TCS Daily


Failing Chemistry

By Eileen Norcross - April 5, 2004 12:00 AM

Will chemicals companies soon be fleeing Europe for friendlier places? That is likely to be decided this month by the European Parliament when it considers legislation to create a new regulatory regime for chemicals. Called REACH (Registration, Evaluation, Authorization of Chemicals), the new system will establish strict testing and registration requirements for 30,000 new and existing chemicals on the market. Based on a 2001 European Commission white paper, the intent of REACH is to protect human health and the environment from the toxic effects of chemicals, while at the same time strengthening the competitive position of the EU. However, it is unlikely to achieve its aims.

To start with, the costs are staggering. Testing 30,000 substances over the suggested 11-year time frame will cost billions -- $2.4 billion by the EU's own estimates but others put the figure as high as $9 billion, enough to drive small and medium sized manufacturers (SMEs) out of business. In France alone, that will mean a 10 percent drop in production for 80 percent of SMEs.

Chemicals companies that weather the initial costs will have to slash their spending on R&D and innovation to stay afloat, denying the public access to newer and better chemicals technology. REACH is certain to drive many chemicals businesses out of Europe, causing job losses and destroying one of the most robust manufacturing sectors in the EU.

The economic repercussions do not end at the EU's borders. REACH demands that importers of chemicals into the EU meet the same requirements as domestic manufacturers. US chemical imports totaling $20 billion annually will also be affected. And REACH is not limited to chemicals, but also calls for manufacturers who use chemicals in finished products such as toys, textiles, and cosmetics to also submit to the process.

The reason for the high costs is simple. REACH is based on the precautionary principle, a "better safe than sorry" rule that asserts the existence of a hazard even in the absence of evidence. As such, the precautionary principle switches the burden of proof. Instead of the government having to show a given substance poses a risk, the manufacturer must prove it is safe. In the absence of scientific proof, the substance may be banned.

This approach is a rejection of scientific risk assessment. Risk assessment estimates and characterizes risk while specifying the probability of certain outcomes. The precautionary principle does not assess risk, but assumes hazard where evidence is lacking. Since the precautionary principle cannot assess risks, it cannot manage risks for the greatest public benefit. If the precautionary principle leads to a ban of a substance, it also forces the public to forgo the benefits associated with that substance.

Initially, EU Environment Commissioner Margot Wallström, architect of the legislation, insisted that the law would save between $20 and $60 billion over 30 years due to a decrease in chemicals-related diseases, namely occupationally induced cancer. This translates to a decrease of between 2,200 and 4,300 cancer deaths per year. Yet, these are primarily cancer deaths related to asbestos, a naturally occurring mineral that should not be included in a chemicals policy. So far the EU has not shown a causal link between cancer deaths and chemicals. And under the new legislation, it would not need to in order to ban a substance.

Such an approach to public health fails to consider the consequences of banning a chemical without a balanced assessment of risks and benefits. Acting on the basis of precaution without proof has its own risks. When the Peruvian government decided to ban chlorine in its drinking water between 1991-1996 based on environmentalists' assertion that it caused cancer, it created a cholera epidemic. The disease sickened 11.3 million people and killed 11,000. No scientific evidence has before, or since, shown a link between chlorine intake in drinking water and cancer.

The EU does not need to base its chemicals policy on a bad idea. The principles of scientific risk assessment need not be rejected. It is possible to establish a testing framework for chemicals without using the precautionary principle. Chemicals testing and risk assessment can be the responsibility of industry and not government authorities. Whoever conducts the assessment, should seek to elicit an accurate and unbiased estimate of risk. Neither an "innocent until proven guilty rule" or "guilty until proven innocent rule" will advance that objective.

Eileen Norcross is a Research Fellow with the Government Accountability Project at the Mercatus Center at George Mason University. She can be reached at enorcros@gmu.edu.


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