Select Committee on Science and Technology Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



  Q160  Bob Spink: We met this morning with a representative of the industry and also an NGO, WWF. We have had evidence from both of these bodies that generally they disagree on the level of costs and benefits of this legislation. Which one is more likely to be correct?

  Commissioner Liikanen: Ours!

  Q161  Bob Spink: Of course. I never doubted it.

  Commissioner Liikanen: I must say here we have spent a lot of time assessing the costs. On the direct costs side, our figures are not contested actually. How does it work? Nick Burge is an expert and he knows I have been very insistent on this figures side of the issue. How does the cost come? It comes from the number of the tests you need to do for registration. Then you go through the tests, give the price for every single one, count them together, and then you add the other registration costs. That is it. Of course market prices for tests may vary depending on the laboratories, but, I mean, in general they can be estimated. I think it is pretty reliable what we say on the direct costs. We had big discussions inside the house between our different services, between, let's say, DG economic and monetary affairs (our economics department), DG environment and DG enterprise, on the indirect costs, let's say, the cost to the final user or the indirect user. Is it more than just the same costs that you had in the first case ? The difference is that I am personally convinced there can be situations, if your testing or assessment costs are very high for small volume chemicals which are not a making a good return for you, that may lead to a withdrawal from the market and the alternative may cost much more. So I believe that is the case, but, the fact that we changed the requirements for small volume chemicals, I think that danger is now more limited. On the costs side, I think our figures are, let's say, pretty reliable. On the benefits side, it varies. Of course that is the issue that they disagree mostly.

  Q162  Bob Spink: Before you come on to that, on the costs side, how much have you factored in for the consequential costs; for example, depressed innovation because of the lack of available chemical for them to use, or, say, the loss of intellectual property and all these concerns? Have you factored those in at all?

  Commissioner Liikanen: Yes. On indirect costs, I just told you, yes, we have done this in our models, and for that reason exactly we reduced essentially the number of tests required for small volume chemicals. To give you a figure, if I remember rightly: On the first draft proposal it was about 80,000 euro for the one to 10 tonnes; we cut it by two-thirds. I tried then to get one more test out—which was, by the way, an animal test. But that was difficult for people: they say that for the health and safety at work reasons you cannot take it away. Animal testing, by the way, is the most expensive part of those tests—I am sure that the industry and the animal people will find that. So, after we cut it down, in the economic models which are done, the indirect consequential cost goes dramatically down. Dramatically down. If you have very high costs for these small volumes, these kind of indirect costs are higher. But, as I said, there, there are schools of economics which diverge. I have been on the side perhaps of the highest assessment of the indirect costs and that is why I want to tackle this. This part has been the most heavily criticised part by the environmental lobby, the fact that we changed it. On innovation, the consequential costs for innovation, I just say that for that reason I do not believe there is a fundamental increase in the products which will be withdrawn from the market after the changes we made and I have not been presented a strong case for that. Before it was possible, because it was way, way too high.

  Q163  Bob Spink: Before I interrupted you so rudely, you were going to talk about benefits.

  Commissioner Liikanen: Yes. The problem is—and I am talking about a very personal position—is that in these issues you get costs in the short term and benefits are medium and long term. That is always a problem. Secondly, there are references to the studies on the benefits, which are done by relatively serious organisations, but I must say the quantification of those benefits is not extremely easy. That is why we always use the reference to the study which has been done there. If I take the indirect benchmark here, when I was in the autumn in the United States, the American Chemistry Council announced a campaign of $250 million a year for improving the image of the chemicals industry, and that comes added to this liability surge which they are suffering. If this is taken into consideration for 15 years, the costs we are able to keep at around $2 billion, it still costs, but compared to that it is not something unreasonable.

  Q164  Bob Spink: We heard that one of the reference points you have used in calculating benefits in human terms was the asbestos model.

  Commissioner Liikanen: That is very different.

  Q165  Bob Spink: How would you answer that?

  Commissioner Liikanen: Asbestos is not a comparable case but of course you must see that.

  Q166  Bob Spink: That was the point that was made.

