BUSINESS ment; the German Chemical Industry Association (VCI); and the German Mining, Chemical & Energy Industrial Union. Given that cross-society support, VCI was able to convince German Chancellor Gerhard Schroder to meet with top-level officials at the EC and argue the industry's case.
REACH OUT BASF estimates it would spend about $500 million over 10 years to test chemicals in order to remain in compliance with the REACH program.
EU'S LONELY COURSE ON CHEMICALS POLICY Industry has marshaled unlikely allies for alternative, less costly approach PATRICIA L. SHORT, C&EN LONDON
J
UDITH HACKITT, DIRECTOR-GEN-
eral of the U.K.'s Chemical Industries Association (CIA), calls the European Union's planned chemical evaluation and registration policy "the most important issue the European chemical industry has faced in decades." With that vital issue at hand, the chemical industry throughout the European Union has swung into action to ensure that its concerns about the policy's business impact are heard. The centerpiece of the policy is a potentially costly program called REACH—for Registration, Evaluation & Authorization of Chemicals—that is intended to cover most chemicals. The economic stakes are high: Chemicals are one of the region's top industries in terms of industrial output, exports, and employment. The EU chemical industry employs some 1.7 million people directly, with another 3 million indirect jobs. The European Commission, the administrative arm of the EU, is currently drafting the new policy based on a discussion document, or white paper, titled "Strategy for a Future Chemicals Policy" published 14
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in February 2 0 01. A draft was originally expected this spring, but the timetable has slipped, and it is now expected to be issued in September or October. In order to make its points now, the industry has formed some surprising alliances. Throughout Europe, chemical associations are linking with labor unions, governmental agencies, and even the occasional environmental activist group to present a coherent case. Also unusual, the chemical industry is being joined by downstream industries—ranging from semiconductors to coatings to leather tanneries—that are alarmed by the potential impact on their chemical raw materials. The latest action on the industrial front was the joint statement presented to the U.K. minister for environment earlier this month by CIA and the major labor unions representing British chemical industry workers. The statement calls for the U.K. government to press the EC for a full business-impact study on the proposed chemicals policy The CIA-unions' statement follows a similar joint position paper in March from an alliance of the German federal govern-
BOTH THE U.K. and German statements support the general principles of the REACH program. But they both insist that the policy must be practicable, so that small and medium-sized enterprises can comply without dire business consequences. Those businesses are important: 96% of all the chemical companies in the EU have fewer than 250 employees. And crucially the VCI paper argues, "the planned regulations must not impair the basic conditions for the competitiveness of the European chemical industry The industry faces hard international competition, especially from the US. and Japan." Tony Bastock, CIA president and group managing director of the small fine chemicals producer Contract Chemicals, says his immediate reaction on reading the white paper was that—although there was a passing reference to competitiveness— it was written as though the EU were a selfcontained island. "But the chemical industry truly is a global industry," he emphasizes. "The EU and EC overlook this at their peril. It is imperative to safeguard the competitiveness of the industry" T h e European Chemical Industry Council (CEFIC) has submitted to the EC a modification of the proposed REACH program it calls a "Thought Starter," which attempts to set priorities aligned with resources. It points out, for example, that there is little or no need to test polymers, intermediates that never leave a manufacturing site, or materials that have been around for many years. That would help, CEFIC believes, in controlling costs of the REACH program. As proposed, testing would cost anywhere from $100,000 to $250,000 per chemical and would apply to all products, even those that have been on the market for decades. In May, the EC held a conference in Brussels to explore the business impact of its new policy. At that conference, consultants from London-based Risk & Policy Analysts (RPA) presented the results of a study they had prepared on behalf of the commission. The total cost of testing will range from a low of $ 1.4 billion to a high of $7 billion, depending on the number of chemicals HTTP://PUBS.ACS.ORG/CEN
