Select Committee on Science and Technology Written Evidence


Memorandum from the Chemical Industries Association


  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.


  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.


  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.


  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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