SMEs warn of ‘REACH leakage’ ahead of EU chemical review

Hazardous chemical warning labels. []

A review of Europe’s REACH chemicals safety law, due in 2017, will look into the “cumulative costs” of the legislation on industry and small businesses in particular, according to a senior official at the European Commission.

Policymakers and campaigners of all kinds are gearing up for a review of the controversial REACH regulation on chemical safety next year.

Eric Mamer, a senior official at the Commission’s internal market directorate (DG Grow), gave further detail about the review during an event held in the European Parliament last week (1 June).

“We know that REACH is considered as one of the most difficult pieces of legislation for industry to deal with — in particular SMEs,” said Mamer, who is director for competitiveness at DG Grow.

Cumulative costs

“We are very concerned and interested by what we call the ‘cumulative costs’ of legislation on industry,” explained Mamer, who said his directorate was working on such assessments as part of the 2017 REACH evaluation.

Adopted ten years ago, REACH gave rise to one of the most epic lobbying battles in EU history, pitting environmental campaigners against the powerful chemicals industry.

But the review, which is being conducted under the executive’s REFIT programme for leaner policymaking, should be done “without watering down the health, environmental and safety” benefits of REACH, Mamer underlined.

“It’s a pretty difficult exercise, I will confess,” Mamer said, calling on industry players to play ball by sharing data with policymakers about their production supply chains.

The European Commission will take into account the needs of industry “as much as possible” ― but this requires cooperation and transparency, he stressed, saying access to industry data “is what we need to tell our colleagues: ‘Look, we’re going to kill the patient before we actually cure him’,” Mamer explained.

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‘REACH leakage’

Ashley Fox, a Conservative MEP from the UK, who was hosting the Parliament event, put the issue in simpler terms.

“We need the EU to do less and to do it better when it comes to regulation of SMEs,” he told the event, held with support from the Nickel Institute, an industry group.

But regulating a complex sector like chemicals is no easy task, participants agreed, especially when dealing with small companies that use hazardous substances down the manufacturing supply chain – the so-called downstream users of chemicals.

The European Chemicals Agency (ECHA) expects up to 70,000 chemicals will be registered by the 2018 deadline for substances produced in the smallest quantity band, between 1-100 tonnes per year.

According to the European Commission, this will involve a lot of SMEs, many of which are outside the chemical sector and may not even be aware that REACH exists.

Simon Meirsschaut represents a small trade group that will soon be regulated under REACH, the European Association for Surface Treatment on Aluminium. ESTAL members, he said, are all SMEs dealing with aluminium finishing of products like window frames, doors, or Venetian blinds.

He said these small firms can easily relocate part of their production abroad and reimport products into the European market, without having to comply with REACH.

“At ESTAL, we invented the term ‘REACH leakage’,” said Meirsschaut, referring to the relocation of factories outside of the European Union where environmental legislation is less exacting. “REACH leakage is something that is very real in our industry,” he explained, because companies use very small amounts of hazardous substances in their manufacturing process.

“These substances may be dangerous during the production process but after, they are not. This means it is very easy for our companies to go out of the EU, produce there and re-import the finished product in Europe without any REACH constraints,” he told participants at the event.

No substitutes for metals

His views were echoed by Véronique Steukers, Director for Health and Environment Public Policy at the Nickel Institute.

REACH was designed to encourage substitution of hazardous chemicals for new substances that do not pose a risk to human health or the environment, she said. But this approach doesn’t work for metals, which can’t be substituted, she warned.

“Unfortunately, you cannot invent new metals ― it’s as simple as that. So there is a growing pressure on the manufacturing value chain as more metals are being put on the REACH authorisation list,” she explained.

Steukers said this could result in “metal value chains moving outside of the EU” to places like China, from where products can be re-imported into Europe, “without benefits to the environment or human health”.

“We do believe that these challenges can be overcome,” she added, but that requires understanding all parts of the manufacturing value chain, such as surface engineering. One way forward, she said, would be to identify areas where REACH overlaps with workplace safety rules in order to avoid duplication.

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Upstream applications

According to Meirsschaut, small businesses are often “unable to comply” with the complex authorisation process of REACH because they simply lack the time, knowledge, and capacity to do so.

“In the automotive sector, you can rely on the huge knowledge of a big industry. But for small companies like our members, they do not know how to deal with REACH.”

One way forward for SMEs is to rely on “upstream applications” filed by companies up in the supply chain who can certify their products are REACH compliant for the benefit of hundreds of SMEs using the substance further down.

This is what happened in March 2015, when more than 150 supplier companies teamed up to file a common application for Chromium Trioxide, a substance used for chrome-plating of parts in the aeronautics and automotive sectors.

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It was the first time that an application was filed “upstream” to cover so many downstream users, the consortium said in a letter.

“Because of the multitude of uses, users, confidentiality and competition law concerns, the data was collected by independent consultants and presented in a neutralised and aggregated form in the application,” the consortium document stated.

However, Meirsschaut said the Helsinki-based European Chemicals Agency (ECHA) “had a tendency not to accept that”, requesting more information and insisting that data be presented on a company-by-company basis.

This is a no-go for consortium members who claim upstream applications are “a fundamental necessity” due to the resource and knowledge limitations at the downstream user level, which are mainly SMEs.

Otherwise, they write, “production of products relying on Chromium Trioxide would be stopped in Europe”, affecting many different industries and causing “large scale job losses” across Europe.

“We should accept upstream applications at a very high level so that the small companies downstream can profit from that,” said Meirsschaut.

Adopted a decade ago, REACH gave rise to one of the most epic lobbying battles in EU history, pitting green campaigners against the powerful chemicals industry.

This is why the European Commission is keen to play down expectations for the 2017 review, calling it a mere "monitoring report", which Brussels is required to undertake every five years.

"It's a review report and not a legislative proposal," underlined Lucia Caudet, a Commission spokesperson, drawing attention to the roadmap drawn up by the EU executive for the review.

This will be the second such review undertaken by the Commission since REACH was adopted.

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Five years after its adoption, the European Commission is preparing to review the controversial REACH regulation, which for the first time required chemical manufacturers to justify that their products are safe for consumers before placing them on the market.

  • 2017: Evaluation report to monitor progress on REACH and propose recommendations to improve its functioning. According to the Commission roadmap, it will "put emphasis on potentials for burden reduction and simplification".
  • 2018: Deadline to register substances produced in the smallest bond of quantities, between 1-100 tonnes.

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