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BUSINESS that undergo full registration and the rigor of the tests, the consultants reported. Removing the need for testing and registration of site-limited intermediates alone would reduce manufacturers' costs by $400 million to $600 million. Some downstream users, the RPA report said, are concerned because they consume a relatively small number of chemicals in relatively low volumes, and manufacturers may withdraw chemicals that can't justify registration costs. In fact, the consultants estimated, producers would scrap chemicals that contribute roughly 10% of industry sales, knocking off more than $40 billion from the region's total annual sales. The industry would be less hard hit, the consultants concluded, by the impact of the CEFIC Thought Starter alternatives. BarryJ. Stickings, immediate past-president of CIA and managing director of BASF in the U.K., notes that BASF as a corporation estimates that complying with protocols in the original white paper would cost it roughly $500 million over 10 years. More seriously, however, proportional effects for smaller companies would be even higher. For example, he cites the case of one small German chemicals maker with 250 employees and sales of $75 million per year. According to information the company supplied to VCI, its cost of registration would be $71 million. Some two-thirds of its products could not support the per-chemical testing costs, and it would probably have to withdraw 750 chemicals. One-third of its jobs would be lost, as would one-half of its annual sales. STICKINGS NOTES that "it already takes three times as long and costs 10 times as much to introduce a new Wallstrom chemical in Europe than in the U.S. At BASF, we estimate that twothirds of the new products we introduce each year don't survive two years. If we don't innovate, what chances do our customers have to survive?" He also questions what will be covered by authorizations, that is, approvals for uses. The original proposal, for example, reads in such a way that ethylene oxide— which has more than 2 0 0 uses—would have to be authorized for each application. Each authorization would take a couple of years and cost hundreds of thousands of dollars, Stickings points out. 16
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Industry's arguments, however, come up against the stern presence of Sweden's Margot Wallstrom, the EU environment commissioner and head of the DirectorateGeneral (DG) that is drafting the chemicals policy She insists that chemicals reform is based on more than a moral appeal. "There is a good business case for it as well. The new chemicals system will undoubtedly encourage the replacement of potentially hazardous substances by safer alternatives. This will stimulate innovation," Wallstrom argued at the Brussels conference. "Our proposals in the white paper specifically encourage innovation by more favorable conditions for research and development. It should mean more jobs and not less jobs." The Commission's draft policy, Wallstrom pledged, will also help cut the number of animals used in testing from what was originally proposed—now a highly contentious issue. The Environment DG, for example, seems rather defensive about the topic on its website. CIA, Hackitt says, estimates that the EC's REACH program would require 4 million to 5 million animals for the various tests, whereas the CEFIC Thought Starter proposal would pare that to less than 1 million. Wallstrom spoke to the European Institute in Washington, D.C., in April regarding EU and U.S. approaches to environment policy. She stated that the EU and the US. "cooperate well bilaterally on certain technical issues—air quality and chemicals are two notable examples." However, there is alarm in the U.S. that such cooperation is diminishing. For example, the American Chemistry Council, the Office of the U.S. Trade Representative, and even the Environmental Protection Agency have expressed, sometimes diplomatically, sometimes bluntly, an unease that the EU might be going off on a thoroughly independent tangent with its chemicals policy. "We are concerned with how the EU is approaching a new chemicals regulatory framework," wrote Jennifer Yoder Prescott, director for trans-Atlantic trade issues at the Office of the US. Trade Representative, in the June issue ofChemistry
Business, published by the American Chemistry Council. "The system could present obstacles to trade in chemicals — 9% oftotal world trade in goods—possibly distorting global markets for thousands ofproducts," she wrote.
The EU s planned chemical evaluation and registration policy is "the most important issue the European chemical industry has faced in decades." Prescott added that the U.S. is also concerned that the white paper approach represents a move by the EU away from greater harmonization of chemical regulatory approaches among countries in the Organization for Economic Cooperation & Development (OECD). That possibility also worries U.S. environmental authorities, said Stephen L. Johnson, assistant administrator of EPA's Office of Prevention, Pesticides & Toxic Substances, speaking at the CEFIC general assembly in Versailles, France, last month (C&EN, June 24, page 24). "AS WE KNOW from working together for more than 20 years in the OECD chemicals program, cooperation has important advantages: It can save industry money by reducing duplicative efforts and by lowering regulatory burdens that impeded innovation and trade. It also helps to focus governments' science resources,"Johnson said. "There is a trade-off in regulating new chemicals," he pointed out. "The more information required up front, the more difficult, costly and time-consuming it is for companies to bring out new products. And in our experience, that especially includes innovative, safer, greener chemicals." As CIA's Bastock puts it, "If you think a chemicals policy will have no impact on anything else, you are being hopelessly naive. Without the chemical industry there will be no manufacturing—we will have a third-rate economy" Some European legislators, he adds, "believe that ifwe in Europe set a trail, the rest of the world will follow But there is no way the U.S. will do this—they already have a way of testing and screening. They will not follow us down the route to uncompetitiveness. We need to get government support at the highest levels all through EU, so the white paper as originally proposed won't be accepted in Europe." • HTTP://PUBS.ACS.ORG/CEN
