Environmental Engineering Reference
In-Depth Information
chemicals market, over the
rst 11 years of the implementation of REACH. One appro-
priate standard of comparison in this case is the sales revenue of the European chemicals
industry over an 11-year period. On this basis, a cost of a few billion euros is tiny, less than
0.1 percent, or one part per thousand, of industry sales revenues. Our study found a ratio
of 0.06 percent, or one-sixteenth of 1 percent, but it is the order of magnitude, not the
exact number, that matters. In industry, costs are constantly changing by much more than
0.1 percent; an industry unable to deal with changes of this magnitude would not survive
in the marketplace. Even if, as the chemical industry sometimes suggested, most of the
costs of REACH would be borne by one-third of the industry, the same general conclu-
sion applies: that a
fi
ff
ected third of the industry would face costs of only a fraction of
1 percent of its sales.
The fact that the costs of REACH are so small, relative to the size of the a
ected indus-
try, sets the stage for the analysis of impacts on trade. Since costs are small for European
producers, and since REACH applies identical standards to European and foreign pro-
ducers, the impact on Europe's trading partners is small as well.
ff
REACH and developing countries
During the long debate leading up to the adoption of REACH, one of the last major
objections raised was the potential impact on developing countries. In particular, will
REACH harm the economies of the group of African, Caribbean and Paci
c (ACP)
countries that historically have been connected to Europe?
2
In 2005, the ACP Council of
Ministers adopted a resolution supporting the general goals of REACH, but expressing
'deep concern' about the 'potential negative impact of REACH on exports, particularly
in commodities such as minerals and metals, from ACP to the EU'. The Ministers stated
that they were 'convinced that REACH will be expensive to implement', that REACH will
have a negative e
fi
ect on small, medium-sized and micro-enterprises, and that the costs
imposed by REACH could 'lead to disinvestment from ACP States', potentially resulting
in loss of employment for millions of people (ACP Council of Ministers, 2005).
Responding to these and other concerns, the European Parliament commissioned a study
to assess the potential economic impacts of REACH on the ACP states. In that study, we
analyzed the
ff
ows of ACP exports that would be subject to REACH, examining the com-
modities, countries and companies involved in those exports (Ackerman et al., 2006). At
one extreme, local enterprises exporting a wide range of products in small volumes might
face a heavy regulatory burden from REACH; at the other extreme, multinational compa-
nies exporting a small number of products in huge volumes might experience very little
impact from regulations. We found many examples of multinationals and other large
fl
rms
involved in ACP's exports subject to REACH, although we did also turn up one small
example of local enterprises that might
fi
cult.
ACP includes many of the world's poorest countries, as well as South Africa and some
smaller countries that are at a middle-income level by global standards. As of 2003, ACP's
population of 743 million people represented 12 percent of the world population, while
its total GDP of
fi
nd REACH compliance to be di
434 billion was only 1.3 percent of world output. South Africa, by far
the largest and most industrialized economy in ACP, accounts for about one-third of the
group's total GDP, and two-thirds of the group's exports subject to REACH.
ACP countries are heavily dependent on trade, and have historically strong connections
to Europe. Nonetheless, more than two-thirds of ACP exports go to non-European
€
