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EU: Chemicals: A tale of fear and lobbying

by Matthew SaltmarshInternational Herald Tribune
October 27th, 2006

Three years ago, Margot Wallstrom, who was then the European Union's environment commissioner, revealed to a startled Brussels press corps that a blood test had found the presence of 28 artificial chemicals in her body, including DDT, a pesticide banned from European farms since 1983, when it was found to harm wildlife and attack the nervous system.
 
"I was surprised to see some of these chemicals in my blood," Wallstrom, now deputy president of the European Commission in charge of communication, said in a recent telephone interview from Brussels. "I was raised in northern Sweden, where our air and water were supposed to be clean."
 
Wallstrom's disclosure was one high-intensity moment in an eight-year campaign by European officials to curb what health experts call a relentless march of toxic chemicals - used in just about everything from ballpoint pens to household cleaners to DVDs - into the everyday lives of Europeans.
 
The legislation, known as Reach, for Registration, Evaluation and Authorization of Chemicals, has generated one of the bitterest and most expensive lobbying campaigns the European establishment in Brussels has ever seen.
 
For European citizens, the rules could raise the cost of everyday products but also offer hope that there would be less chance of contact with harmful substances through those products.
 
Chemical companies across the spectrum, from large multinationals like Dow Chemical to industry associations representing small enterprises that make fragrances for dishwashing liquid, have spent billions trying to persuade lawmakers to water down or drop legislation that they say would unnecessarily multiply tests for harmful chemicals and cost the industry additional billions.
 
Nongovernmental organizations like Greenpeace are fighting back, saying the rich and aggressive chemicals lobby has already neutralized the proposed rules and asserting that the battle is solely for health and safety. European heads of state and the U.S. State Department have at various times joined the battle in seeking to shape the debate in favor of their citizens, corporate or otherwise.
 
A new version of the legislation heads for a final vote at the European Parliament by the end of the year. Lobbyists and diplomats are still fighting for last-minute changes. Whether the final law leans toward industry or the environment, the financial stakes of the legislation for businesses around the world are sizable.
 
Chemicals, plastics and rubber generate about 3.2 million jobs in Europe at more than 60,000 companies, according to the European Commission. In 2004, world chemical sales were estimated at €1.74 trillion, or $2.20 trillion, with revenue from the 25 countries of the European Union accounting for €586 billion, according to the European Social Investment Forum, a nonprofit organization whose members include managers of some of the largest investment funds.
 
When the Reach proposal was introduced 2001, it sought to impose a thicket of new testing requirements. An initial version of the proposal that year would have required chemical makers to perform extensive toxicological and environmental tests on the 30,000 chemicals most commonly used in commerce. Over the following years, the proposals were amended, watered down in the opinion of some and improved in the view of others.
 
For example, one contentious part of the original plan would have imposed the new testing rules on companies that produce chemicals in annual amounts as small as 10 kilograms, or 22 pounds, the size a small bag of garden fertilizer. That measure was ultimately killed after industry and governments argued that it would place an undue cost burden on small companies.
 
Environmentalists and health experts are angry that, among other things, some of the thresholds used to determine whether a safety test is needed for certain chemicals were altered, cutting the number of substances originally covered by the measure by about two-thirds. Greenpeace estimates 17,500 chemicals will be excluded from the original list.
 
From the start, the German chemical industry association, the Verband der Chemischen Industrie, which includes companies like BASF and Bayer, and the German government have led a fierce campaign to soften the original proposal, according to campaigners and European Commission officials. The Union of Industrial and Employers' Confederations in Europe, or Unice, and the European Chemical Industry Council, or Cefic, were also active in the project. Companies like Novartis of Switzerland, Rhodia of France and Shell Chemicals of Britain all worked with Cefic.
 
The leaders of Britain, France and Germany sent a letter to the commission in 2003 describing the proposal as "too bureaucratic."
 
"This was a very intensive lobby campaign," said Wallstrom, the commission's deputy president. "I mean really! And the way they lobbied - the national governments!"
 
Dow Chemical, the U.S. giant, Unice, Cefic and Bayer deny that they tried to kill the legislation and argue that their lobbying was legitimate because of estimates showing that the proposals would impose a staggering financial burden on the chemical industry.
 
In 2003, the commission estimated that macroeconomic effects would be limited and asserted that Reach would yield business benefits including improvements in innovation, competitiveness and workers' safety. The total costs, including those to smaller, or "downstream," users, were estimated at €2.8 billion to €5.2 billion.
 
If the legislation succeeds in reducing chemical-related diseases by 10 percent, the commission added, the health benefits would be €50 billion over 30 years, while it could prevent 2,200 to 4,300 occupational cancer cases per year.
 
