EN Official Journal of the European Union C 164/78

Opinion of the Committee of the Regions on ‘The impact of EU chemicals policy on Europe's cities and regions’

(2005/C 164/10)

THE COMMITTEE OF THE REGIONS

Having regard to the decision taken by the CoR Bureau on 15 June 2004, under the fifth paragraph of Article 265 of the Treaty establishing the European Community, to instruct the Commission for Economic and Social Policy to draw up an own-initiative opinion on this subject;

Having regard to the proposal for a Regulation of the European Parliament and of the Council concerning the registration, evaluation, authorisation and restriction of chemicals (REACH), establishing a European Chemicals Agency and amending Directive 1999/45/EC and Regulation (EC) on persistent organic pollutants, and to the proposal for a Directive of the European Parliament and of the Council amending Council Directive 67/548/EEC in order to adapt it to Regulation (EC) of the European Parliament and of the Council concerning the registration, evaluation, authorisation and restriction of chemicals (COM(2003) 644 final);

Having regard to the presidency conclusions of the Lisbon European Council of 23 and 24 March 2000;

Having regard to the European Commission's annual reports on better lawmaking pursuant to Article 9 of the Protocol on the application of the principles of subsidiarity and proportionality, the most recent of which was the report ‘Better Lawmaking 2003’ of 12 December 2003 (COM(2003) 770 final);

Having regard to the European Commission's initiative on Simpler Legislation for the Internal Market (SLIM), launched in May 1996;

Having regard to its opinion on the Communication from the European Commission on Productivity: the Key to Competitiveness of European Economies and Enterprises (CdR 224/2002 fin) (1);

Having regard to its opinion of 9 October 2003 on the Communication from the European Commission on Industrial Policy in an Enlarged Europe (CdR 150/2003 fin) (2);

Having regard to its opinion on the Report from the Commission on Better Lawmaking 2002 (CdR 62/2003 fin) (3);

Having regard to its opinion on the 2003 Communication from the European Commission on the Internal Market Strategy (CdR 341/2002 fin) (4);

Having regard to the draft opinion adopted by its Commission for Economic and Social Policy on 8 December 2004 (CdR 238/2004 rev. 1) (rapporteur: Mr Jochen Riebel, Minister for Federal and European Affairs of the Land of Hesse and Land delegate to the Federation (DE-EPP));

Whereas:

1) the March 2000 Lisbon European Council set the European Union the strategic goal of becoming the most competitive and dynamic knowledge-based economy in the world;

2) after completion of the first four years, it has become apparent that significant additional efforts will be necessary in order to achieve this objective. It is therefore particularly important that all proposals for EU policy be reviewed with an eye to their impact on international competitiveness;

3) Point 6 of the Protocol to the Treaty of Amsterdam states that ‘the Community shall legislate only to the extent necessary’. In addition, Point 9 states that the financial or administrative burden falling upon local authorities and economic operators should ‘be minimised and proportionate to the objective to be achieved’;

4) Article 2 of the EC Treaty states that the tasks of the Community should include promoting the sustainable development of economic activities, a high level of employment, a high degree of competitiveness, and a high level of protection and improvement of the quality of the environment;

5) Article 3 of the EC Treaty refers to the activities of the Community for the purposes set out in Article 2, and the strengthening of the competitiveness of Community industry in particular;

adopted the following opinion at its 58th plenary session of 23-24 February 2005 (meeting of 24 February).

1. Views of the Committee of the Regions

THE COMMITTEE OF THE REGIONS

1.1 approves in principle of the Commission's attempt to lay down uniform rules on handling chemicals through the introduction of the REACH system;

1.2 feels that account should be taken both of the interests of environmental and consumer protection, and of the need to maintain and strengthen the competitiveness of European industry;

1.3 notes that the proposal would place a significant burden not only on the chemicals industry but on the production chain as a whole, and at the same time points out however that a balance needs to be struck between, on the one hand, protecting the environment, health and worker safety and, on the other, promoting the innovative capacity and competitiveness of the industry concerned;

1.4 feels that the legislation in question is too complex, and that the parties concerned will be unable to apply it without external expertise;

1.5 supports any changes in the regulation that can help simplify procedures and cut costs. This will require more specific measures in particular for SMEs, which may incur disproportionate costs as a result of implementing the REACH system;

1.6 feels that data should not only be based on annual product volumes, but that other approaches which have been mentioned in the discussion on simplifying registration procedures should also be taken into account, i.e. exposure categories, the ‘one substance — one registration’ principle, or priority lists. This could facilitate better overall organisation of REACH system operations;

