The Indian chemical industry has become big business in recent years and is expected to be worth $200 billion by 2020. However, a European Union (EU) legislation called Regulation for Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) that came into effect in 2007 could cut into this growth over the next decade. REACH already threatens 24 per cent of India’s chemical exports, according to the Indian government. Although EU chemical exports are worth more than $2 billion a year to the Indian economy, some Indian chemical producers are wondering if the European market is worth the investment. Jack De Bruijn, Director, Risk Managing Unit, European Chemicals Agency (ECHA), the organisation charged with implementing REACH, spoke to Pallavi Aiyar on some of the issues surrounding the regulation. Edited excerpts:
According to the European Union’s stated goals, REACH is supposed to be about protecting health and environment, but also increasing European industry’s competitiveness. Many feel there is a trade protection angle to reach. How would you respond to the charge that REACH is in fact a non-trade barrier?
ECHA is an implementation agency and can’t really comment on trade issues. But, yes, there is a balance between health and safety concerns and competitiveness as the main goals of REACH. The fact is that once there is information available about the safety of various chemicals, it helps the marketing of the end products as ‘safe’ and increases the competitiveness of those products. When we speak to people in the industry, we are led to believe that REACH is like a tool for them to use in making their marketing strategy more competitive.
Are you aware of any figures that look at the increased cost to the chemical industries of developing countries as a result of REACH? In India, the government has said the regulation threatens some 24 per cent of the country’s exports, by pushing up the cost per exporter per chemical by Rs 500,000-600,000.
I am aware of the reports from India. But the figures sound somewhat high to me. There is a data sharing principle underlying REACH. So, it aims to bring various companies together and forces them to share data, which helps keep the costs of compliance lower. As far as high-volume chemicals are concerned, I’m sure the costs are not so high. For those chemicals on which there was already existent data, compliance with REACH is relatively cheap. For those chemicals where no information was available in the past, there are more complicated compliance issues, but this is the same for all companies, Indian or European or from any other country.
REACH covers conventional chemicals such as sulphuric acid, nitric acid, etc, which the world has known for centuries. Is REACH founded on empirical evidence of manifested risks? Or is it only founded on precautionary approach?
The aim is to get information on all chemicals exported or imported in and out of Europe. For some chemicals, there is already a lot of information out there, so making a dossier on these is relatively easy. The idea of REACH was to set up a reliable channel by which health and safety information could be transmitted to the authorities and on to the public. Before REACH came into effect in 2007, in Europe we had information available on only 140 chemicals and realised we needed to change the system and put the burden of proof on the industry, so as to help consumers make better choices. With REACH, the aim is to have information on 30,000 chemicals by 2018, when the final deadline for registration expires. Since REACH has been implemented, we have already gathered data on around 4,500 substances.
There were worries that drug prices would be pushed up as a result of the increased costs for exporting intermediates into Europe. Has this, in fact, happened?
I’m not sure about this, since we don’t follow the pharmaceutical industry but would be surprised if there had been any impact. Under REACH, intermediates are subject to special rules. So, if you import intermediates under strictly controlled conditions, for example, using closed containers, you only have to provide a very minimal amount of data, compared to what is needed for other chemicals. There may be some other administrative costs, but the overall costs for intermediates should be low.
So far, 46 Substances of Very High Concern (SVHC) are identified by ECHA, which require special authorisation. This list is expected to grow at the rate of 30-40 substances per year over the next few years. What implications will this have for Indian businesses that are exporting to the EU?
SVHC are a group of most hazardous chemicals based on criteria like, carcinogenicity, bio-accumulation and so on. Companies must also notify the presence of any SVHC in their articles. The SVHC issue is generating considerable discussion in India because many companies may not be aware if their articles contain SVHCs at all.
Secondly, they often don’t know the exact percentage of the SVHC in the article. According to REACH, if there is over 0.1% of any SVHC in an article then ECHA must be informed of it by the European importer. Another point to keep in mind is that increasingly there are retailers in Europe who don’t want to sell products with any SVHCs at all.
So once again, awareness of SVHCs becomes a marketing issue. If you want to export into Europe then you can expect pressure directly from retailers on the SVHC issue as well. Further, there is a separate list of substances, currently numbering 6 chemicals, amongst the SVHC which need special authorisation from the European Commission.