Romania wants to join the European Union (EU) as soon as it can because it expects membership to increase its business competitiveness and trigger economic growth. But if Romania is to reap the benefits of EU membership, policy makers need to be prepared to deal with EU bureaucracy- which threatens to undermine some of the benefits by imposing costly regulations.
Consider the EU’s proposed chemical policy – REACH - which is expected to become law by the end of this year. REACH, which stands for “registration, evaluation and authorization of chemicals”, recently passed the European Parliament’s environmental committee and is scheduled for plenary vote next month. Under REACH, every chemical used or imported at levels of one metric ton or more per year will have to be approved by the European Chemical Agency through a costly three-stage process. The stated purpose of REACH is to improve public health by increasing knowledge about chemical risks and by forcing companies to substitute potentially dangerous chemicals with safer alternatives.
REACH has been strongly criticized for being expensive and likely to have negative worldwide impacts, given the importance and size of the chemical industry. It is estimated that the program will cost up to $5.3 billion over the next decade.
Romanian policy makers should be aware that acceding EU nations will pay the highest costs. Accordingly, they need to be prepared to defend Romania’s interests as the EU bureaucracy implements the law.
Because a large part of Romania’s economy is made up of small and middle-sized enterprises (SMEs) with low profit margins, many Romanian firms will have a difficult time complying with REACH regulatory burdens. Even small increases in production costs will force many to exit the market. REACH will also be a barrier for new businesses, as their entry to the market will be significantly impeded.
One reason REACH will be so expensive is because of the so-called Precautionary Principle. This principle calls for reducing or even eliminating risks to public health and environment by applying regulations on technology even in the absence of scientifically demonstrated reasons to do so. Accordingly, REACH will likely apply regulations on the relatively safe low-level risk chemicals – needlessly imposing costs on Romanian SMEs. Many will very likely not be able to absorb these costs and will go bankrupt.
Another foreseeable negative impact of REACH is its effect on innovation and economic growth. The Romanian business sector will be harmed at a time when general development is most needed, given the need to catch up to the wealthier economies in the EU. Recent World Bank data proves that pollution and environmental problems decline as Gross Domestic Product increases. Therefore, it is safe to say that the goals of REACH would be better realized if REACH was not applied to Romania. In fact, the impact of REACH on Poland, the Czech Republic, and Estonia has been analyzed by Europe’s Chemical Industry Association and the conclusions have not been encouraging.
REACH will also undermine free trade between Romania and non-EU countries, for two reasons. First, Romania will prefer importing chemicals from firms within the EU, even when prices are higher than importing from other places, as it will be easier to demonstrate their compliance with REACH standards. Second, since costs will be so high due to the long registration process, Romanian firms will raise the prices of their products, which will make them less competitive on the world market.
REACH is a threat to free markets, free trade, and economic growth, not just in Europe but around the world. That said, REACH should not be a deal breaker; it is a warning that EU membership for Romania will bring challenges as well as benefits. Romanian policy makers, bearing in mind the potential impacts of REACH and other EU regulatory schemes, must be prepared to fight for Romania’s national interests once they get a seat at the table.
Andreea Curelea is a research associate at the Competitive Institute Enterprise in Washington DC and a political science major at the University of Bucharest. She is attending Georgetown University in Washington DC this fall.
neamtu tiganu commented:
6 Decembrie 2006 la 22:12
Lumea vazuta din Washington!
Ce vrea sa ne spuna domnsoara Andreea si care-i realitatea?
Domnisoara Andreea ne spune:
“Under REACH, every chemical used or imported at levels of one metric ton or more per year will have to be approved by the European Chemical Agency through a costly three-stage process”
Adevarul e:
“Das REACH-System basiert - anders als das bisherige europäische Chemikalien-Regime - auf dem Grundsatz der Eigenverantwortung. Es verlangt vom jeweiligen Inverkehrbringer (Hersteller, Importeur), dass er für die Sicherheit seiner Chemikalien in soweit selber verantwortlich ist, dass er die zur Bewertung dafür notwendigen Daten auch selber beschafft (Beweislastumkehr) und auf dieser Grundlage Vorgaben zum sicheren Umgang mit den Stoffen entlang der gesamten Wertschöpfungskette macht (Risiko-Management). Registrierungspflichtig und damit vom REACH-System grundsätzlich erfasst sind Chemikalien, die ab einer Tonne pro Jahr produziert werden. Der Umfang der bei der Registrierung beizubringenden Daten richtet sich nach der Menge des produzierten Stoffes. So ergibt sich ab einer Menge von 10 Tonnen pro Jahr die Pflicht zur Erstellung von Stoffsicherheitsberichten (CSR = Chemical Safety Reports) und gegebenenfalls zu Vorschlägen zur Risikominimierung
Comentariu… probabil ca Domnsoara are probleme de limba… chimicaliile de peste o tona trebuiesc numai inregistrare si nu cum incearca sa sugereze dumneaiei ca ar trebui APROBATE si totu pe baza propriei raspunderi. De la o cantitate mai mare de 10 tone trebuiesc elaborate certificate de siguranta “Chemical Safety Reports” documente care in mod normal contin numai date privind date privind gradul de risc, in producerea, depozitarea utilizarea si transportul acestor substante.
P.S Domnsoara uita sa ne spuna daca aceste regulamentari au sau nu sens, uita sa ne spuna care sunt reglementarile in USA (impuse printre altele si prin legile americane de protectia a consumatorilor, infinit mai aspre decit cele europene). Concluzia , propaganda ieftina de doi bani.
PPS Exemplu concret, am facut o multime de cercetari pt. lipirea unor componente. Am gasit in sfirsit o solutie. Am introdus materialele in sistemu SAP… dupa o zi un primer a fost interzis de protectia muncii interna pt. ca era cancerigen, desi cantitatea era de numai citiva mililitri. A trebuit sa caut alta substanta.
Samot Acibuk commented:
11 Decembrie 2006 la 18:12
Very informative, well written, and clearly-structured article! A good choice topic, very up-to-date. I come from a newly-joined EU country, and also have my doubts about the REACH’s implications to the national economy. My company (consumer goods/electronics/chemistry industry) lobbied heavily in Brussels against REACH, since it will significantly increase the price of our products and cause delays in bringing them to the market. In the end, as you suggest, REACH may indeed hurt the EU’s and national economies, free trade, and consumers. We can only hope that some of the positive effects (increase in awareness among public and introduction of safer chemicals by businesses) will also materialize…Good luck with your work and studies in DC!
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