Columns

ISSUES & TRENDS FORECAST: Euro chemical proposal hits home

â€œAlmost 99 percent of regulation will come from the EU over time.â€ â€” Jeffrey Immelt, General Electric CEO, The Wall Street Journal, April 2002

REACH stands for Registration, Evaluation and Authorization of Chemicals. Itâ€™s shorthand for a new system of regulation of chemicals now winding its way through the complicated legislative process of the European Union (EU). If adopted in anything like its present form by the EU, as many observers expect, REACH will bring about a sweeping change in the way chemicals are regulated. Few have heard of it in the U.S. so far, yet the implications are far reaching. Health and safety professionals had best sit up and listen.

The REACH proposal says that without basic hazard data and an assessment, no chemical will be made, used or sold in the European market. The system would be implemented in over little more than a decade.

It will require the registration of any chemical made or imported in amounts larger than 2,200 pounds, by providing basic information about properties, intended uses, likely exposure scenarios, potential risks to human health and the environment, and how these risks will be managed.

An evaluation of the information for each chemical will follow, with different degrees of priority and scrutiny according to the volume of production and other factors.

Finally, chemicals of â€œhigh concernâ€ will trigger a process of use-specific authorization. This will occur when serious risks exist, such as carcinogenicity, mutagenicity, reproductive toxicity, or bio-accumulative and persistent properties. The use of these chemicals may be severely restricted.

Selling points

According to a White Paper of the European Commission (roughly the executive arm of the EU), REACH will generate the same information about â€œexistingâ€ chemicals (first marketed before 1981) that is now required of new chemicals. This is expected to favor innovation by eliminating the current incentive to stay with existing chemicals because of the testing and information hurdles to developing new ones. Innovation would accelerate the replacement of high-risk existing chemicals by safer substitutes.

The commission also argues that the new process will make market leaders of the safer chemicals produced by European manufacturers. REACH is also intended to generate risk assessments much more efficiently, and to shift the burden of developing them from public authorities to the manufacturers.

Not so fast

Not everybody agrees that the proposalâ€™s human health and environmental benefits will far outweigh the costs. The European chemical industry has lobbied intensively to stop it. They assert that the system would drive large parts of the chemical industry and thousands of jobs out of Europe. So far, these industry arguments have not stopped the momentum of the proposal, but after a process of consultation that culminated last fall, the initial proposal was modified in several areas industry desired but environmentalists opposed. A large number of chemicals (polymers) were excluded, and other requirements were relaxed or eliminated. The basic framework of the proposed new system remained intact, however.

U.S. industry was late to awaken, but then weighed in with strong opposition. In letters to major industry groups in Europe, the U.S. National Association of Manufacturers (NAM), the American Chemistry Council (ACC) and other trade groups vehemently opposed the proposal. In addition to the cost arguments, they also protested that the system would create trade barriers contrary to existing agreements. Statements of opposition also came from the Bush administration, through the U.S. Trade Representative, as well as senior officials of State, Commerce, and EPA.

Despite the opposition by much of the industry, the commission has presented the proposal to the European Parliament and the Council of Ministers, and the process of official deliberation has begun in earnest. Member states will also be discussing the proposal individually, because final adoption requires approval by a majority of the member governments. These two tracks of deliberation occur roughly simultaneously, and may result in further changes in the draft legislation. The entire process can be expected to take about two years before the final decision.

Reasons to track

Why should we pay attention, if the final outcome is uncertain and may take two more years? There are at least seven good reasons:

1) REACH will change the way we manage chemical risks, because it will result in a lot more information than we have today. Actually, we should be able to manage chemical risks better, because we will be dealing with chemicals with known risk profiles and material safety data sheets that should contain much better information. Many of us may also be called upon to provide business and marketing units the information necessary to register a chemical for export to Europe. If the system takes hold around the world, this could apply to other markets.

2) The impacts will go well beyond manufacturers and importers. The downstream companies that process chemical products and intend to export to Europe will have to make sure that the components they get from their suppliers meet the requirements. These changes wonâ€™t happen today or tomorrow, but they are not so far down the road, either.

3) The silver lining is this: Companies that are ahead of the pack in responding to these new requirements will gain competitive advantages, and those of us who are prepared to help them adapt will increase our value to our employers.

4) The REACH proposal has already fundamentally changed the terms of the debate about the regulation of chemicals. The deliberations that led to the proposal confirmed what many of us already knew, that there is a huge information gap about the hazards of the thousands of existing chemicals that dominate the market.

5) The pressure from the environmental community on issues such as persistent and bio-accumulative chemicals is also here to stay. Simply too many people are worried, and the stakes are too high.

6) One of the main drivers for the proposal is the concept of the Precautionary Principle, which has taken firm hold in European environmental thinking, public opinion, and political discourse. Somewhat simplistically, this principle dictates a prudent or protective response in the presence of suggestive but not definitive scientific evidence of a risk. This concept also will not go away.

7) Finally, and probably most importantly, the leading influence of European regulation in matters environmental is here to stay.

REACH is already reaching us, and we would do well to sit up and listen.