APPENDIX 7
Memorandum from the Chemical Industries
Association
1. INTRODUCTION
The Chemical Industries Association (CIA) is
the predominant trade association and employers' federation for
the chemical industry. Our membership is made up of 180 operating
companies, based at over 300 manufacturing sites nationwide.
The chemical industry in the UK employs 230,000
highly skilled people nationwide and accounts for 2% of Gross
Domestic Product and, with sales of chemicals and chemical products
of £34 billion, the chemical industry is one of the UK's
largest manufacturing industries.
The industry is the UK's top manufacturing export
earner, with an annual trade surplus of £5.5 billion on a
gross output of £49 billion. It spends nearly £3 billion
a year on new capital investment, plus £3.5 billion on R&D
expenditure—equivalent to more than 10% of sales.
The European Chemicals Policy review—and
its impact—is of vital importance to the future of the industry
and to the UK as a whole and workable legislation is essential.
This paper outlines the involvement of the CIA in the process
thus far, the industry's aims and objectives with regards to the
legislation as it now stands, and the potential impact if these
concerns are not taken on board by policy makers.
2. BACKGROUND
SUMMARY
Throughout the legislative process, the CIA
and its European counterparts have supported the European Commission's
aims of developing a new chemical regulatory system, building
upon its 2001 White Paper: "Strategy for a future Chemicals
Policy" and the principles behind REACH (Registration,
Evaluation and Authorisation of Chemicals). We continue to do
so. The CIA recognises that the existing regime is unsatisfactory
and needs replacing.
In July, the CIA indicated that it could not
support the proposals as they were presented in the Internet consultation.
Such an unrealistic system would seriously damage the EU's attractiveness
as a location for the chemical industry and all its customer industries
in the manufacturing supply chain.
Whilst the revised legislation, as formally
adopted by the European Commission on 29 October 2003, demonstrates
some progress towards a more sensible scope for the legislation,
they have not addressed the fundamental issue of workability.
The whole of manufacturing industry now operates
on a global scale and the complexity of supply chains mean that
there are serious risks of unintended consequences if the details
of REACH are not properly thought through. These will be highlighted
later in the paper.
The chemical industry seeks regulation that
has a proportionate, risk-based approach that will speed up the
provision of information on chemicals and enable sound decision
making to take place on appropriate risk management and believes
there is still a long way to go if this is to be achieved.
Preservation of the industry's competitiveness
within the global market and stimulation of innovation are vital
and must be assessed ahead of the legislation coming into force.
CIA will continue to make these arguments as
the co-decision process moves forward and will play a full part
in the public consultation to be conducted by Defra over the next
few months.
In short:
— the chemical industry is not opposed
to new chemicals regulation;
— it seeks better legislation than
currently exists—or that is currently being proposed by
the Commission; and
— chemicals policy is a concern for
all manufacturing industry, not just the chemical sector.
3. THE CHEMICAL
INDUSTRY'S
OBJECTIVES AND
PROPOSALS
Working with the European Chemical Industry
Council (CEFIC), the CIA's primary goal is to ensure that the
Commission works with all its stakeholders to develop a regulatory
system that is practicable, proportionate, and distinguishes between
risk and hazard; has realistic deadlines; enhances innovation;
and minimises the adverse effect on competitiveness across EU
manufacturing industry as a whole.
The CIA believes that REACH can still be a workable
system and we have been working closely with CEFIC to offer constructive
suggestions on how this could be achieved. The outstanding issues
to be resolved in order to maximise benefits and avoid unintended
consequences are detailed below.
3.1 Role of the Central Agency
The Central Agency must have powers to oversee/manage
the entire REACH process to ensure consistency and timeliness
of decision-making.
The Central Agency should have full responsibility
for all aspects of prioritisation, decision-making and management
of the system. Currently this is just at the registration phase.
In terms of ensuring enforcement of the legislation,
the Agency has a role in ensuring that there is harmonised enforcement
action across Europe and issue guidance on what and how to enforce
and on penalties. They could also operate a "sneakers-charter"
to help Member States target their enforcement activities.
3.2 Prioritisation
The scope and the requirements of REACH need
to be proportionate. The required measures must be based on risk
(hazard and exposure of a substance, not simply its properties).
Only tests that are really necessary should be undertaken.
A prioritisation system that takes into account
the actual use (exposure) and hazard of a substance is necessary.
REACH should define the underlying scientific principles for determining
the identification and prioritisation of substances for further,
detailed evaluation and allow exemptions for substances with exposures
and hazards of low concern. This would reduce the number of tests
that will never be used, and save time, money and tests on animals.
CIA believes that the first stage of REACH has
to be the pre-registration of all substances at the same time,
rather than the three reporting requirements based on tonnage,
as is currently proposed. This stage would then be followed by
the registration of those chemicals identified as being of most
concern first (based on risk) and others of lower concern at a
later date.
3.3 Substitution
Within the context of REACH, there is a requirement
for producers to submit a substitution plan in order to gain an
authorisation for the continued use of an authorisable substance
in a specific application.
Substitution is already well practiced within
industry, where less hazardous alternatives or processes are available,
and CIA believes that REACH could encourage these practices further.
However, for substitution to work in the context of REACH, substitution
plans must engage downstream users as well as producers if they
are to be implemented effectively. Inflexible imposition of substitution
plans on EU producers will only cause downstream customers to
switch sourcing of ingredients, rather than cooperating with a
substitution process.
