Select Committee on Science and Technology Written Evidence


APPENDIX 2

Memorandum from Leigh's Paints

IMPLICATIONS OF REACH FOR THE COATINGS INDUSTRY IN EUROPE

OBJECTIVES OF REACH

  The key objectives of REACH are:

    —  to protect health and the environment;

    —  to stimulate innovation;

    —  to protect the competitiveness of the EU chemical industry; and

    —  to increase public confidence in chemicals.

  As well as the coatings industry, REACH will affect our upstream suppliers—the chemical industry—and our downstream customers.

  While the objectives of REACH are wholeheartedly supported by all industry sectors, it is difficult to see how the above objectives can be met from the draft white paper and its amendments published to date. Indeed, the measures set out in the white paper are more likely to achieve the direct opposite of the stated objectives, despite efforts in the latest revision to "tone down" some of the more onerous requirements.

  We anticipate the consequences of REACH—in its current form—will lead to:

    —  imposition of significant costs, for very little quantifiable gain to society;

    —  no increase in the protection of man or the environment;

    —  loss of the EU's SME manufacturing base across many supply and use chains; and

    —  stifling of innovation.

  The information presented below provides a summary of some of the available data gathered in support of these views.

1.  COSTS OF REACH

    —  There are significant costs associated with each stage in the process proposed in the white paper—ie testing, validation, risk assessment, administration, registration and authorisation—and further unquantifiable costs to business of reformulating products where one or more ingredients become unavailable.

  The European Chemicals Policy Working Group—working with a number of national bodies—have prepared an estimate of the likely costs involved. A copy of a "Briefing Paper" prepared by CEPE and summarising their conclusions is enclosed (not printed), which puts the cost of registration for a single chemical at over 55,000 Euros for quantities of 1-10 tonnes/annum, up to over 650,000 Euros for quantities over 1,000 tonnes/annum. If "authorisation" is required, a further 55,000 Euros can be added to the cost in each case.

    —  The coatings industry uses some 10,000 chemical substances to make around 500,000 different products. Risk assessments may be required on all of these and most of the work would have to be done by the coating manufacturers—at substantial cost. For an industry already operating at extremely low margins, the additional resource needed is likely to be prohibitive, at least for some.

    —  Raw material suppliers will be subject to the same requirements as the coatings industry, and will inevitably be seeking to pass on the additional costs they have incurred. The consequence will be a significant increase in cost of those raw materials that the industry chooses to support through this costly process.

2.  AVAILABILITY OF CHEMICALS

    —  As it is intended that REACH will apply to all chemicals, a significant withdrawal from the market of low volume and low margin raw materials—where the cost of registration outweighs the value of the business—can be anticipated.

    —  When the Biocidal Products Directive was introduced in May 2000, there were 1,600 biocides available in the marketplace. This has now fallen to just 350—mostly because suppliers have not been prepared to support the high testing costs necessary to obtain authorisations. We anticipate a similar—perhaps not quite as extreme—trend in response to REACH, with at least 30% of coatings raw materials predicted to be withdrawn.

    —  Most paint ingredients are used in more than one product—and the vast majority are used across a wide range of products. This is particularly true of minor ingredients—ie those used in small quantities but nevertheless vital to the performance of the coating. These ingredients will be the most vulnerable under REACH, and many are likely to disappear from the market. This will create a massive task for coatings manufacturers in finding and testing registered alternatives. Almost certainly, the bulk of each manufacturer's product range will require reformulation.

    —  Apart from the costs associated with this, there are four possible undesirable consequences:

  1.  in some cases suitable alternatives will not be found, in which case key products may also disappear;

  2.  for products that remain, their performance will quite likely be impaired;

  3.  reformulation of products will be delayed until REACH is completed—ie until chemicals are known to be still available—in which case there will be an inevitable gap in product availability; and

  4.  highly specialised products (niche products) upon which some customers are totally reliant (eg some products designed for the nuclear industry) are unlikely to justify registration costs and will therefore have to be withdrawn.

3.  PROVISION OF INFORMATION

    —  Risk assessments or CSA's (Chemical Safety Assessments) for a single product could result in a document of up to 150 pages. While the latest revision of the white paper allows this to become a compilation exercise—at least for downstream users of chemicals—the additional administrative burden will be considerable.

