AmCham EU was invited by the Maltese presidency of the Council of the EU to develop this perspective at a joint session of the Industry Working Party with environment Attachés on 22 May 2017. Leah Charpentier, Chair of AmCham EU’s Environment Committee, talked about the impacts of the REACH regulation on competitiveness. Here are some key takeaways:
1. REACH sends unclear messages to the market
Given the number of different REACH processes and the plurality of actors involved in their implementation, it is sometimes difficult to understand which substances are targeted under which process and why. Thus, it is particularly difficult to know whether a substance will be available for 3, 5 or 10 years. Never-ending compliance is a regulatory risk that investors have to consider.
Although efforts have been made to address this (CoRAP, SVHC roadmap) and communication has improved with European authorities, REACH continues to send unclear signals to the market and we have observed differences across
2. REACH can lead to opportunity costs
REACH compliance requires specialist knowledge and in-house expert competence. One of the negative indirect impacts of REACH on innovation is that company expert staff, which includes research and development (R&D), process improvement, and product testing experts, is mobilised for compliance efforts associated with REACH rather than for the R&D priorities they were hired for.
3. REACH can complicate access to certain substances
REACH-related costs mean that accessing the European market for chemicals requires capital upfront. While this may be fully appropriate for high or medium tonnages, it makes it is relatively less interesting to sell small-volume specialty chemicals in Europe. Downstream users are therefore penalised: 1/ they have limited access to substances that cannot usually be substituted easily, potentially threatening business continuity, 2/ they may only be able to use new substances later in the innovation cycle, compared to other regions, as small volume substances may be developed in innovation clusters outside the EU.
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