In 2004, the European Commission and industry groups agreed to ask KPMG, the accounting firm, to assess the costs of the legislation. Rob Ronday, a consultant associate at KPMG who led a nine-month study on the Reach legislation, said he and his team had been inundated with faxes, e-mail messages, telephone calls and requests for meetings at all hours by representatives of the chemicals industry. "I wouldn't say the lobbying was hostile," he said, "but it was very close to that."
 
Wallstrom recalled that commissioners and their aides in Brussels "just didn't have the resources to respond." She added: "It was so unbalanced. Who will speak for the fish and the unborn?"
 
Meanwhile, the United States joined the battle. A report prepared for Representative Henry Waxman, a California Democrat, and released in 2004 uncovered documents and transcripts showing that Bush administration officials were "actively meeting with the U.S. chemicals industry to solicit their views and concerns" on the legislation.
 
The report said the lobbying effort had included pressure from the Environmental Protection Agency, the Office of the U.S. Trade Representative and the Departments of State and Commerce .
 
In March 2002, Colin Powell, then the secretary of state, sent a cable directing U.S. diplomatic posts to "raise the EU chemicals policy with relevant government officials" and to object to the Reach legislation as "a costly, burdensome and complex regulatory system."
 
The report also said officials working for the U.S. trade representative had exchanged e-mail messages with industry representatives identifying European Union nations that needed to be "targeted" and urging industry to "get to the Swedes and Finns and neutralize their environmental arguments."
 
C. Boyden Gray, the U.S. ambassador to the European Union, said he had not "received instructions from people in Washington or the chemical industry" to fight the legislation.
 
As the European Parliament prepares for a final vote on the legislation in November or December, Guido Sacconi, an Italian Socialist who is steering it through Parliament, said he was confident that a compromise could be found.
 
"The distance between the sides is not so big," Sacconi said. "The principle is the same."
 
Gray said he still hoped for changes that ensured that small businesses and U.S. companies were not unduly punished. "Our concern is for the small guy," he said.
 
Wallstrom, the European Commission vice president, acknowledged that the legislation would fall short of some of its original aims but insisted that "the whole debate has been useful" and would create a need for more improvements.
 
Others are not so sure that all the time, energy and money has been worthwhile.
 
"The commission will have to ask itself, 'Was it all worth it, all the resources and the money?" said Ronday, the KPMG consultant associate.
 
"They might want to do it differently next time."
 
 
PARIS Three years ago, Margot Wallstrom, who was then the European Union's environment commissioner, revealed to a startled Brussels press corps that a blood test had found the presence of 28 artificial chemicals in her body, including DDT, a pesticide banned from European farms since 1983, when it was found to harm wildlife and attack the nervous system.
 
"I was surprised to see some of these chemicals in my blood," Wallstrom, now deputy president of the European Commission in charge of communication, said in a recent telephone interview from Brussels. "I was raised in northern Sweden, where our air and water were supposed to be clean."
 
Wallstrom's disclosure was one high-intensity moment in an eight-year campaign by European officials to curb what health experts call a relentless march of toxic chemicals - used in just about everything from ballpoint pens to household cleaners to DVDs - into the everyday lives of Europeans.
 
The legislation, known as Reach, for Registration, Evaluation and Authorization of Chemicals, has generated one of the bitterest and most expensive lobbying campaigns the European establishment in Brussels has ever seen.
 
For European citizens, the rules could raise the cost of everyday products but also offer hope that there would be less chance of contact with harmful substances through those products.
 
Chemical companies across the spectrum, from large multinationals like Dow Chemical to industry associations representing small enterprises that make fragrances for dishwashing liquid, have spent billions trying to persuade lawmakers to water down or drop legislation that they say would unnecessarily multiply tests for harmful chemicals and cost the industry additional billions.
 
Nongovernmental organizations like Greenpeace are fighting back, saying the rich and aggressive chemicals lobby has already neutralized the proposed rules and asserting that the battle is solely for health and safety. European heads of state and the U.S. State Department have at various times joined the battle in seeking to shape the debate in favor of their citizens, corporate or otherwise.
 
A new version of the legislation heads for a final vote at the European Parliament by the end of the year. Lobbyists and diplomats are still fighting for last-minute changes. Whether the final law leans toward industry or the environment, the financial stakes of the legislation for businesses around the world are sizable.
 
Chemicals, plastics and rubber generate about 3.2 million jobs in Europe at more than 60,000 companies, according to the European Commission. In 2004, world chemical sales were estimated at €1.74 trillion, or $2.20 trillion, with revenue from the 25 countries of the European Union accounting for €586 billion, according to the European Social Investment Forum, a nonprofit organization whose members include managers of some of the largest investment funds.
 
