Introduction

USCIB supports international cooperative efforts on chemicals agreed under the U.N Prior Informed Consent (PIC) and Persistent Organic Pollutant (POPs) treaties, the World Summit for Sustainable Development (WSSD) and the OECD.

WSSD highlighted the synergy among development, trade, commercial activity and environmental protection, emphasizing implementation that integrates economic, social and environmental considerations, built on cooperation and partnership. In our view, the REACH proposal is risks undermining robust international negotiations and cooperative ventures on chemicals in international commerce, and does not adequately reflect economic, development and trade aspects of sustainable development.

In its present form, the REACH proposal sets out a framework that could threaten progress towards a harmonized framework of global chemicals management programs, and would have negative economic impacts throughout the global economy with questionable environmental benefit. The proposal focuses on tonnage-driven registration requirements and hazard-based criteria in decision-making relating to chemicals and products made with chemicals. Any procedure under REACH that leads to management decisions should be based on risk assessment.

Most of our concerns arise from the proposal’s focus on tonnage-driven registration requirements and hazard-based decision-making relating to chemicals and products made with chemicals. In our view, REACH lacks adequate science-based risk management and provision for trade impacts and the special circumstances of developing countries. There are four primary areas where substantial revision is necessary:

· If implemented in its current form, REACH will result in unnecessary increase of costs for chemical producers, users, and the general public;

· REACH raises the potential for trade discrimination disadvantaging non-EU companies from many sectors;

· REACH could overtake global harmonization and cooperation on chemicals;

· REACH would mean onerous impacts for developing countries seeking to export chemicals or goods containing chemicals to the EU;

The European Commission authorities -- DG Environment and DG Enterprise -- have recognized that the proposed policy’s competitive impact can only be justified if the “REACH regime is successful in establishing itself as a new international standard.” We are troubled that European Commission authorities themselves anticipate the need to impose the proposed system on a worldwide basis to make it economically viable, which would seem to contradict the multilateral cooperation commensurate with trans-boundary chemicals issues.

Given the pervasiveness of chemicals in almost every product and REACH’s substantial requirements for upstream chemical input producers and downstream users and importers, we believe REACH poses barriers for companies representing a wide range of industries seeking to access EU markets, or relying upon chemicals or products manufactured in the EU. REACH will have significant consequences not only for chemical manufacturers, but also for all companies along the value chain that produce or use chemicals in the manufacture or formulation of their products. The costs will not only threaten current commerce, but could negatively impact market innovation as companies elect not to move beyond the “use” authorizations allotted for chemicals. We would also expect consequences for employment, particularly for small and medium sized companies that are key creators of jobs in the U.S., EU and in developing countries. Ultimately the cost of the initiative will be borne by individual consumers.

In light of what are certain and potentially significant economic costs of the proposal, we would strongly recommend that the Commission prepare a socio-economic assessment of the REACH proposal, to evaluate both its impacts in the EU member states, including candidate countries, and on the EU’s trading partners. We note that the REACH proposal itself provides for consideration of socio-economic impacts in authorization decisions and includes procedures to ensure transparency and public comment in that connection. In view of that, it would be appropriate to undertake the same type of socio-economic analysis of REACH and share it publicly for comment from stakeholders. The findings of such an analysis and subsequent societal dialogue would be of tremendous value in improving REACH, and determining the most cost-effective approaches to meet its objectives.

The chemicals testing and information framework that results from the REACH consultative process should:

· be workable and non-trade discriminatory;

· manage chemicals in a manner that is cost-effective and responsive to actual environmental and health risks, in order to limit the disruption of commerce and welfare;

· work in harmony with established international chemicals testing, risk management frameworks, and voluntary industry initiatives rather than seek to impose European approaches internationally;

· be streamlined to accommodate the use of existing information and establish requirements that are flexible enough to reflect the intended uses of substances;

· permit all information submitted under REACH to be covered by a right to assert business confidentiality, supported by an effective means of redress;

· allow more comprehensive exemptions for those substances whose chemical structures or uses pose low health and environmental risks.

· provide a substantive interface with the proposed EU Chemicals agency for third countries, particularly developing countries, and make available technical and other assistance to developing countries in line with their special circumstances.

The EU should continue to work with the international community to promote cooperation to test, harmonize testing and assessment procedures for, share data on, and manage the trans-boundary movement and use of chemicals that pose the greatest risk to people and the environment. These international efforts should continue to be complemented by efforts to reduce and manage environmental impacts in the chemical and other industries. Such partnerships and voluntary initiatives should be promoted as complementary to governmental efforts in EU and international contexts.

Potential Trade Discrimination for non-EU Companies of many sectors

Some elements of the REACH proposal will effectively discriminate between chemicals manufactured in the EU and those which are imported (chemical intermediates, for example) contrary to WTO rules that oblige no less favorable treatment for imported products than that accorded to domestic “like” products. Companies based outside the EU will be disadvantaged in accessing the EU market because the REACH proposal’s procedures ultimately favor EU-based companies that have greater, more immediate access. For example, EU-based companies will be among the first to develop the required data-sets. Under a cost sharing arrangement, later registrants will likely be obliged to pay for access to that test data, again likely disadvantaging foreign producers. The proposed exemption from registration for certain intermediate products is specifically designed to benefit European manufacturers, and will impose more burdensome requirements on the importers of chemicals for exactly the same purpose

The Proposal should be revised to simplify its requirements, and to remove those procedures that favor EU producers and discriminate against imports. REACH should be brought into full alignment with WTO rules, and take due consideration of developing countries’ special circumstances as regards accessing EU markets.

