The issue of better regulation is certainly one of the most important topics on the agenda of the European Union at the present time, and it is also a topic to which Malta attaches a high level of priority. It is clear to all that we can only safeguard and enhance our competitiveness if Europe as a whole is competitive, and this implies that great attention must be paid to the decision-making and legislative processes within the European Union. This is particularly so in the case of proposals which are far-reaching and which will have an extensive effect on large sectors of the economy.
The proposed Regulation on the Registration, Evaluation and Authorisation of Chemicals (REACH) clearly falls in this category. It has been described as one of the most important legislative proposals in the recent history of the European Union. Certainly, its importance has been recognised by European business, environmental NGOs, trade unions, consumer organisations and, not least, by Europe’s trading partners.
The European Commission received around 6,400 comments during the Internet consultation held in 2003. Over 3,000 amendments were presented during the course of the first reading in the European Parliament, while a specific ad hoc working party has been established in the council to extensively discuss this detailed
proposal.
The extent to which the proposal could affect European industry and society in general, as regards both costs and benefits, has been recognised by the European Commission which has carried out an extended impact assessment on the proposal, as well as further work focusing on specific aspects. It can safely be said that no proposal has ever been subjected to such an extensive impact assessment.
There is a good reason for this. The chemical industry is of strategic importance, supplying most of the raw materials used by thousands of downstream users in practically every sector of business. The direct compliance costs for REACH are estimated at between e3 to 5 billion. Estimates for indirect and knock-on costs vary widely, but are reliably expected to be at least two to three times this amount. The competitiveness implications of such a proposal cannot therefore be underestimated.
On the other hand, there are undeniable benefits for health and the environment that will result from an improved system for chemicals regulation. These benefits are far more difficult to quantify, as it is almost impossible to assign a monetary value to a cleaner environment or a reduction in long-term health effects, for example.
It is, however, evident that this proposal will require a very careful balance to be achieved between competitiveness on the one hand and health and environment protection on the other. Within the council, both the Competitiveness Council and the Environment Council have discussed REACH extensively on a number of occasions.
This debate has clearly shown how challenging it will be to achieve an appropriate balance that will also be based on as wide a consensus as possible. From a political point of view, Malta supports all efforts intended to ensure this wide consensus. This proposal is simply too important for us to base our considerations on just one aspect. On the other hand, the existing global economic realities are concrete facts. Decision-making in Europe must take full account of these new realities.
As a member state, Malta has given its utmost priority to this proposal. We have also participated actively and constructively in the discussions, with the firm belief that Malta’s interests are widely reflected in the rest of the community. Following the extensive exploratory work carried out under the Irish and Dutch presidencies, a number of key issues were identified. Malta focused on two main conclusions from this stage of the discussions.
To start with, the key to an acceptable agreement was to achieve a balance within the regulation as a whole and not necessarily within each and every component. Secondly, a consideration of resource requirements and compliance costs clearly indicated that the main problem with the Commission’s proposal was the registration of low volume substances. These substances are estimated at around 20,000 from a total of 30,000 substances on the market.
The commission’s further work on impact assessment confirmed our initial analysis that there was a substantial threat that many of these substances could be vulnerable to withdrawal simply because of the relatively high costs of registration. A further consideration was that the resources at community and national levels are also very limited. A strong prioritisation element is therefore necessary in REACH in order to ensure that attention can be rapidly and effectively focused on substances of the very highest concern.
Malta realised that these two considerations could be combined in order to reduce negative effects while maximising efficiency.
This line of thought led to a series of initiatives under the Luxembourg and UK Presidencies.
In March 2005, Malta, acting jointly with Slovenia, presented a discussion paper outlining its thoughts on how an appropriate balance in registration of low volume substances could be achieved. This was followed up by concrete text proposals in April 2005 at the Competitiveness Council. Although the initial reaction was somewhat sceptical, our continued and sustained arguments slowly but surely gathered support in the Council and European Parliament.
The three main committees in the European Parliament have adopted positions that reflect the principles we have put forward. The compromise text recently proposed by the UK Presidency also includes a targeted approach for low volume substances. I am pleased to note that at the last Competitiveness Council on 11 October, my colleagues virtually unanimously endorsed the concept of a targeted approach for substances marketed between one and 10 tonnes.
The Commission has also expressed its endorsement of this concept and has indicated that it is willing to present an amended proposal that would fully take on board the Maltese-Slovenian proposal. Discussions are now focusing on the precise mechanism to be adopted for this purpose.
Preliminary estimates on the impact of the Maltese-Slovenian proposal indicate potential savings to European industry of between e120 and 150 million. This would translate to an average cost reduction of between e6,000 and 7,500 per substance in this tonnage band. These estimates also indicate that the Maltese-Slovenian proposal would reduce the number of substances in this tonnage band that would be vulnerable to withdrawal for economic reasons from 57 per cent under the commission proposal to 13 per cent. Finally, our proposal has made it possible to consider increasing information requirements for those low volume substances used in ways which increase the probability of risk, or where information on serious hazardous properties already exists.
Malta has also been very active in discussions on other parts of this proposal. We have supported the UK/Hungarian “One Substance, One Registration” (OSOR) concept, albeit reserving our position on the need to protect confidential business information and reduce unnecessary administrative overheads. We have also supported the French “SAFE” proposal, aimed at strengthening the role of the European Chemicals Agency and transferring to it responsibility for dossier and substance evaluation. We are also fully engaged in the discussion to find an acceptable solution to the thorny problem of how to deal with substances in articles. A solution seems well in sight on that issue as well.
Malta has also insisted on equal participation for all member states within the structures of the European Chemicals Agency, a position that has also been endorsed. We also note that many of our earlier suggestions for clarifying issues relating to authorisation, including the key issue of criteria for identifying substances of the highest concern, have been taken up by the presidency in its compromise text.
I believe that the ground has clearly been laid for an agreement that could find widespread acceptance. Malta fully appreciates the efforts being made by the UK Presidency to facilitate this process. We are confident that we are on track, both as regards timeframes as well as regards policy objectives. I assure you that Malta will spare no effort to ensure that the REACH regulation, once adopted, will have the ability to deliver benefits in the most cost-effective and efficient manner possible.
I would also like to thank the Malta Business Bureau and its constituent bodies for keeping this important topic high on the agenda of the local business community. Stakeholder awareness is an essential component of the decision-making process. The first-class cooperation on the REACH proposal is certainly an excellent model for other proposals in the future.
Censu Galea is Competitiveness and Communications Minister