Asking a producer to promote a competitive product
as a substitute is completely unrealistic if the substitute is
not in the product range he could make, or involves different
technology, in which he is not involved. The decision as to when
and how to reformulate is taken by downstream formulators, not
chemical suppliers.
Industry seeks definition on the mechanisms
by which any substitution would be evaluated and decided, in terms
of the required input, decision criteria and the platform at which
these would be discussed.
3.4 Imported articles
The current proposals place EU-manufactured
finished articles (products) at a commercial disadvantage to the
same article manufactured outside the EU. It also provides little
protection for the EU's manufacturing base from unfair competition
from outside the EU. As the legislation currently stands, it will
be possible for articles (such as computers, household products,
cars, toys, packaging, clothes etc) to be manufactured outside
of the EU using a wider choice of non-EU registered materials
and with fewer controls. It is clear that these articles would
be substantially cheaper than equivalent articles produced within
the EU. This needs to be addressed to prevent the migration of
total manufacturing and supply chains outside the EU.
Furthermore, the proposed restriction to cover
only intended release of chemicals offers no protection to the
general public, who may be exposed to dangerous substances that
are released from articles produced outside the EU and imported
into the EU.
There must be a level playing field for imported
and EU-manufactured articles and these must be subject to the
same rules as EU-based actors.
3.5 Impact Assessment
Although many studies have been carried out,
there is no one clear analysis of the business impact of the current
proposals. It is critical that an independent third party conducts
an extended impact assessment, taking into consideration the likely
impact on the whole value chain and alternatives to the present
proposals, the impact on innovation, and a full cost/benefit analysis.
The revised proposal does not take into account
the loss of substances that will occur when manufacturers decide
not to register a substance because the cost of registration is
greater than the value of the business. Some low value non-hazardous
substances will disappear for purely economic reasons. Given that
the purpose of the proposal is to control identified risks to
man and/or the environment, we believe this consequence needs
to be fully appraised.
DG Environment has claimed that the most significant
benefits of the proposed regulation will be based on substantive
reduction in occupational health diseases. Whilst the chemical
industry is supportive of any improvement in the flow of information
through the supply chain that will lead to more effective implementation
of existing workplace legislation, CIA has serious doubts about
the magnitude of the benefits being claimed. What is quite clear
is that for any such benefits to be realised, information needs
to be user-friendly and simple. CIA continues to work closely
with the Trade Unions on this issue and in October signed the
latest of three joint agreements on workplace safety and occupational
health.
DG Environment also claims that REACH will bring
benefits in the health and environment of the community, however
we do not believed that these benefits can be realised without
ensuring that substances of concern do not come into the EU in
finished goods, as detailed in 3.4 above.
3.6 One substance: One registration
The UK Government is proposing that there be
a limit of one substance per registration, essentially leading
to mandatory consortia. The CIA support this principle in general
as a means of minimising the amount of animal testing that will
be necessary to meet the requirements of the REACH regulation
and believe that it should be strongly encouraged. However, there
must be flexibility in the system to allow companies to operate
outside of consortia and to register separately where there are
real business reasons for doing so.
This is an issue that the Association has examined
in some depth in response to a Defra paper on the issue. This
more detailed CIA position can be found in Annex 1.
3.7 Innovation
Experience shows that different regulatory regimes
do give rise to differing levels of innovation. This can be illustrated
by comparing the number of new chemical notifications in a specified
period, between 1987 and 1996. In the EU, companies notified an
average of 274 new chemicals per year. In Japan, companies have
made 265 notifications annually, and the gross number of new chemical
substances notified per annum in the USA was 1,720. CIA believes
that the balance established within the current REACH proposals
will stifle innovation even further, rather than promoting it.
Firstly, as manufacturers take commercial decisions
to not register some of their products for economic reasons (as
detailed in 3.5 above) there will be far less choice in the number
of different substances available within the EU with which to
practice chemistry.
Secondly, the provisions within REACH to promote
research and development into new substances are too restrictive.
They are too involved and require industry to address with the
authorities any form of research and development above one tonne.
Research and development substances should have neither weight
thresholds nor time limits as long as specified criteria are met,
documented and retained for future inspection.
Another factor in the stifling of innovation
will be the loss of confidentiality and a lack of provisions to
protect intellectual property. There are many opportunities in
REACH for confidential information on substances to become "public",
for example, the classification and labelling inventory, the sharing
of data within consortia, and in the Chemical Safety Report. Such
public availability of information will be of great interest and
use to competitors within or outside the EU as their own R&D
costs would be dramatically reduced.
4. IMPLICATIONS
FOR THE
UK CHEMICAL INDUSTRY
If the issues detailed above are not considered,
the result would be an unworkable REACH system. Some implications
for the UK chemical industry include:
— Widespread migration of manufacture
(and wealth creation) out of the EU to avoid a costly testing
regime coupled with greatly increased levels of imports of finished
goods made with/containing untested chemical substances.
— Human health and environmental protection
not improved because substances of concern continue to come into
the EU in finished good eg Televisions/Laptops etc.
— Inflexible imposition of substitution
plans on EU producers causing downstream users to switch sourcing
of ingredients rather than cooperation with substitution process.
CIA believes that industry has nothing to gain
from delaying implementation of the legislation, as this will
merely encourage strategic decision-making focused on investment
outside the UK. However adequate time and debate is required to
get the legislation right.
January 2004
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