Important article in the Wall Street Journal about the way the US chemical industry, notably DOW, is controlling the US Government's position on important European chemical policy initiatives that could have implications here in the US. The article is based on leaked internal memos outlinging the US Government/chemical industry strategy.

To learn more about the European initiatives and their US implications, the Ecology Center is hosting a policy briefing in Lansing on September

WSJ - online

U.S. Opposes EU Effort to Test

Chemicals for Health Hazards

By Thaddeus Herrick in Houston, Matthew Newman in Brussels and Michael Schroeder in Washington

Amid festering trade and diplomatic tensions, the Bush administration is siding with the U.S. chemical industry to wage an unusually aggressive campaign against European proposals that would require testing tens of thousands of chemicals for potential health and environmental hazards at a cost of billions of dollars.

The controversy comes as the European Union increasingly has asserted its regulatory powers in the global marketplace, in matters ranging from genetically modified crops to consumers' Internet privacy. The growing role of the EU, a 15-nation trading bloc and the world's second-largest economy, threatens the U.S.'s traditional role as the world's standard setter for manufacturing and safety. U.S. producers are finding that if they want to export to the lucrative European market they must comply with the EU's separate and often stricter regulations.

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The U.S. State and Commerce departments, the Environmental Protection Agency and the office of the U.S. Trade Representative have sided with companies, including Dow Chemical Co., Rohm & Haas Co. and Lyondell Chemical Co., and trade groups in opposing the EU's chemical-testing initiative. That has angered environmentalists, who say that lax U.S. policy allowed dangerous chemicals such as PCBs and DDT to be used for decades before they were found to be potentially cancer-causing.

U.S. companies volunteered in 1998 to screen some 3,000 high-volume chemicals for environmental and health hazards by 2005. Still, U.S. policy permits the use of some 30,000 chemicals that predate testing requirements under the Toxic Substances Control Act of 1976.

The EU Commission, the executive arm of the European Union, estimates the direct costs of screening these mostly untested chemicals to be between 1.4 billion and 7 billion (U.S.$1.6 billion and $7.8 billion) over 11 years. Overall costs, including those to eliminate toxic substances from products, could be considerably higher. But commissioners say the benefits, mostly from expected lower health-care costs, are estimated at 18 billion to 54 billion over a 30-year period.

The American Chemistry Council says the proposal could cost U.S. companies alone some $8 billion in direct testing over the next decade, though that figure may be high because the costs would likely be shared by a consortium of producers. The council says testing costs could force specialty companies out of business, raise liabilities and stifle innovation. Ultimately, some U.S. manufacturers might have to stop doing business in the EU, which imports more than $20 billion in chemicals from the U.S. annually, the council says.

The EU's proposed regulation, known as Registration, Evaluation and Authorization of Chemicals, or Reach, would require manufacturers to phase in the examination of previously untested chemicals by 2012. A final version of the regulation is due this fall, though approval by member governments and the European parliament could take as long as two years.

The U.S.-led opposition appears to be having some impact. In May, the EU revised its chemical-testing proposal to exempt a number of chemicals that are used to make other products that don't come in contact with humans.

Still, Washington's effort comes as the U.S. struggles to maintain its international clout on trade issues. The Bush administration's go-it-alone approach to Iraq has stirred suspicions in many parts of the world of Washington's motives.

Documents gathered by the Boston-based Environmental Health Fund under the Freedom of Information Act show that the Bush administration has been a leader in fighting the EU chemical-testing proposal. Don Wright, a desk officer in the Commerce Department's Office of European Union and Regional Affairs, wrote in a January 2002 background paper that the U.S. government "has advised industry to develop an official position and strategy as soon as possible to assist in influencing EU's draft text." In an internal memo, the department even chided the U.S. chemical industry for not joining the lobbying fight more quickly and aggressively, the documents show.

That same month, the American Chemistry Council hosted a meeting at its Arlington, Va., headquarters to discuss EU chemical policy with EU officials. Attending that meeting were officials from the Department of Commerce, the EPA and U.S. Trade Representative and executives from Dow Chemical, Rohm & Haas and Lyondell Chemical, among other international companies.

William Lash, assistant Commerce secretary for market access and compliance, said in an interview that coordination among Commerce, EPA and the State Department shows that the "U.S. government is speaking in one voice on this issue." Mr. Lash said U.S. representatives have been rallying support from numerous EU member governments and foreign industry groups affected by the proposal. The Bush administration also has lobbied other countries with sizable chemical industries, including Brazil, Canada, China and Japan, to oppose the EU proposal, he said.

