Date: Nov 21, 2005
The European Commission proposal concerning the Registration, Evaluation, and Authorization of Chemicals (REACH) in the European Union was considered and adopted in the first reading of the legislation by the European Parliament on November 17, 2005.
Parliament considered approximately 1,000 amendments to the legislation, and several controversial compromise provisions were adopted. Reportedly, the main elements of the section on Registration, which passed by a vote of 398 in favor and 148 against, with 36 abstentions, include:
Highlights of the section on Authorization, passing by a vote of 324 votes in favor and 263 against, with 13 abstentions, include:
Through REACH the EU is seeking to revise its current chemical regulations, by placing responsibility upon industry to support the continued use of existing products in commerce in the same way that new chemicals must be supported through test data and risk assessment. A new European Chemicals Agency would be created as the regulatory body charged to manage the new system.
It is not just commodity chemical suppliers that will be affected by REACH. For example, the status of "articles" is the subject of debate, as evidenced by the close vote on this item last week. Importers favor the traditional exemption from notification for chemical substances when they enter commerce as part of a finished good, while EU manufacturers and processors are concerned with the competitive advantage such an exemption would offer under REACH to foreign goods. As a result, the European Parliament endorsed by a vote of 291 to 290, with 16 abstentions, the equal treatment of imported articles to those produced in the EU. The provisions include notification requirements for articles containing substances listed in the candidate list of substances of very high concern subject to Authorization, and application of the authorization process to imported articles.
Downstream users of chemicals in the United States also will be drawn into REACH in at least two ways. These companies will need to support the development of information on intended uses and exposure. They also will face, in some situations, the inability to continue to sell a product into the EU if the product contains ingredients that their suppliers do not support through REACH. The European Council of the Paint, Printing Ink and Artists' Colours Industry (CEPE) has warned that up to 30 percent of the raw materials used in the paint and printing industry may disappear in the EU because of the high cost of REACH.
Polymers continue to be exempted, and intermediates partially exempted, from the legislation. We do not yet know whether any limitations will be achieved to protect proprietary formulations from widespread disclosure, due to the need to communicate REACH registration numbers for all ingredients in an open manner.
The cost burden of REACH is expected to be seen in price increases in raw materials in order to support them under REACH, costs associated with reformulation in many sectors due to voluntary and mandatory ingredient de-selection decisions, and the time-consuming task of managing the scheme. Specialty chemicals on the market in low volumes with small margins will be especially hard-hit. The Wall Street Journal (Nov. 16, 2005, p. A6) observes that, "given the high unemployment in many European countries, it is a testament to the strength of Europe's environmental movement that the chemicals proposal is moving forward in any form." The best hope, still not realized sufficiently in this most recent go-round, is for a common sense prioritization that will relieve chemicals that are not hazardous from the bulk of the regulatory burdens REACH would otherwise impose.
Challenges that REACH violates World Trade Organization (WTO) rules have, thus far, been rebuffed. There is also significant concern among European companies to not be put at a disadvantage, leading to support for measures with negative trade implications such as including finished goods within the scope of REACH. It is important for U.S. companies to understand the desire for no difference in the requirements under REACH, whether a product is produced in Europe or imported. One can foresee the possibility of backlash in the form of laws with REACH-like twists eminating from foreign governments to place EU exports on a level playing field in their own jurisdictions.
The draft legislation will now go to the European Council, after which the European Commission may issue a revised proposal that would go again through the Parliament and the Council. The United Kingdom is working on a compromise REACH package for consideration at the Council level in December this year.
Entry into force of REACH is still predicted for 2007.