A New Chemicals Policy in Europe – New Opportunities for Industry
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A new chemicals policy in Europe – new opportunities for industry. A response to the claims made regarding the business impact of a new chemicals policy that is designed to protect the environment and human health A discussion paper from WWF European Toxics Programme and the European Environmental Bureau January 2003 WWF/EEB - A new chemicals policy in Europe – New opportunities for business Table of Contents 1 Executive Summary............................................................................................................3 2 Introduction.........................................................................................................................5 3 A new Chemicals Policy in the EU - REACH......................................................................6 4 Costs vs benefits ................................................................................................................8 4.1 Cost – the estimates ................................................................................................................. 8 4.2 Costs - are the assessments accurate? ................................................................................... 9 4.3 Benefits – for industry ............................................................................................................. 10 4.4 Benefits – for human health and the environment.................................................................. 12 5 Responses to industry claims and concerns ....................................................................14 5.1 “The chemical industry will be forced to leave the EU”........................................................... 14 5.2 “The regulatory system is better in the USA”.......................................................................... 15 5.3 “REACH will create barriers to trade”...................................................................................... 16 5.4 Concerns of downstream companies ..................................................................................... 18 5.5 Testing costs: “Re-testing on 12.8 million animals” ................................................................ 20 5.6 An uneven distribution of implementation costs will put a particular burden on SMEs .......... 22 5.7 “The chemical industry is taking responsibility through ‘Responsible Care’”.......................... 22 6 Conclusions......................................................................................................................26 6.1 The need for positive engagement from industry ................................................................... 26 6.2 A new market in safer chemicals and products ...................................................................... 27 7 References .......................................................................................................................28 Written by: Annika Korzinek and Dr A. Michael Warhurst for WWF and Stefan Scheuer for EEB. in co-operation with Andreas Ahrens (Ökopol) 2 WWF/EEB - A new chemicals policy in Europe – New opportunities for business 1 Executive Summary • The European Commission has proposed a new system for the regulation of the production, import and use of chemicals, the REACH system. It aims to create a uniform system where both existing and new chemicals have to be registered and assessed. Chemicals of very high concern will need authorisation prior to any use. The system will place an increased responsibility upon industry to provide data on substances. The burden of proof will therefore lie with the industry, who are best placed to obtain usage data and who make a profit from producing the substance concerned. • In our view, this new system has the potential to ensure that the precautionary principle will be put in practice in a harmonised, simple, transparent, and predictable way. However, the European chemical industry associations argue that the REACH system will damage the competitiveness of the industry, because of increased costs and other business impacts. • The costs estimated by industry, and by the Commission’s business impact study, ignore the potentially positive effects on innovation and competitiveness presented by REACH, for example: • New markets for safer and more environmentally friendly products; • Safer products will reduce the risk of future liability lawsuits, which can result in enormous costs (as has happened with asbestos); • Increased trust among consumers, employees, local communities and investors, leading to a more positive business environment; • Easier introduction of new chemicals onto the market will encourage development and innovation; • A more predictable regulatory system will aid future long-term planning by industry; and • Improved transparency and communication through the supply chain will lead to increased power and confidence for downstream users and SMEs. • The biggest failure of the various business impact assessments has been an assumption that the market is inflexible and an associated focus on substances rather than services provide. EU consumers will continue to purchase products – some products may leave the market due to problems with the chemicals they contain, but consumers will purchase other products that provide the same service. For example, if a manufacturer sells a chair which contains a chemical that is to be phased out, it will be up to that manufacturer – or another – to provide a chair which does not contain this chemical. The public will carry on buying chairs at the same rate, so the input of money into the retailing and manufacturing supply chain will remain constant. • REACH is in many ways a schoolbook example of innovation-friendly regulation, since it does not tell business which chemicals to produce or which processes to use. Instead, it sets strict harmonised standards for all substances, it proposes a phase-in period, and it places the responsibility for the solutions on industry. • There are many contradictions in the concerns expressed by industry, with industry associations taking lowest common denominator positions. Some players are also attempting to ‘scaremonger’ downstream industries with inaccurate and imaginative interpretations of the REACH system. This report examines some of the concerns of downstream users in detail. • Other players, notably the US Government, are also involved in scaremongering, using poorly researched and outdated figures. For example, the US Government’s ‘non paper’ suggests that the EU may ban the import of US computers, based on a US chemical industry 3 WWF/EEB - A new chemicals policy in Europe – New opportunities for business association’s misinterpretation of the White Paper. It also uses outdated figures from a UK study into animal testing and the new chemicals policy. • In discussing the costs of REACH it is equally important to identify the societal benefits of stricter chemical regulation in form of less environmental and health impacts. Monetary values can be attributed to some benefits, but methodological and ethical problems prevent us from carrying out traditional cost-benefit analysis – e.g. what is the price of an uncontaminated foetus? • Industry has claimed that increased costs could lead to companies leaving Europe, however research does not support this claim. Research has shown that compliance costs tend to be rather small compared to the direct and indirect costs of moving. Since the European chemical industry is a high technology sector with demand for skilled workers and research facilities, it is more likely that the labour, education and research policy will determine its future viability, not the environmental policy. • The evidence does not support claims that the US system is more innovation-friendly than the EU system, nor does it show that it is more effective in protecting human health and the environment. It is also questionable if it is more cost-efficient for industry, since much of it relies on costly legal procedures, such as liability claims, instead of up-front corporate regulation. • Industry inside and outside Europe has argued that the requirements under REACH will lead to barriers of trade, yet this is unlikely to be the case. We consider that it is important to avoid discrimination, and to achieve the environmental and health improvements envisaged, through ensuring that imported articles/goods are treated in the same way as domestically produced articles. • The chemical industry’s voluntary “Responsible Care” programme is often referred to as a guarantee for safe management of chemicals, but this is not supported by the evidence. A closer look at Responsible Care shows that it is impossibly to identify what improvements Responsible Care has contributed, beyond the increasingly strict legal requirements. • The chemical industry’s attempt to trial their ‘thought starter’ provides clear evidence than Responsible Care is not working. The results suggest that industry cannot provide hazard data on substances, has little exposure information, is failing to communicate properly with downstream users, and will find it difficult to defend the use of substances of very high concern with socio-economic benefit analysis. This ‘thought starter’ trial demonstrates that Responsible Care needs REACH more than REACH needs Responsible Care. Conclusions REACH presents a huge business opportunity. It does have implementation costs, like any regulatory system, but these have to be weighed against the benefits that will flow from investment