When the Reach proposal was introduced 2001, it sought to impose a thicket of new testing requirements. An initial version of the proposal that year would have required chemical makers to perform extensive toxicological and environmental tests on the 30,000 chemicals most commonly used in commerce. Over the following years, the proposals were amended, watered down in the opinion of some and improved in the view of others.
 
For example, one contentious part of the original plan would have imposed the new testing rules on companies that produce chemicals in annual amounts as small as 10 kilograms, or 22 pounds, the size a small bag of garden fertilizer. That measure was ultimately killed after industry and governments argued that it would place an undue cost burden on small companies.
 
Environmentalists and health experts are angry that, among other things, some of the thresholds used to determine whether a safety test is needed for certain chemicals were altered, cutting the number of substances originally covered by the measure by about two-thirds. Greenpeace estimates 17,500 chemicals will be excluded from the original list.
 
From the start, the German chemical industry association, the Verband der Chemischen Industrie, which includes companies like BASF and Bayer, and the German government have led a fierce campaign to soften the original proposal, according to campaigners and European Commission officials. The Union of Industrial and Employers' Confederations in Europe, or Unice, and the European Chemical Industry Council, or Cefic, were also active in the project. Companies like Novartis of Switzerland, Rhodia of France and Shell Chemicals of Britain all worked with Cefic.
 
The leaders of Britain, France and Germany sent a letter to the commission in 2003 describing the proposal as "too bureaucratic."
 
"This was a very intensive lobby campaign," said Wallstrom, the commission's deputy president. "I mean really! And the way they lobbied - the national governments!"
 
Dow Chemical, the U.S. giant, Unice, Cefic and Bayer deny that they tried to kill the legislation and argue that their lobbying was legitimate because of estimates showing that the proposals would impose a staggering financial burden on the chemical industry.
 
In 2003, the commission estimated that macroeconomic effects would be limited and asserted that Reach would yield business benefits including improvements in innovation, competitiveness and workers' safety. The total costs, including those to smaller, or "downstream," users, were estimated at €2.8 billion to €5.2 billion.
 
If the legislation succeeds in reducing chemical-related diseases by 10 percent, the commission added, the health benefits would be €50 billion over 30 years, while it could prevent 2,200 to 4,300 occupational cancer cases per year.
 
In 2004, the European Commission and industry groups agreed to ask KPMG, the accounting firm, to assess the costs of the legislation. Rob Ronday, a consultant associate at KPMG who led a nine-month study on the Reach legislation, said he and his team had been inundated with faxes, e-mail messages, telephone calls and requests for meetings at all hours by representatives of the chemicals industry. "I wouldn't say the lobbying was hostile," he said, "but it was very close to that."
 
Wallstrom recalled that commissioners and their aides in Brussels "just didn't have the resources to respond." She added: "It was so unbalanced. Who will speak for the fish and the unborn?"
 
Meanwhile, the United States joined the battle. A report prepared for Representative Henry Waxman, a California Democrat, and released in 2004 uncovered documents and transcripts showing that Bush administration officials were "actively meeting with the U.S. chemicals industry to solicit their views and concerns" on the legislation.
 
The report said the lobbying effort had included pressure from the Environmental Protection Agency, the Office of the U.S. Trade Representative and the Departments of State and Commerce .
 
In March 2002, Colin Powell, then the secretary of state, sent a cable directing U.S. diplomatic posts to "raise the EU chemicals policy with relevant government officials" and to object to the Reach legislation as "a costly, burdensome and complex regulatory system."
 
The report also said officials working for the U.S. trade representative had exchanged e-mail messages with industry representatives identifying European Union nations that needed to be "targeted" and urging industry to "get to the Swedes and Finns and neutralize their environmental arguments."
 
C. Boyden Gray, the U.S. ambassador to the European Union, said he had not "received instructions from people in Washington or the chemical industry" to fight the legislation.
 
As the European Parliament prepares for a final vote on the legislation in November or December, Guido Sacconi, an Italian Socialist who is steering it through Parliament, said he was confident that a compromise could be found.
 
"The distance between the sides is not so big," Sacconi said. "The principle is the same."
 
Gray said he still hoped for changes that ensured that small businesses and U.S. companies were not unduly punished. "Our concern is for the small guy," he said.
 
Wallstrom, the European Commission vice president, acknowledged that the legislation would fall short of some of its original aims but insisted that "the whole debate has been useful" and would create a need for more improvements.
 
Others are not so sure that all the time, energy and money has been worthwhile.
 
"The commission will have to ask itself, 'Was it all worth it, all the resources and the money?" said Ronday, the KPMG consultant associate.
 
"They might want to do it differently next time."





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