EU regulatory scheme panned
German chancellor says proposed chemicals policy will harm industry

Patricia Short

German chancellor Gerhard Schröder spoke out forcefully against the European Commission's draft policy on chemical testing and regulation at the European Chemical Industry Council (CEFIC) general assembly meeting, held on June 27 in Hamburg, Germany.

The proposed policy, which would require explicit government authorization before certain chemicals could be sold in European Union countries, has dominated discussion at almost every European chemicals meeting since it was introduced in the form of an EC white paper two years ago. But Schröder's criticism of the draft added a high-level endorsement of the industry's cautious response.

Schröder argued that "the competitiveness of the European chemical industry must not be neglected. It is essential for Europe to have a registration system--there is no way for each EU member country to do it differently. But the current proposal poses too much of a burden on the industry."

Moreover, he added, the legislation as proposed "would be attacked--probably successfully--by our overseas allies," under World Trade Organization criteria.

Comments like these were sweet music to the company and industry association executives at the CEFIC meeting, who are concerned about how any policy will be put into effect. Workability was one of the major points the EC wanted addressed in May when it posted all 1,200 pages of the draft chemicals policy on its Internet site for comment.

This week winds up the consultation period. And, as Eggert Voscherau, president of CEFIC and vice chairman of BASF, noted: "We need workable regulation, not regulation overkill that stifles innovation and fails to meet its political objectives. We had thought that the proposed chemicals policy would be an excellent opportunity to ensure better regulation."

With chemicals as one of the top industries in 11 of the 15 member countries of the EU, Voscherau added, it is especially important to keep it growing and healthy.

What industry experts see in the draft, however, is causing deep concerns, he said. "It will overwhelm the authorities. Are they really focused on what needs to be done?"

Schröder claimed that implementing the draft policy would cost several billion euros. "This must be reduced if we want to meet our objective of competitiveness of the industry," he said. "Most of the companies in this industry in Europe are not large, but SMEs [small to medium-sized enterprises]. The burden of red tape and regulation would fall particularly hard on them."

Schröder's comments reinforced points made in a letter he sent to the European Council of Ministers this spring along with British Prime Minister Tony Blair and French President Jacques Chirac. "The European industry has to hold its own in global competition," the three agreed. "It cannot be used as a laboratory for regulatory experiments which increase costs or burdens on employers."

The other speaker at the assembly, Erkki Liikanen, the European commissioner responsible for enterprise and information society, acknowledged Schröder's concerns. "Industry matters," he said. "A strong and competitive industry is a sine qua non to build a more competitive and dynamic knowledge-based economy capable of sustainable economic growth."

It remains to be seen what will emerge from the EC, which is expected to issue its final legislative proposal at the end of the summer, when the proposal will be presented to the Council of Ministers and the European Parliament. It is unlikely that Parliament will be able to deal with the proposal before the end of its term next May. A new Parliament will be elected in July, so it is probable that it won't be until late 2004 that Europe finally has its chemicals policy--however it is worked out.