BUSINESS INSIGHTS

BY WILLIAM J. STORCK

A brouhaha broke out this month in the commentary pages of the Financial Times, the U.K. business newspaper, over the European Commission's proposed chemicals policy, called Registration, Evaluation & Authorization of Chemicals--or REACH.

The fracas actually began on Oct. 30, with the publication of an editorial, "A Better Solution," which began: "Erkki Liikanen, the European commissioner for enterprise, looks on the bright side. Faced with 6,000 responses to the Commission's badly flawed proposal for new regulation of the chemicals industry, he argued yesterday that it had helped to stimulate 'wider public appreciation' that the industry 'is a precious asset.' Kicking someone in the shins also helps to raise awareness of his legs, but that does not justify the act."

Acknowledging the recent revision of the proposals, which would somewhat lessen REACH's original requirements, the Times said, "Although progress has been made, some unsatisfactory elements remain. One is the burden of proof, which threatens to engulf those who make, distribute, and use chemicals in cumbersome regulation and monitoring. Another is the strange emphasis on defining whether chemicals need to be registered, based on the amount being produced. This has the smack of bureaucracy, rather than something that focuses attention on the most potent chemicals."

The appearance of the editorial brought a quick letter from Margot Wallström, European commissioner for environment and one of the architects of the policy, responding that the newspaper's opinion "reflects an outdated view of commercial reality. In a modern society, consumer trust in safe products is a guarantee for a successful business."

Calling the chemicals reform a test case for sustainability, Wallström said the policy has to reconcile economic, social, and environmental concerns. Achieving this balance is particularly important in the case of chemicals, where the stakes are so high on all three concerns. "It is high time that European citizens got the high level of protection for environment and health they have a right to expect. This is why we need a new strategy for chemicals management, and we should never forget this.

"Industry has a crucial role in this process," she said. "Continuous scaremongering about economic ruin is a sign of naivety and ignorance with serious risks for business failure."

Thereupon, the Scientific Alliance, a London-based nonprofit organization advocating sound science in government policy and general public debate, weighed in. A letter from Mia Nybrant, director of the alliance, said: "It is crucial that regulation is based on sound science. Rational evaluation of both the risks of chemicals and the very real risks of withdrawing chemicals such as fire retardants is essential. There has been considerable politicization of science within the chemicals debate, and accusations of scaremongering do little to promote a return to sensible and informed discussion."

Nybrant concluded: "The REACH legislation, as it now stands, is still unworkable and irrational. Furthermore, by concentrating solely on the negative impacts of chemicals, it will not assist industry or regulators in gaining the trust of people at large. The public deserves proper communication, based on sound science, of the risks and benefits of chemicals. This must be the aim of the new chemicals legislation."

ALSO RESPONDING in the strongest terms to Wallström's letter was Guy Villax, chief executive officer of Portugese fine chemicals maker Hovione. In an open letter sent to Wallström and to business and industry publications, including C&EN, Villax tackles the issue of maintaining competitiveness against countries that have little regulation of chemicals.

Villax wrote that REACH will put European fine chemicals producers at an even greater disadvantage than they already suffer from existing regulation. REACH is "little more than the widening of existing legislation that applies to all new chemicals in Europe," he said. "We, the producers of active pharmaceutical ingredients (APIs), have for many years needed to generate toxicology data whenever we produced amounts as small as 10 kg of any new chemical. It is common knowledge that 97 out of 100 products tested clinically never make it to market. So tens of thousands of products and their intermediates have needed up to $80,000 worth of testing each--a phenomenal waste of money, rats' lives, and time."

Pointing out that the active ingredients in more than three-fourths of medicines found in U.S. pharmacies are not made in the U.S. but abroad, Villax said, "The current trend is that an increasing proportion of all U.S. and [European Union] generic medicines use APIs no longer produced in the Midlands [of England] or in the valleys of the Po, the Rhone, or the Rhine, but in the Far East."

Villax saved his harshest comments for the end. Aiming his words directly at Wallström, he said: "The central flaw of your policy is that you are seeking to impose regional legislation on an industry that is now global. Do you realize that in making us uncompetitive you do nothing but stimulate production elsewhere? EU policies have clearly made it harder for us to compete successfully with Indian and Chinese API producers. Sadly, these business opportunities seem to lead some people that appear to have neither the technical competencies, nor the ethics, nor the civic development to be involved in advanced technology industries. The consequences are dead people and deformed babies."

Villax and the others make some telling points. Europe has a long history of enacting social and regulatory policy that hurts industry's competitiveness against the rest of the world. And sound science is needed to effect the right balance between business and societal needs.

There is still time for debate on REACH. On Jan. 1, 2004, the presidency of the EU will be taken over by Ireland, where the government is on record as being very concerned about the effects of REACH on its fine chemicals industry. And the European Parliament will dissolve in April, after which the new Parliament will approve new commissioners to the EC.

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