    —  If this massive dossier, passed on to the customer, served a worthwhile purpose, there would be no cause for objection. However, most paint users have little "chemical" content in their day-to-day business activities, and are most unlikely to have either the time or the resources necessary to plough through a massive dossier on each product they use. The current Health and Safety data sheet format provides them with all the information they require to enable safe working with chemicals—anything substantially more than this is likely to be wasted effort. The latest amendments acknowledge that current data sheet format is acceptable, but stipulates that these must reflect the CSA—so the additional data package will still be required.

    —  Even the white paper itself admits that completeness checking must be done automatically by computer because of the weight of administration involved—so it seems strange that manual checking can be too onerous for the authorities, but the far greater task of generating the data in the first place is still expected of industry!

    —  The requirements for obtaining feedback information about downstream uses have been simplified slightly in the latest revision, but some responsibility still remains with the supplier for a task which will be extremely difficult to achieve in practice.

    —  The proposals are heavily loaded towards hazard identification. It would be better if they were replaced by a prioritised, risk-based approach to control of chemicals.

  Friends of the Earth, Greenpeace and the WWF object to the system as it will allow the continued use of the worst chemicals, even where safer alternatives exist. Permission to use them will be granted provided the regulations are followed and the necessary safety dossiers are produced etc.

  It would be more sensible if the regulations concentrated on identifying substances of very high concern, such as CMR's (Carcinogens, Mutagens and Reprotoxins) and looked urgently at ways of replacing them—ie a beefing up of current practice.

  Once the urgent actions are under way, thought could be given to expanding the scope of REACH.

    —  The principle of data sharing has been introduced into the latest draft in an attempt to limit the increase in animal testing that would be inevitable under the original proposals. Despite this, the massive increase in testing overall is certain still to require a significant increase in animal testing.

4.  INNOVATION

    —  Concerns about IPR have to some extent been addressed in the latest draft, with sensitive information protected for a limited period. However, this protection appears only to apply while R&D is in progress and thereafter when commercial supply is limited to relatively small quantities. This area needs clarification as uncertainty about IPR will be a great disincentive for innovation.

    —  The greatest negative impact on innovation, however, will be the cost of registration of new products. There is a serious concern that once this legislation is in place, chemicals R&D in the EC will stagnate.

  There is a parallel to this in the effects of the Dangerous Preparations Directive (1999/45/EC), where controls and data requirements similar to those envisaged here were introduced. Despite the rightness of the actions taken, it is significant to note that the number of biocides available (ie the number deemed worth putting through the costly registration process) has dropped to less than 25% of the original number, and few if any new registrations have been sought. Manufacturers in many sectors have accepted that there is no point developing new products unless the predicted market is extremely large. The same is likely to happen to chemicals development in general under REACH.

5.  THE UK COATINGS INDUSTRY

    —  The annual sales turnover of paints, coatings and printing inks exceeds £2.5 billion.

    —  Exports were worth £317 million in 2001, £248 million of which was paints.

    —  The industry employs approximately 20,000 people and effective management combined with new investment, high levels of training and tight control over labour costs has resulted in improved productivity levels, eg:

    —  Sales value per head up 66% in 10 years to end 2001.

    —  Sales volume up 76% in 10 years.

    —  With the likely impact of REACH on innovation within the EU, exports in particular are likely to see some reduction. Indeed, it is quite likely that the trend will be reversed, with an increase in importation of finished goods coated outside the EC, out of reach of REACH!

    —  The latest revisions of the white paper do attempt to address this danger, by applying some registration requirements to imported goods, but only above certain limits. There is scope, in the way these safeguards are worded, for abuse of the regulations unless adequate policing measures are in place.

  Bearing in mind the scale of what is involved here, it is difficult to believe that EC authorities will have the necessary resource in place—either human or financial—to police imports effectively.

    —  There is a growing concern that REACH will drive the chemical producers out of the EC, into regions where the costs of development and production are already low by EC standards. If this move takes place, there will be less and less incentive to register raw materials in Europe, and manufacturers who rely on chemicals—including all paint manufacturers—will themselves have to consider whether EC manufacture is a viable option.

  Since paints are key supplies to most major industries, the knock-on implications for British and EC manufacturing are clear.

December 2003



 
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