1.7 considers that, to ensure that the system is practicable and, for SMEs especially, financially viable only the data which is relevant for safe usage should be required. Compliance with data requirements should not slow down production, marketing or application processes so that enterprises remain in a position to react innovatively and quickly to new market demands (time to market);

1.8 suggests making use of all the data already accessible to manufacturers, users and public authorities as another means of applying the regulation more flexibly. In the case of the establishment of consortia, however, (especially between downstream users and between SMEs) the protection of intellectual and industrial property rights must be safeguarded or, alternatively, compensation should be paid. The main features of the division of costs must be laid down in the regulation;

1.9 notes that implementation of registration procedures will involve additional responsibilities for the relevant authorities in Member States. A considerable amount of work will be needed, particularly in cases where the criteria used are left very much open to interpretation, making it unclear whether certain requirements apply or not. Registration procedures should therefore be kept as far separate as possible from regulatory activities. Derogations and distinctions must be simplified and formulated with greater precision. If necessary, downstream legislation must be put in place to provide clear pointers to assist in interpretation. Access by regulators to information on the procedures used by the agency must be kept as straightforward and free of red tape as possible;

1.10 basically approves the idea of setting up an agency insofar as it would facilitate a uniform approach within the EU, but insists that the jurisdiction and competences of the agency should be more clearly marked out, especially in terms of its relations with other Community, national, regional or local institutions with responsibilities for registering chemicals;

1.11 considers it desirable that authorities in the Member States, in close cooperation with the agency, should be in a position to provide entrepreneurs subject to registration requirements with on-the-spot assistance in complying with application procedures, thereby securing the administrative implementation of REACH in the Member States;

1.12 views the agency as an independent institution and important service provider, which organises the registration and evaluation of substances under the mantle of confidentiality; in doing this, the agency should seek to be very much open to scientists and experts from the industry;

1.13 feels that the agency should ensure that specifications and guidelines for the evaluation procedure are in place so as to enable rapid and uniform action by authorities in the Member States. For this to happen, there must be a clear division of tasks between the agency and the Member States, with no overlapping of administrative responsibilities; in addition, the extremely complex voting rules should be substantially simplified and streamlined to cope with the expected high caseload, while avoiding detailed, bureaucratic rules for communication between the Member States and the agency, and simplifying the rules for dividing substance evaluation tasks among the Member States, without thereby making them a quasi sub-structure of the agency;

1.14 notes that there are significant loopholes concerning animal protection. The draft regulation stipulates that, in cases such as parallel registration of a substance, manufacturers are obliged to make use of existing data on animal testing, in order to avoid unnecessary duplication of tests. However, Article 23 only refers to the avoidance of unnecessary animal testing as an abstract objective and cannot therefore replace a specific provision on this point;

1.15 argues that animal testing needed to achieve the objectives of the regulation, including a high level of protection for human health and the environment, should be kept to an absolute minimum, and that all existing data should be made available. Animal testing should be prohibited if there are alternative options for testing which have been approved by the authorities;

1.16 welcomes the introduction of an obligation for downstream users to register usage of substances, so that applications which have not been registered by manufacturers or importers can be identified, and potential risks can be avoided through appropriate precautions;

1.17 is however aware of the disadvantages that would arise, especially for SMEs, from any requirement to disclose details of usage and consequently of technical expertise to substance suppliers or to conduct costly studies of their own;

1.18 feels that it is necessary to lay down exact conditions for data sharing, so that SMEs are not penalised by rules on the sharing of costs (not only the costs of animal testing) and protection of know-how.

2. Evaluation of the impact

2.1 Implementation of the draft regulation will primarily concern producers and importers of substances and preparations, who will be subject to requirements for registration and the related obligations to disclose information. The main burden will fall on the chemicals industry. However, all sectors which make use of chemicals, i.e. virtually all processing industries and service providers, will be affected as ‘downstream users’. Under the new rules there is a danger that chemicals will disappear from the European market and that price levels will rise. This in turn would undermine the position of European processing industries vis-à-vis competitors from outside Europe. Moreover, adjusting to the new system would also entail costs. Production and employment could therefore be adversely affected by the introduction of the REACH system, not only in the chemicals industry, but also in many other sectors.

2.2 Small and medium-sized enterprises are particularly affected. Substance registration alone is likely to exceed the financial and human resources of many companies, if information is to be provided in as much detail as currently required by REACH. Given that, in many cases, it will not be possible to pass on costs to customers, the production of certain chemicals will be brought to a halt and the viability of companies along the production chain will potentially be under threat, even though the companies in question are the backbone of many European industrial regions.

