European Commission

Further Impact Assessment of REACH

ETUC ConferenceBrussels, 11 February 2005

Patrick HennessyDG Enterprise and Industry

Why REACH?

• General Public demands better information on chemicals

• Inadequate chemical testing regime for “old” chemicals and backlog in evaluation

• Need to maintain single market & establish level playing field in chemicals

Commission Impact Assessment

• Direct testing and registration costs

• Wider costs to downstream users

• Health and environmental benefits

• Computer-based methods to reduce animal tests

• Bureaucracy reduced following Internet consultation with 6000 replies

Results of Commission Impact AssessmentOctober 2003

Balance between economic and environmental considerations

• Direct costs € 2.3 billion• Overall costs: € 2.8 – 5.2 billion

(incl. Direct costs)• Effect on innovation: probably positive• Overall benefits very difficult to quantify:

possible health benefits: € 50 billion.

Stakeholder Workshop in November 2003

Presentation of Commission Impact Assessment and discussion of key issues with the stakeholders

(industry, trade unions, environmental NGOs)

Three issues identified for further investigation:

1. Supply chain impacts:

commercial substance withdrawal

2. Impacts on innovation

3. Impacts on New Member States

Memorandum of Understanding between UNICE/CEFIC and EU Commission

March 2004

Objectives:• Further specific studies on cost effectiveness• Inclusive and transparent process,

involving all stakeholders

Methodology:• Business case study (factual evidence)• Critical substances in significant value chain• Transparent investigation process and validation

Time frame: results by early 2005

Working Proceduresunder Memorandum of Understanding

Working Group• Representatives from industry, trade unions

(incl. EMCEF), NGOs, and Commission • Meets about once a monthHigh-level Group• Commissioners, high level representatives

of Council, European Parliament, industry, trade unions, and NGOs

• First meeting in January 2005

UNICE/CEFIC Industry consortium study

KPMG Consultants

• Scope:• Commercial substance withdrawal • Innovation and business benefits

• 4 business cases on value chains within:• Automotive industry (e.g. vehicle engine)

• High-Tech Electronics (e.g. Printed Circuit Boards)

• Inorganics Industry (e.g. steel, cement)

• Flexible Packaging (e.g. inks, adhesives)

Study on REACH & the New Member States

Commission Scientific Service (JRC/IPTS)

• Sectoral overview and business cases of specialty chemicals industry and downstream users

• Focus on Poland, Czech Republic, and Estonia

• Comparable to KPMG study

Study on REACH & SMEs in Textiles Industry

Envirotex/CAST for DG Enterprise

• Special focus on SMEs, both specialist chemical producers and textile mills

• Impacts on management, legal, technical resources

• Financing of testing and registration costs

• Case studies, comparable to KPMG study

Key Issues: Supply chain impacts

• Size of testing and registration costs relative to future profitability (especially important for lower volumes)

• The incidence of the commercial withdrawal of substance of critical importance for downstream users

• Scope for substitution and pass-through

• Effects on SMEs

Key issues: Innovation impacts

Identifying the positive and negative effects:

• Higher volume thresholds for new substances• New R&D provisions• Time-to-market effects• Production flexibility effects• Induced-innovation:

due to substitution or commercial withdrawal

Expected Timetable from Now

March Finalisation of studies

April Presentation to Stakeholder Working Group and High Level

Group

May Discussion in European Parliament and Council of Ministers

Moving Forward on REACHthe View of this Commission

• No amended proposal before EP’s first Reading

• Disposition to work closely with EP and Council to arrive at a balanced and workable solution

• “The Commission stresses the need to arrive at a decision which will be consistent with the Lisbon goals as regards the competitiveness of European industries and encouraging innovation, and which will achieve a marked improvement in health and environment to the benefit of Europe’s citizens” (Lisbon Communication)