INSIGHT: US and EU facing a chemicals quandary in trade talks

14 November 2013 16:58  [Source: ICIS news]

By Joe Kamalick

US and EU pursue complex trade dealWASHINGTON (ICIS)--US and EU negotiators meeting in Brussels this week to forge a new and comprehensive free trade agreement between the two huge economies face a major challenge in reconciling fundamentally different rules for chemicals in commerce.

About 50 US officials, including the office of the US Trade Representative (USTR) and environmental regulators, are meeting this week with their EU counterparts in the Belgian capital toward a Transatlantic Trade and Investment Partnership (TTIP).

If completed, the partnership would eliminate about $1.5bn (€1.12bn) worth of chemical product tariffs on each side and mesh a wide variety of regulatory programmes that otherwise would inhibit increased trade between the US and the 27-member nations of the EU.

The proposed treaty has been welcomed by US chemicals producers.

Eliminating the tariffs will be the easy part, according to Bill Allmond, vice president for government and public relations at the Society of Chemical Manufacturers and Affiliates (SOCMA).

“The hard part will be how to eliminate or reduce the regulatory barriers to US-EU trade,” he said. “That’s the really difficult part.”

“I anticipate that during this week the US delegation and EU officials will come to a better understanding of which regulatory barriers must be addressed,” Allmond said.

But identifying regulatory barriers and resolving them are two wholly different tasks, and Allmond says that hopes for a final TTIP deal by mid-2014 are perhaps overly optimistic.

“That is a very ambitious goal,” he said, “especially given the regulatory barriers that are in place, namely TSCA and REACH.”

TSCA is the US Toxic Substances Control Act, and REACH is the EU’s programme for “regulation, evaluation, authorisation and restriction of chemicals”. 

The EU REACH system, based on the precautionary principle, is anathema to US chemicals manufacturers who prefer the risk-based and science-based approach to chemicals controls that underlies TSCA.

Reconciling those two controls programmes may be the largest stumbling block to a final TTIP deal.

“The EU is not going to change its regulatory programme,” Allmond said, referring to REACH, “and EPA knows that there is no way that the US industry is going to accept a REACH approach here,” referring to the Environmental Protection Agency, some of whose officials are in Brussels this week as part of the US negotiating team.

“Clearly the EU regards its REACH programme as superior to TSCA, and they are not willing to change,” Allmond said.

The US Congress is now considering what many view as the best legislative vehicle in years for modernisation of the 37-year-old and decidedly creaky TSCA.

That bill, S-1009, the Chemical Safety Improvement Act (CSIA), is pending before committees in both the House and Senate, but it is not likely to get full congressional approval before the end of 2014, if at all.

As noted, the Obama administration is keen to see completion of TTIP by mid-2014, a timeline that is more of a hopeful goal than a deadline and one that is not likely to be met in any event.

Allmond said that the TSCA reform legislation, S-1009, “is the best shot we have had in years in modernising our chemicals controls programme, but it is nothing like REACH, so the US seems dug-in on its own regulatory framework”, just as the EU is locked in on REACH.

“The EU will probably want to try to change TSCA,” Allmond said, “but there must be a realisation in Brussels that that is not going to happen.”

“I think it is a very large challenge that the US and the EU are just now facing in this round of TTIP negotiations,” Allmond said.

“There has been very little talk about this potential conflict between TSCA and REACH, which tells me that not much thought has been put into this thus far,” he added.

“We hope that there will be recognition by both the US and the EU negotiators that what is appropriate for their respective regions in chemicals controls is settled,” Allmond said.  “What’s appropriate for the US is TSCA, and what’s appropriate for the EU is REACH.”

“The best we can hope for is that each party is going to assess chemicals risks through its own respective programmes,” he added.

Allmond said that he hopes the conflict between TSCA and REACH will not be a deal killer for a TTIP treaty.

Greg Skelton, senior director for global affairs at the American Chemistry Council (ACC) shares Allmond’s view that TSCA and REACH essentially are irreconcilable - but he says that should not block a TTIP deal.

“The short answer is that the two sides are not even going to try to reconcile TSCA and REACH, and both governments understand that,” Skelton said.

“We’re not talking about harmonisation or mutual recognition,” he said, but the two sides instead are starting from the point that REACH and TSCA (and its eventual replacement) “provide equivalent levels of protection, and we don’t want to try to weaken either side’s approach.”

“The question is, how can we promote efficiency and cost savings while maintaining those strong levels of protection for human health and the environment,” Skelton said.

“Some are saying that the TTIP negotiations are essentially a race to the bottom in terms of chemicals controls, but it’s not that at all,” he added.

Each side in the US-EU TTIP talks can keep and maintain its own chemicals controls system, but there is still room for “cooperation rather than harmonisation”, Skelton said.

“There are a lot of things we can do within the two regulatory systems,” he said, “including a focus on greater information sharing - with protections for confidential business information - that could reduce the need for duplicate statistics and thus save money for both industry and governments in interpreting that data.”

In addition, he said, “the US and EU could focus on reaching agreement on a high-priority list of chemicals for testing and splitting that work up between them”.

“Each government remains sovereign, and each is making its own decisions, but they’ll be saving money in the process,” Skelton said.

The two governments, he said, also can make use of the best available science to promote regulatory cooperation.

Skelton too is doubtful that a final TTIP treaty can be completed by mid-2014, even by the end of next year.

He said that President Barack Obama is keen to have the unprecedented transatlantic trade agreement completed before the end of his second term in 2016.

“We support a swift conclusion of the TTIP agreement,” Skelton said, “but we recognise that this is the most complex trade negotiation that has ever been attempted.”

($1 = €0.74)

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By: Joe Kamalick
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