  Commissioner Liikanen: Oh, but not in our documents.

  Q167  Bob Spink: No.

  Commissioner Liikanen: No.

  Q168  Bob Spink: Okay.

  Commissioner Liikanen: I mean it is not a similar point but it is an indicative issue, that if there is a dangerous chemical which can have this kind of long-term impact, of course, let's say, first of all, the liability suits can be terribly expensive. This regulation has one logic which to my mind is very important, which is that, once this regulation is applied, industry takes responsibility for its actions. The possibility of a liability suit is there, but it is very different in logic compared to the American system.

  Q169  Bob Spink: On impact assessments, do you think it would help if Member States did their own or do you think that should be totally sectorised?

  Commissioner Liikanen: I have no difficulty. I mean, anybody who wants to look at chemicals, I welcome. I just hope one thing, after having spent a lot of time with this issue, that people preferably do some homework first, before they come to say, "You should do some extra impact assessments" every time. The easiest political initiative is to say that you should do more counting. It is better that first people study what has been done, look at the methodology. In the whole impact assessment issue, to my mind, we should aim at consolidating methodologies: talk about methodologies first before results are there. Once we agree on methodology, we cannot then disagree on the results because the same mathematical rules apply. It is very important to concentrate on methodology first. If somebody wants to do other studies, it is fine. We have compared these studies which have been done, let's say, in France and Germany and so forth. We have had open workshops: everybody has been able to present their case. On the direct costs side I think there is not a huge difference; it is on the indirect or dynamic side that there are differences of views. But most of those studies have not been done on the basis of this proposal but on the basis of the earlier drafts.

  Q170  Bob Spink: Do you think that the impact of substitution has been adequately considered in your own assessments?

  Commissioner Liikanen: As I said before, you know, I am now very open, but inside the house there were different figures discussed—and I was of the extreme line as far as costs are concerned, so that must be taken into account. By the way we have changed the treatment of one to 10 tonne chemicals, small chemicals, and anything up to one tonne is out, I expect that we are, let's say, within relatively reliable safety margins.

  Q171  Bob Spink: But then sometimes the most toxic and most dangerous chemicals come in very, very small volumes. Are you not going to miss a trick by having your prioritisation the other way round, with the bigger volumes, which tend to be more inert, studied first and the smaller volumes, which tend to be more active and possibly more toxic, subsequently—

  Commissioner Liikanen: But if they are really dangerous they will go to the authorisation procedure.

  Q172  Bob Spink: Yes, but that is not an answer, is it, because—

  Commissioner Liikanen: No, but can I continue my answer? That was only the first sentence. First reply: If they are the most dangerous they go to authorisation procedure.

  Q173  Bob Spink: Yes, but if I—

  Commissioner Liikanen: Can I continue? The second issue: This question about prioritisation has been discussed, and I am intellectually open to that position, but I just don't want people to start to turn upside down all the logic, that, if we have 99.99% of chemicals that we try to cover, actually it is the wrong part, this 99.99%, because we should concentrate on the 0.01%. That is what it means in volumes. Common sense says that if you cover 99.99%, you go rather far, but of course you must also look at the 0.01%. But, instead, if we just take the 0.01%, it makes the exercise much easier. In volume terms, we cover the biggest part, but personally I am sure that the Council and Parliament will concentrate very much on the prioritisation issue. We in the House had a long debate on that. I understood well the argument, that we should start by looking at the most dangerous substances. In this balance which we try to have between competitiveness and the environment anyhow, my colleagues said that if we do not have one entire system, then we do not have certain uniform, reliable base core data which we need. We were in the final balance able to cut the costs down essentially from 12 to two billion euros, and strengthen the European Agency in that field of European internal market. Now it is in Council and Parliament. There are countries who are raising the prioritisation issue strongly.