The State Department also lobbied against the Reach proposal. Rockwell Schnabel, U.S. ambassador to the EU, registered concerns with EU commissioners last spring and criticized the measure in meetings with business groups and European officials. "Not only would the proposed chemical policy impact the chemical industry, but it could hurt manufacturers ranging from toys to textiles and autos to computers," said Mr. Schnabel in a speech at the American Chamber of Commerce in Budapest last year.

Documents obtained by the Environmental Health Fund show that U.S. diplomats in EU-member states were instructed by Secretary of State Colin Powell to fight the chemical-testing proposal, which Mr. Powell called "costly, burdensome and complex" in an April 29, 2003, e-mail message. Mr. Powell also widely distributed a "nonpaper," unsigned by any U.S. governmental agency, that challenges the original Reach proposal.

The EPA also has told European officials that it backs the U.S. system of regulation under the 1976 Toxic Substances Control Act. That measure doesn't require U.S. manufacturers to explicitly test new chemicals but instead requires that they provide any data on toxicity to the EPA. The agency then can decide whether further testing is warranted.

The differences between the U.S. and Europe on the testing issue reflect a broader debate over the so-called precautionary principle, a legal concept increasingly invoked by the EU. The Europeans maintain that in the case of uncertain science, everything from chemicals to hormone-treated beef should be banned to prevent potential harm to humans and the environment. The U.S. maintains that some uncertainty is acceptable.

Some environmentalists react angrily to the degree to which the State and Commerce departments and the EPA have lobbied the Europeans.

"It's not the mandate of those agencies to do what they're doing," contends Joe DiGangi, a scientist with the Environmental Health Fund. "The government has adopted the industry position and tried to sell it," he says.

At a meeting in November 2002 between American and European government officials, including EU Trade Commissioner Pascal Lamy and Commerce Secretary Donald Evans, Mr. Evans told his European counterpart that the chemicals policy posed significant trade problems, European officials said. American diplomats also argued that certain chemicals that are used to make other products should be exempted if they don't come in contact with humans. Mr. Lamy acknowledged the U.S. concerns and assured American officials that the chemicals policy wouldn't violate global trade rules.

Write to Thaddeus Herrick at thaddeus.herrick@wsj.com, Matthew Newman at matthew.newman@dowjones.com and Michael Schroeder at mike.schroeder@wsj.com

Updated September 9, 2003

POLICY BRIEFING

Emerging European Chemicals Policies:

Implications and Opportunities for Michigan

Friday, September 19, 2003, from 12:00 (Noon) to 1:30 p.m.

Room 810, Farnum Building, 125 W. Allegan St., Lansing, MI

A policy briefing by Dr. Joel Tickner.

The briefing is co-sponsored by Senator Liz Brater, Representative Chris Kolb, the Ecology Center and Michigan Environmental Council.

About the policy briefing:

The European Commission has proposed a sweeping new chemicals policy called Registration, Evaluation, and Authorization of Chemicals - REACH. A broad change in chemicals management policies in Europe is inevitable which will ultimately affect manufacturers in the United States. What opportunities does this create for comprehensive chemicals policy in the US? What effects will it have on US manufacturers?

While the details of these proposals are still uncertain, it is in the best interests of forward-looking governments and companies to foresee these changes and begin to institute integrated chemicals policy approaches in this country. A proactive approach to chemicals policy provides great opportunities for firms to innovate in safer and cleaner chemicals and products and to gain market advantage among the growing market for less-toxic products.

Learn about the innovative chemicals policies being proposed in Europe, and their implications for U.S. manufacturers, as well as the opportunities this legislation presents.

About Joel Tickner:

Dr. Joel Tickner is a Research Assistant Professor in the Department of Work Environment at the University of Massachusetts Lowell where he is also a Principal Investigator at the Lowell Center For Sustainable Production. He is an expert on regulatory policy regarding toxic substances, pollution prevention, risk assessment and science policy.

He has served as an advisor and researcher for several government agencies, the World Health Organization, non-profit environmental groups and trade unions both in the U.S. and abroad during the past ten years. He regularly lectures, speaks at conferences and professional meetings, publishes and conducts trainings on the topics of pollution prevention, risk assessment, toxic chemicals policy, and uncertainty and the precautionary principle.

RSVPs are encouraged though not required. For more information, contact the Ecology Center at 734-663-2400 ext 108, or email marybeth@ecocenter.org.