The Union ministry of commerce is examining the possibility of challenging the new European Union legislation for evaluation and restriction of chemical substances at the World Trade Organisation ( WTO).
As it stands now, the legisation threatens 24 per cent of Indian export of chemicals by pushing up the cost per exporter per chemical by Rs 50-60 lakh, according to data collated by the ministry.
Popularly called, REACH — Registration, Evaluation, Authorisation and Restriction of Chemical substances – this legislation came into force from June 2007. The pre-registration process started in 2008 and registrations have just begun from November 2010.
Ministry officials said once the registration process started, it was found the law was restrictive and discriminatory. “We are preparing for a full-fledged dialogue at the WTO level, since it violates two basic principles of WTO – principles that come under the most favoured nation (basis) and technical barriers to trade (TBT) agreement,” said one.
The new legislation requires fresh registration of all chemicals, with voluminous data to be given by Indian companies through the help of only European agencies, known as “only representative”, to ensure safety to animal and human life.
“Besides challenging it at WTO, a long-drawn process, we are proposing to take up the issue at the bilateral talks with the European Union (EU), before finalising the India-EU bilateral trade agreement,” added the official.
Under WTO, the most favoured nation status means all countries should be treated at par. Under the TBT rule, any standard should be made with scientific justification and differential standards should not be followed on the basis of geography. In this case, it means no difference between EU and non-EU countries.
“Under examination, we have found that REACH is doing both. It is discriminating between EU industry and non-EU industry. This is because non-EU members will be registered under an institution called “only representative”, a company or firm or entity based in Europe. This entails a huge cost,” said the official. Second, the registration involves generating a whole lot of data on chemicals to be provided to the EU to ascertain safety for animal, plant and human life. To organise, coordinate and file this data for the European Chemical Agency in Helsinki, an exporter has to be a member of a body called Substance Information Exchange Forum.
Another objection is on an article under REACH to allow special and differential treatment to developing countries.
The ministry of commerce, in co-ordination with the ministry of chemicals, had started preparing the industry for the new REACH regime. Under its market access initiative, it had encouraged companies to start the pre-register formalities under REACH, and thereafter for the process of registration.