  Q174  Bob Spink: I am sorry, when I interrupted you again, I wanted to say—because we keep hearing this argument, that if we know they are mutanogenic, carcinogenic or sex-changing, then we look at them early anyway—that the whole point of this legislation is not to catch those because we know about those anyway and we should be dealing with those anyway, but the point of this legislation is to make discoveries about things that we currently do not have evidence on the public record about and to get that evidence on the record so that we can make decisions about them. So you would not know, would you? The whole point of the legislation is to make new discoveries about toxicity and what have you. Finally, on the operation of REACH, you are going to review it after six years and then, thereafter, after every 10 years. After six years, of course, you will only have dealt with the known problems—which, by definition, we know about, so this legislation is not going to help them. The thousand tonne plus, you will not at that stage have addressed the 100 to 1,000 and the one to 100 tonne chemicals. Do you think that six years is the right level to draw it, too early or too late?

  Commissioner Liikanen: If I can come back to this 99.99%. We must always think, when talking about the environment, about what is the total impact on the environment. If you cover 99.99%, of course there is the possibility that just this 0.01% is the most dangerous, but I expect that some toxicity will be covered by 99.99%. I mean, there is a certain logic also in high volumes. Whether you can combine those two is another issue. On six years, that was after my insistence. Just because we start off with the big volumes, it does not mean that we know everything about them. We must see whether the system is able to handle these well. If there are real issues for this first phase which we cannot handle, then we are certainly going to fail for the rest. It is very good to review the system early, so that if the first phase has been registered and assessed, we see where we are and go forward. So I would prefer always, you know, early reviews, but one part of the substances must be in the system to have, let's say, a representative presentation of the volumes. We know it is not all, but, I mean, it is one part. That should be the easiest part. If there are problems with the easiest part, there will certainly be problems with the small part.

  Q175  Bob Spink: But six years is an awfully long time. The system would surely have settled down after a year or 18 months or two years or three years. You would be able to audit the system and the costs of . . .

  Commissioner Liikanen: If the British Government is insisting that we do it after four years, I will be very open-minded. That is not the breaking point.

  Chairman: We will put the word in.

  Q176  Dr Turner: Mr Liikanen, when you published your White Paper, it kind of frightened the horses, certainly as far as industry is concerned. Do you think you might have had a slightly less painful process if you had done more consultation before getting to the White Paper stage and you might have considered alternative models to the actual REACH model that you ended up with?

  Commissioner Liikanen: May I put a very direct reply? I do not believe there is any piece of legislation in the UK which has been consulted so widely as this was. If you have one example, give it to me. All those phases: drafts on the internet, replies to everything, public hearings, White Paper. I have been sitting in so many consultations. I do not believe there is any single piece of legislation that has received this level of attention, but if you have one I am happy to say that I was wrong. Because I have tried that with every country and I am not getting—

  Q177  Dr Harris: Fox hunting.

  Commissioner Liikanen: That may be. That may be! I am not sure about the open consultation on the internet or impact assessment.

  Q178  Dr Turner: For instance, one of our major retailers, Marks and Spencer, told us in evidence that there was little consultation before the White Paper and they felt, rightly or wrongly—clearly, in your view, wrongly—that by the time they read it in the White Paper it was pretty much set in stone and their influence was not going to have that much value. Clearly you would rebut that and I would be interested to hear.

  Commissioner Liikanen: I am horrified at the professional quality of Marks and Spencer when I hear this. I have been their client for years.

  Q179  Chairman: You do not get your suits there, then.

  Commissioner Liikanen: No, no. You know why I say so?—and here I am ready to be on the record. I am sure that, as far as the costs of the industry are concerned, the changes which were done in the Commission proposal after the internet consultation have been the biggest ever in the Commission's history—the biggest ever—and they were very much based on the concrete evidence, especially from the downstream users. Of course, the capacity of companies to follow European legislation varies enormously. They are concentrating their efforts on their core business, but if it is not in core business it varies. I agree with you that there has been one problem with this issue, that this White paper became a concept, especially among those who have never read the whole document. It has been complex, heavy process. You look at the label, then the draftists look at the label, and the final proposal is not known by many to have equal exactitude, so it had a negative connotation. But, as far as our part is concerned, all these open procedures, including impact assessment, and many phases, I think have been a quite respectable effort to apply the rules of Better Regulation.

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