by its Knoll pharmaceuticals unit (soon to be sold off along with the rest of the firm's drug business) without submitting them to a lengthy notification procedure.

Many in industry complain this process is too cumbersome and discourages innovation, especially by the small and medium-sized enterprises that do much of the pioneering work today and account for 95% of all companies in the sector.

The numbers back up this argument: currently just 200 new substances are registered in the Union every year, compared to around 2,000 per year in the 1970s. In the past 18 years, a mere 2,700 new substances were notified in the EU, compared to the expected 20,000.

Industry executives argue that this puts Europe at a competitive disadvantage to rivals in the US, where notification of many new chemicals intended for use in small amounts costs just h25,000 and takes a relatively brief 18 weeks.

As the European Commission wrestles with the difficult question of how to impose controls for older substances already on the market, but not covered by existing legislation, manufacturers are stepping up pressure for a simplified regime that encourages innovation.

The EU executive plans to unveil its delayed White Paper next month.

Meanwhile, industry is demanding greater responsibility for assessing health and environmental hazards and arguing that rigorous testing should be required only for those substances believed to be dangerous. This would allow firms to focus more attention on new products.

"Our idea is to target areas of concern," says Paul van Eijsden, executive director in charge of trade and environment at the European Chemical Industry Council (CEFIC), pointing out that of 110 risk assessments begun in 1993, only 70 are now being finalised. "Our approach is a lot more pragmatic."

The lobby group points out that many chemicals companies have already agreed to voluntary global initiatives to provide more extensive and reliable data on their products. For example, the International Council of Chemical Associations plans to have data and initial assessments on 1,000 high-volume chemicals ready by 2004.

The Commission remains deeply divided over how to set new policy in the sector, with two different plans for improving EU chemicals legislation.

Enterprise Commissioner Erkki Liikanen, with the strong backing of industry, would distinguish between new and existing substances, on the premise that a lot more information is available on older materials. Substances would be restricted only in cases in which evidence shows they could harm human health or the environment. The idea is to gradually collect information about various chemicals until public authorities know enough to take appropriate action.

Liikanen advocates a tiered approach to testing existing substances - those which came on the market before September 1981 - depending on their use and production levels. But even substances that fail to meet the new thresholds would be subject to legal requirements on liability and workplace safety.

This plan, to be phased in over the next decade, would cover 10,000 existing substances and cost industry an estimated h90 million a year. Although EU chemical makers do not consider this a perfect solution, many feel it would be a vast improvement on the current regime.

But Environment Commissioner Margot Wallström has very different ideas. Her proposal, widely supported by green groups, would impose a single set of standards for both new and existing substances and require limited testing of all chemicals produced in amounts exceeding one tonne per year.

Even stricter standards would be set for chemicals produced in larger amounts, as well as for substances in products (such as toys or textiles) which can be released into the environment.

The Wallström plan would cover about 30,000 different chemicals and cost industry an estimated h1160 million per year. Environmental campaigners insist this is the only way to restore much-needed confidence in the Union's chemicals regime. "The present system is protecting the industry against the environment," says Christian Hey, EU policy director at the European Environment Bureau. "We want a system which is protecting the environment from hazards."

Hey argues that manufacturers should be allowed to conduct initial testing, but should not be given complete freedom in cases where their products are believed to pose risks to health or the environment. He also calls for an increase in financing for the European Chemicals Bureau, which collects information on substances throughout the Union.

No matter which approach experts favour, they do agree on one thing: the EU's chemicals policy is in need of major reform. And the more time policymakers take to decide what to do about it, the more industry will complain it is losing ground to competitors in other regions.

A recent report by the Organisation for Economic Cooperation and Development states that there are between two and four times more notifications in the US than in the EU, a finding also reflected in studies carried out for the Commission.

"One of the big concerns for European companies is that the regulatory system is not favourable for innovations," says Michael Vara, an analyst at Commerzbank Securities in Frankfurt. "This is one of the competitive disadvantages against the US."

Nevertheless, he questions the industry argument that rules and requirements are the sole barriers to innovation in the Union. "Research and development is mainly concentrated on the production of chemicals, rather than the development of new chemicals," Vara says.

BASF's Seufert counters: "You cannot have new production processes without new chemicals."