2.3 The Commission's estimates for the direct and indirect costs of using the system over the next few years have been criticised by various parties as being too low. The Committee therefore welcomes the Commission's decision to conduct a new impact assessment to study indirect costs, effects on downstream users and the implications for new Member States. It would be best to wait for the results of this impact assessment before any further decisions are taken by the European Council and Parliament.

2.4 It is thought that the new system will encourage innovation, and it is certainly true that some of the measures will make it easier to identify and market more new substances. However, there is also a negative impact on the innovative capacity of enterprises, particularly in the initial implementation phase. As a result of REACH, the time to market of new products will be increased. Enterprises will be more exposed to risk as a result of additional costs at the research stage, and researchers will spend a great deal of time on testing existing chemicals rather than developing new products. However, innovation is the key to the future economic success of Europe, and the chemicals industry is by far the largest source of innovative intermediate products. A lack of innovation in this field would therefore also have a strongly negative impact on the innovative potential of other sectors. In general, the Committee considers that the mechanisms (which are mostly automatic) designed to encourage innovation are still too general and, given the scale of the expected impact, insufficient to the job at hand.

2.5 On the one hand, costs are likely to be incurred by economic players, by the regions in which jobs will be threatened, and by end users as a result of higher prices of final products. As for the benefits, they are expected to arise in the fields of health, environmental and consumer protection, safety at work, and also from simplified legislation and the pressure on enterprises to innovate and compete; however, this view does not take into account the fact that benefits will be phased over a considerably longer period than the costs, and will thus be felt in other sectors or society as a whole.

3. The Committee of the Regions' recommendations

THE COMMITTEE OF THE REGIONS

3.1 urges the European Commission to check the REACH proposals for compliance with the subsidiarity and proportionality principles;

3.2 calls on the Commission to take account of the public and consumers by providing for the uniform labelling of chemicals in an area that is today marked by considerable disparity, and endorses the Commission's proposal to secure uniform rules for chemical products registered before or after 1981;

3.3 calls in particular for a review of the proposals to consider whether the administrative outlay to businesses and the related costs involved in achieving the objectives of these legal provisions are in fact necessary;

3.4 feels that the objectives envisaged by the proposals could also be achieved by less complex legal provisions;

3.5 urges the European Commission to consider alternative proposals currently under discussion for simplifying the REACH system;

3.6 calls for measures to help and support SMEs in the registration process in order to safeguard or strengthen economic performance and employment in European regions which are dependent on industry;

3.7 recommends using a more strongly risk-orientated, exposure-based, priority-led concept instead of a quantity-based approach to production and import volumes;

3.8 in tandem with that recommends other moves designed to make the legal provisions considerably simpler and more readily understandable for users of the registration, evaluation and authorisation procedure;

3.9 urges the European Commission to consider whether substance evaluation cannot make use of information systems and data which already exist in Member States;

3.10 urges the European Commission to bring chemicals legislation into line with legislation in other policy areas;

3.11 calls especially for the introduction of a specific risk-based information system to avoid duplication of data procurement at different stages of the production chain;

3.12 recommends, for the sake of European business competitiveness, entering into negotiations with the WTO, with a view to international harmonisation of these rules;

3.13 in particular urges the European Commission to cast a critical eye over its proposals to check for compatibility with its own initiatives for simpler legislation for the internal market (SLIM) and for better lawmaking;

3.14 calls upon the Commission to ensure that the basic principle that responsibility shall lie with the manufacturer of the chemical product or the party marketing the product (‘polluter pays’ principle and principle of the reversal of the burden of proof) shall continue to be upheld at all stages of the marketing of the product in question, the aim being to help to safeguard the protection of workers, consumers and the environment.

3.15 urges the European Commission, in its overall consideration of Community objectives, to examine the impact of its proposals on regional economic structures and thus their compatibility with the EU objective of economic and social cohesion; with this in mind, sectoral pilot studies could be carried out in the various European regions that have a chemicals industry, in order to secure an accurate assessment of the impact of future legislation on a case-by-case basis;

3.16 urges the European Commission to act on the findings of the expanded impact assessment, which is expected for the end of March 2005;

3.17 urges the European Commission to clearly mark out the powers of any European Chemicals Agency and to ensure a viable and business-friendly implementation of chemicals policy by closely involving local players.

Brussels, 24 February 2005 The President of the Committee of the Regions Peter STRAUB

(1) OJ C 128, 29.5.2003, p. 1

(2) OJ C 23, 27.1.2004, p. 16

(3) OJ C 73, 23.03.2004, p. 38

(4) OJ C 128, 29.5.2003, p. 48