REACH not reachable to emerging economies

Focusing on the problems that could crop in as emerging economies become a part of the REACH regulation, the second global Helsinki Chemicals Forum (HCF), which followed after ECHA’s fourth stakeholder's day, discussed the problems and worked out solutions to make REACH reach and accessible to the world. Arshiya Khan reports

Nobel laureate speaks

Panelists at a discussion

The second Helsinki Chemicals Forum was hosted in Helsinki, Finland on the 20th and 21st May, making it a tradition now, as said by Jussin Pajunen, Mayor, Helsinki. The theme was once again debates regarding making REACH, the chemicals regulation of EU, reach the nooks and corners of the world. The forum saw experts and veterans from across the world to share their thoughts on the gaps that REACH now has.

A day prior to the inauguration of HCF, was European Chemicals Agency fourth Stakeholder's day on the 19th May which discussed the details of Classification and Labelling of chemical substances. Over 350 people from EU, BRIC (Brazil, Russia, India, China) and the US participated to share REACH experiences and lessons. Though the main aim of ECHA was to make rapid progress towards resolving outstanding issues in implementation, one of which was high-end IT tools, to make notification easier.

The opening ceremony of HCF 2010 kickstarted at the hands of Antonio Preto, Head of Cabinet — Industry and Entrepreneurship, European Commission. He pointed at the co-operation of regulations on a global level which is serious. Till now chemical regulations has not been given the importance of sustainability, economic development, though it is very vital. Elaborating further Preto highlighted the importance of the chemical industry in Europe, which employs 13 million workers. And is yet to provide millions of jobs unlike the textile, automobiles, electronics sectors, hence he remarked, “The chemical industry contributes to the economic prosperity of the country, while adding to the burden of diseases.

Call for regulatory convergence?

Majority of speakers called for regulatory convergence. The chemical industry in countries like Brazil, China and India is growing very fast, and they may pass the volume of traditional chemical producers of the EU and US in this decade. This further emphasised the need for common rules. In case of the least developed countries, where regulations in this field are often non-existent, the challenge of harmonisation is immense and will take years to achieve. As Khalida Bouzar, Director, UNEP, underlined that new chemicals recommendations such as the UN's Globally Harmonised Systems (GHS) for classification and labelling of dangerous chemicals provide good models for emerging economies to implement modern legislation. The year 2020 is the target year to reach Strategic Approach to International Chemicals Management (SAICM) under UNEP. Also, OECD initiatives form a basis for burden-sharing.

Regarding competitiveness of the industry, Martin Evans of JP Morgan Cazenove pointed out that investors are not interested in what kind of regulation prevails, as long as it works i.e. provides a stable business environment.

While the forum was open to discussions, what gathered momentum was the implementation of REACH which people felt was increasing considerably over other chemical regulations in the US, Canada, Australia etc whose implementation failed. The panelists and experts raised their voice to make Substance Information Exchange Forum (SIEFs) work. As it is clear that SIEF system needs order, and its regulatory framework is far from sufficient. Most importantly data sharing which is a part of the compulsory information exchange of SIEF. Also as REACH requires companies to share data thereby indicating that they should meet and communicate on a regular basis. However, the resulting proximity between the companies tends to increase the risk that they will enter into anti competitive agreements with one another and more generally violate the competition law.

Thus seeking more clarity on SIEF was a common opinion of many.

The need for REACH?

Since the earlier chemical regulations were made up of too many legislation, REACH was bought into picture with the idea of having one unified regulation, introducing an EU wide system for the management of chemicals. There was also lack of information about many chemicals already on the market. REACH addresses this issue. Off late there has been revisions and addition in REACH . This has brought to the forefront pros and cons, in terms of data confidentiality, burden of proof in the industry, convergence of new and existing substances, obligation to work together, more inventions, prioritisation, etc. Therefore REACH is comprehensive and ambitious, but is it the 'smartest' questioned Perenius. Therefore the need to address workability issues which at present are complex and costly.

Clarity on SMEs

As the sessions at the forum dealt with REACH implementations, challenges, financial constraints, and chemicals policies in emerging countries continued, there were serious points made by S C Gupta, Ministry of Chemicals and Petrochemicals, India, who was more critical of REACH as he highlighted, “The definition of small-and medium-sized enterprises in the REACH legislation does not apply to India, as what could be termed as a large company for EU member states is small for us. The regulation also does not offer any cost benefits for us.”

Taking the thought further, Zhao Ziying, Ministry of Environmental Protection, China said, “The Chinese chemical industry is feeling the pressure of the new regulation. However, the new regulations provides us with an opportunity to improve our own management of chemical substances.”

What makes REACH more complex in nature for emerging and developing nations is that they are unfamiliar with REACH, due to lack of capital, manpower, access to information, and for them to become familiar with this it will take another 10-20 years, hence its more likely that REACH will take time to become a global phenomena.

Can REACH become a global model?

Though now it has become quite apparent that REACH requires considerable attention for implementation across countries, therefore the need for standardisation to enhance global trade. As for now some big players like the US are re-visiting their Chemical regulations, added Preto.

On the same tunes Geert Dancet, Executive Director, ECHA, said, “ We see REACH having a global impact,” as his visits to the US has made him realise. Therefore to make it a global regulation competitiveness has to be discussed, which is vital, felt experts.

Highlighting the existing regulations in countries like US, Canada, Australia, Charles Auer, Charles Auer and Associates, USA, distinguished how the implementation of REACH differs from other countries. Whereas, Lena Perenius, Executive Director, ICCA/Cefic, highlighted a SWOT analysis of the chemical industry by 2020, saying: Many regulations are developing across the world, and there is an increased regulatory convergence facilitating trade and making it a level playing field. Speaking on the foreseeable trends, Perenius said, there has been an increased demand for global harmonised system.

Therefore to make it a global regulatory platform, there needs to be a fundamental understanding of sharing data. Added, George M Enei, Director General, Environment Canada, “The regulatory convergence and value to Canada is 1.5 percent of world market for chemicals, so we can do it alone. But to ensure harmonisation we believe in collaborating with REACH, though we have a better approach in Canada too. But its fundamental to move forward and collaborate with REACH.”

Though Dancet added, “It is not clear yet how exactly REACH could feature in global chemicals legislation because there are so many differences on this issue between different countries.” However ECHA and its Canadian counterparts, Health Canada and Environment Canada, signed a memorandum soon after on complying with REACH. A similar one is expected to be signed with the United States in the near future.

Citing the example of emerging economies, Robert Visser, Acting Director, Environment Directorate, OECD, said, “Regulatory convergence would be the food for OECD, but the challenge would be the new emerging economies coming in, therefore there is a lot of work to be done to make REACH globally workable.”

Stressing on the role played by Asia, Dan Steinbock, India, China and America Institute, notes that, Middle East and China will play an important role in the M&A market and that China is set to take leadership position in the chemical industry. Moreover BRIC countries will shape the future of the global chemical industry. As he believes that by 2015, China will over take the US and in the mid-term focus will shift from EU and US to Asia and Middle East.

As REACH is set to be revised in 2010, it will throw an opportunity on emerging countries to either follow the regulation or strive for a better one in place. Though the European Union is highly committed to make REACH work, lack of co-ordination, difference in classification of SMEs and price constraint still act as barriers. So will the superpower till now ie the US take the lead in the chemical regulations as well, or will REACH become the platform for the chemical regulations, its yet to be known.

arshiya.khan@expressindia.com