Long-awaited regulatory package involves tricky balancing act for Commission

Date: 20/03/03

The EU executive is at pains to ensure its chemicals policy overhaul protects health and the environment as well as industry, writes Karen Carstens

THE European Commission has been known to drag its feet on more than a few policy initiatives.

But it could perhaps be forgiven for taking its time over the most comprehensive overhaul of chemicals' policy for more than two decades.

The stakes are enormous. The chemicals industry is one of the biggest in the world, accounting for 9 of global trade, and is worth €519 billion in the EU.

Though they are not always visible, chemicals are as much a staple of our daily lives as bread and water: they are used in clothes, shoes, cars, paper, dyes, pigments, IT, electronics, medicines and aeroplanes to name just a few examples.

DG Enterprise and DG Environment, the two Commission directorates responsible for bringing forward the new legislation, face a tricky balancing act. While seeking to protect health and the environment, they must also maintain innovation and competitiveness in the industry, Europe's third largest.

"This is the biggest regulatory package this year," says Erkki Liikanen, the Finnish enterprise commissioner who is working on the upcoming legislation with his Swedish environment counterpart, Margot Wallström. At the heart of the proposed regulation is a new system to register, evaluate and authorise chemicals, or REACH for short.

REACH aims to bring an end to the anomaly of chemicals that were introduced to the European market before 1981 not having been fully registered. Only substances introduced since have undergone registration procedures.

The proposed regulation will bring together elements of 60 directives, a hotchpotch of piecemeal legislation, and a 'fill-in-the-gaps' process. Liikanen admits an overhaul is long overdue; the final proposal is due to be put forward in July after consultation with interested parties who will be able to comment on a draft version which will be unveiled next month.

Before becoming law, the proposal would require approval from the European Parliament and member states, so it could be several years before it reaches fruition.

Germany, which boasts the EU's biggest chemicals industry, along with France and the UK, has expressed reservations about the proposals. But a strong REACH system has its advocates too, in Sweden, Denmark and the Netherlands.

Unsurprisingly, REACH is eagerly awaited by environmental and consumer groups, who argue that many chemical products have been on the market for years without ever having been properly tested for possible harmful effects to human health and the environment.

John Hontolez, secretary-general of the European Environmental Bureau (EEB), said the new system "would end 26 years of hopeless policy in which the EU was unable to gain knowledge of around 100,000 chemicals and in which it tried to manage the risks posed by each chemical separately".

Equally unsurprisingly, chemicals companies have reacted frostily to the Commission's plans, which are predicted to cost anything from €2.5-7 billion to honour over the next decade.

They claim small and medium-sized enterprises will be crippled by REACH, leading to the loss of millions of jobs.

Cefic, the European Chemical Industry Council, estimates that 20 of the chemical industry will bear more than 80 of the costs of testing and administration, with the fine and specialty chemicals sector hardest hit.

These companies produce thousands of 'building blocks' for the manufacture of products used in a host of everyday objects.

As both customers of the larger chemical companies and suppliers to downstream industry "they form the industrial tissue of the European Union", according to Cefic.

"Some 96 out of the total of 34,000 chemical companies (in Europe) have fewer than 250 employees and account for 28 of total sales and employment," said Tony Bastock, president of the UK's Chemical Industries Association and managing director of his own specialty chemical company. "It is essential to ensure that the new regulatory system is one in which smaller companies can thrive."

Industry leaders warn of a loss of competitiveness in the sector, which features among the top three industries in 11 of the 15 member states, and argue that the EU has failed to deliver a framework that actually fosters innovation.

"Launching a new substance on the market in amounts of one to ten metric tonnes a year costs ten times more in the EU than it does in the United States. It also takes three times longer," says Cefic president Eggert Voscherau.

Multinational companies such as BASF, of which Voscherau is deputy chairman, are also concerned that the sector could be severely hampered by operating differing systems on each side of the Atlantic. Chuck Ford, counsellor for commercial affairs at the US Mission in Brussels, said there was "no need to overdramatize" the situation, but did indicate that Washington is wary of the international trade implications.

But the tide appears to have turned slightly in industry's favour recently, (with moves by Liikanen to scale back the effects of REACH). "Since we started this whole debate about two or three years ago, things have got better for industry," he said. A key issue still under negotiation with Wallström is the extent to which an estimated 40-70,000 'intermediates' (chemicals used in making other substances), as well as 'polymers' (chains of large molecules that form the basis of most plastics), will come under the new system.

Officials in both commissioners' directorates are assessing whether less stringent rules might apply in respect of four categories of intermediates, which account for some 13 to 15 of all chemicals.

Liikanen explained that this had huge implications for the overall projections of the cost of implementing REACH. "Some of these chemicals are only handled by experts, so from the point of view of exposure we find that heavy requirements are not justified," he said.

Yet for many environmentalists, the debate on intermediates misses the main point of the shake-up. They hope Wallström will continue to fight her corner by ensuring that the new system promotes halting the production and use of an estimated 2,800 to 3,000 chemicals of 'very high concern' and fosters innovation leading to the use of safer substitutes for the most hazardous compounds.

"I won't give up on the basic principles behind this proposal," said Wallström, who has emphasised her concern about the impact such substances may have on children.

According to EEB, the amount of dangerous chemicals being released into the natural and consumer environment could be as high as 20 to 30 during the life of a product that contains them. Michael Warhurst, a chemicals expert at the World Wide Fund for Nature (WWF), said that if a chemical restricted in the EU is found in imported products - for example baby toys - these should be banned from sale within the Union's borders.

Unborn and breast-fed children could be particularly at risk from the largely unknown effects of chemicals accumulating in our bodies from everyday products, he warned. He added that costs to industry have also been "grossly exaggerated" in "scaremongering tactics" by companies trying to water down REACH.

Campaigners argue that the cost over a decade of implementing the new system would amount to barely 0.1 of the annual sales of the chemicals industry, a figure which industry representatives at a recent Brussels briefing with Liikanen did not dispute.

"This is a strange situation," said Warhurst. "Why have we been using certain chemicals for 40 years if we do not even know that they meet basic safety criteria?"

Major feature. The EU executive is at pains to ensure its chemicals policy overhaul protects health and the environment as well as industry.

http://ec.europa.eu/environment/chemicals/index.htm http://ec.europa.eu/environment/chemicals/index.htm

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