Regulatory follies: Overreach

Date: 19/07/03

Are Swedes and NGOs dictating Europe's chemicals regulation?

TREE hugging is popular in Europe. So it is no surprise that the European Commission wants to tighten the regulation of European chemicals to promote cleaner living. But its current proposal is ambitious even by the EU's own lofty environmental rhetoric, dwarfing anything dreamt up by the bossy bureaucrats of America's Environmental Protection Agency.

The chemicals in question are not only the stuff of big, smelly factories, but those used in making everything from cosmetics to car parts. The draft directive, called REACH (Registration, Evaluation and Authorisation of Chemicals) extends oversight to at least 30,000 substances. The aim is to subject all chemicals in use before 1981 - and so not covered by current rules - to a tough safety-testing regime.

European industry is in uproar. Chemicals firms say they support the goal of REACH to update laws that have failed to rid Europe of the nastiest substances. But this plan, they argue, is ham-fisted. It fails to focus on dangerous chemicals. Companies fear endless requests for data on almost any chemicals used. Small firms will suffer most.

Over a decade, the planned regulation will cost firms €40 billion ($45 billion) in testing and other changes, according to one industry study. Some economic studies reckon that, over the decade, total European GDP will be reduced by 2-3% by the regulation - just what the EU's sickly economies don't need. No wonder even green-friendly Gerhard Schröder, with the governments of Britain and France, opposes REACH in its current form.

So who is in favour? The directive's most ardent backers are NGOs such as the World Wide Fund for Nature (WWF), Greenpeace and Friends of the Earth. They are increasingly politically-savvy and have couched their agenda in the language of “costs and benefits”. The WWF's British branch came out with an estimate that the savings on health care alone make REACH cost-effective, even though the precise links between most chemicals and diseases are not well established. As for macroeconomic consequences, the WWF says there is “no evidence” that tighter regulation will result in job losses, eg, because firms move out of the EU. They hope instead (also without evidence) that harsher regulation will spur innovation and jobs.

REACH is largely the brainchild of Margot Wallström, the environment commissioner, who comes from Sweden, a country that has been leading the fight against chemicals. With a minuscule chemicals industry of its own, the country has little to lose. Some critics say she is foisting Sweden's green policies on the entire EU, aiming to create a “chemical-free zone”. Most business leaders, however, are loth to criticise either her or the NGOs publicly.

The public consultation phase for REACH ended this week. Whether the commission as a whole will listen to voices beyond the NGOs remains a big question. Its form is not encouraging. Melvyn Whyte, an owner of Whyte Chemicals and vocal opponent of REACH, recalls one meeting in Brussels to discuss the proposal. Ms Wallström turned up, made a few remarks - and, says Mr Whyte, left without answering a single question.

Article asks 'Are Swedes and NGOs dictating Europe's chemicals regulation?