REACH could Interfere with Global Harmonization and Cooperation on Chemicals

For the past decade, the international community has engaged in negotiations and initiatives to test and manage chemicals of greatest concern for their environmental and health impacts. Numerous U.N. treaties, including the Rotterdam and Hague Treaties, testing and labeling programs (such as the OECD HPV chemicals testing program and the Globally Harmonized System for Classification and Labeling) and voluntary programs (Responsible Care) constitute a truly global consensus: an evolving, flexible, and vital global multilateral framework for cooperation and action. The Commission’s unilateral REACH proposal seems to ignore this progress, and could even undermine it.

The WSSD, with the agreement of European countries, called for a renewal of commitments, “as advanced in Agenda 21, to sound management of chemicals throughout their life cycle …for sustainable development as well as for the protection of human health and the environment…using transparent science-based risk assessment procedures and science-based risk management procedures, taking into account the precautionary approach….in principle 15 of the Rio Declaration …, and support developing countries in strengthening their capacity for the sound management of chemicals … by providing technical and financial assistance.” USCIB believes that the REACH proposal is contrary to this commitment, eschewing risk-based assessment and science-based management for overly generalized presumptions of hazard based predominantly on tonnage across an enormous and varied range of chemicals and products containing them.

We would also note that the REACH proposal is not in keeping with the precautionary approach set out in the Rio Declaration or expounded subsequently by WSSD. No blanket threat of “serious or irreversible damage” is demonstrated with regard to every single chemical covered by the REACH proposal. Moreover, cost-effective measures, as called for by Principle 15, are not sought – instead costs are merely shifted to chemical producers, users and importers.

A globally consistent system of controls and procedures for chemicals in international commerce is desirable for companies doing business in a globalized economy, and business has engaged constructively in observing and contributing to the negotiations and initiatives referenced above. The REACH Proposal should be revised to bring its criteria and procedures fully into accord with the existing treaties and practices referenced above.

Economic Impacts and Market Access Barriers for Developing Countries

Developing countries are major suppliers of a wide variety of commodity chemicals, plastic resins, products made from plastics and textiles made from chemical fibers. Exporters in developing countries -- including many small and medium sized enterprises – may be ill-equipped to face the regulatory hurdles and unaffordable costs that the REACH proposal sets out. The rules proposed could close access for developing countries’ products to EU markets unless they develop the extensive data sets called for, or pay the owner of an existing data set. These barriers to market access will be further aggravated if EU authorities were not to recognize tests performed in developing countries.

Although the opportunity to comment on a proposal is welcome, it does not substitute for the dialogue and partnership appropriate to addressing an international issue with major sustainable development implications. The REACH proposal offers only minimal reference to “third countries,” and provides only for optional consultation with them. Numerous inter-governmental efforts in which both developed and developing countries participate take due account of the financial and technical assistance and capacity building required by developing countries to pursue chemicals risk management, an element which is absent from REACH as currently proposed.

The Proposal should be revised to provide an improved and substantive interface with the proposed EU Chemicals agency for third countries, particularly for developing countries, and make available technical and other assistance to developing countries in line with their special circumstances

Questionable Cost Effectiveness and Unnecessary Increase of Costs for Chemical Producers, Users and the General Public

The REACH proposal prohibits the marketing and use of existing chemicals unless they register a base set of data, based almost solely on the tonnage manufactured, regardless of whether the data are needed to manage the actual exposure and risk to human health or the environment. As such, the REACH proposal ignores basic principles of cost-effectiveness, and could place unnecessary costs on businesses and societies in developed and developing countries.

The REACH proposal could create a significant data generation burden and an extensive and expensive registration processes, potentially at the expense of necessary risk management measures by governments and companies. This will increase the cost of selling existing chemicals in the EU market, and risks removal of those chemicals from that market, with little measured benefit, and with potential losses on employment and economic growth fronts. Even for larger producers, complying with REACH could mean elimination of smaller, specialty chemical production – based on the cost of complying with REACH versus the value of producing. In that case, downstream users will be adversely affected by lack of access to key substances.

In addition to the 30,000 chemicals referenced, it impacts all downstream products made with those chemicals. The draft legislation requires downstream users to carry out additional testing where use or exposure differs from that foreseen by the chemical producer. The implication is that especially for chemicals requiring “authorization,” downstream products could also be barred from the EU market until manufacturers or importers satisfy authorities’ as yet undefined concerns about the chemicals used to make them. Similar potential employment and economic losses could be expected with regard to the wide range of impacted downstream products. This will also be a serious impediment to innovation.

The Proposal should be revised to factor in cost-effectiveness as a primary consideration, and not merely shift (and increase) costs to the private sector. This would include the establishment of more flexible data and risk assessment requirements that would reflect the intended uses of substances. Excessive or unnecessary testing requirements should also be eliminated.

The United States Council for International Business (USCIB) advances the global interests of American business both at home and abroad. It is the U.S. affiliate of the International Chamber of Commerce (ICC) and the Business and Industry Advisory Committee (BIAC) to the OECD, and the International Organization of Employers (IOE). As such, it officially represents U.S. business positions both in the main intergovernmental bodies and vis-a-vis foreign business communities and their governments. USCIB address a broad range of policy issues with the objective of promoting an open system of world trade, finance and investment in which business can flourish and contribute to economic growth, human welfare, and protection of the environment.

The USCIB Environment Committee, chaired by George Carpenter, Director, Corporate Sustainable Development, The Procter & Gamble Company, consists of over 400 representatives from a cross-section of multinational companies, law firms and business associations who are responsible for following international environmental and sustainable development policies that have an impact on U.S. business.

The USCIB Environment Committee works to promote:

· appropriate protection for environment and health within open trade and investment systems; advance environmental protection and economic development as reinforcing endeavors fundamental to sustainable development;

· sound environmental policies that are scientifically based and economically justified;

· awareness of industry accomplishments in improving environmental policy and management through self-regulation.