EU Chemical Legislation Deemed Harmful to Developing Economies and Small Business
Singapore, 12 March 2004
APEC has expressed serious concern to the European Union over possible EU trade restrictions caused by new EU regulations on the use of chemicals used in goods production.
In its letter to the European Commission dated March 11, the APEC Chemical Dialogue stated that the regulation on Registration, Evaluation and Authorization of Chemicals (REACH) system adopted by the EU Commission in October 2003 posed potential trade restrictions.
The Chemical Dialogue also warned that the greatest negative impact of the new European regulations would be felt by developing economies and small and medium enterprises.
The letter stated: "In our view, the REACH system is overly expansive, burdensome and costly. It has the potential to disrupt international chemical markets, burden downstream manufacturers, adversely impact trade, inhibit innovation, limit global competitiveness, and significantly increase costs. These concerns, which extend beyond APEC countries, also apply to downstream manufacturers of textiles and apparel, toys, electronics, and autos, among others.
"Although modest modifications have been made to the proposal, the competitiveness of the chemical industry under the REACH system remains in question. Small and medium enterprises in our region and those economies that depend on commodity exports for their economic growth would be severely affected, even under the revised proposal. Smaller foreign producers, including specialty chemical suppliers and downstream suppliers simply do not have the capacity for the data generation required under REACH. As a result, there is a potential for EU importers to deselect imported supplies, which are not only chemical substances but also articles containing chemical substances. Thus, REACH may create an inherent bias in favor of domestic EU suppliers."
The APEC Chemical Dialogue noted in the letter that while it shares Europe's goals to protect health, safety and the environment, the rules being imposed by the European Commission go beyond what is technically required to meet these ends.
"The WTO Agreement on Technical Barriers to Trade (TBT) obligates members not to impose any system that is more trade restrictive than necessary. As noted above, we see possible trade restrictions arising from the registration, authorization and evaluation proposals that could have a severe impact on our domestic economies," the APEC Chemical Dialogue stated in the letter.