Regulating chemicals. No thanks, we’re European

Stupid Strasbourg stunt

A piece of European legislation that will affect industry across the world

MOLLIE the toxic child was in Strasbourg last week as part of a campaign to stiffen European rules on the import and production of hazardous chemicals. A study by the WWF last year found 35 toxic chemicals in Mollie's blood, and similar levels in 13 families tested in 12 European countries. She was in Strasbourg to persuade members of the European parliament to vote green. That is the emotive side of a gigantic clash between industrial interests and proposed European Union legislation designed to minimise citizens' exposure to hazardous chemicals - in their cars, homes, work and playgrounds.

The plan is to subject up to 30,000 substances to a procedure known as REACH (registration, evaluation and authorisation of chemicals). The European Commission produced a proposal in 2003, since when industrial, consumer and environmental groups have been lobbying hard. A consultation in 2003 led to 968 written responses, of which 587 alone came from Germany, the home of thousands of small companies that handle complex materials. All companies involved in mining, processing, manufacturing or assembly inside Europe, or with the European market in mind, could be affected by REACH.

For that reason, lobbyists have included mining and processing interests in Australia, Canada, Chile, and sub-Saharan Africa, to name just the most vocal. American business associations have also complained that the EU proposal cuts across broader plans by the OECD and the World Trade Organisation. Small businesses worldwide may be shut out of Europe by the cost of compliance, many fear. An EU estimate of the cost to industry of abiding by the new regulations ranges from euro2.6 billion ($3.1 billion) to euro5.2 billion over 11 years. But the EU sees savings on the other side of the ledger - by limiting exposure to hazardous materials, it foresees savings in health-care costs of as much as euro50 billion over the next 30 years. Even giant chemical companies agree that it would be useful to know more about the chemicals people are exposed to. Of the 30,000 substances identified by REACH, only about 10% have been studied in any detail, says the WWF.

But while most people can accept the need for some legislation, they disagree on precisely what it should say. There have been bitter disagreements, even within the EU bureaucracy. The original REACH proposal was drafted by the commission's environment directorate, which was strongly influenced by the likes of WWF. But the enterprise and industry directorate - led by Gunter Verheugen, the German vice-president of the commission - has been fighting for the interests of industrialists. The draft REACH regulation, which European parliamentarians voted for by 407 to 155 on November 17th, contained more than 1,000 proposed amendments, of which fewer than 300 survived.

The result pleased neither industrialists, nor greens. Consumer groups complained that REACH's original concept had been watered down - for example by waiving the registration of any substance imported in quantities of less than one tonne a year. Moreover, many other substances would require no more than registration. The priority for screening potentially hazardous substances would be set by volume rather than by other measures of risk - which was the original plan.

The chemical industry was disappointed too, by a rule that hazardous substances will be authorised for at most five years, after which business must find a substitute, unless it can establish some "socio-economic justification". Five years is too short argues Utz Tillmann, who works on environmental issues at BASF, Europe's biggest chemical company. It took BASF ten years to persuade the car industry to favour a plastic fuel tank over one made of steel, he recalls.

Handlers of non-ferrous metals on the other hand were pleased that ores and concentrates escape the new rules. So do oil-based plastics - because they would have overwhelmed a new European Chemicals Agency due to be set up in Helsinki to handle REACH. Metals traders are forming consortia to standardise the treatment of metals held in warehouses the world over for delivery against futures contracts - fearing that a two-tier market might otherwise develop, one inside the EU and one outside.

At every turn, REACH threatens to trigger unintended consequences. Sandra Carey, of the British non-ferrous-metal lobby, sees it as the EU's most important legislation ever. Her greatest concern is that an over-extended REACH would raise barriers around Europe and suck raw materials and manufacturing in the direction of India and China.

Nevertheless, the EU Council of Ministers, which will be chaired by Britain until December 31st, seems determined to secure a final agreement on REACH by the end of the year. The British are generally wary of burdening industry, but are keen to add some shine to an otherwise lacklustre six-month presidency. Germany won some breathing space this month to give its new government time to review the draft. But EU ministers are due to meet on December 19th and will either accept the parliament's amendments or challenge them and send the bill back for a second reading. The lobbying goes on.

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