Reach Impact on SMEs in Chemical Industry Must Be Mitigated

Regulation on registration, evaluation, authorization and restriction of chemicals (REACH) scored among the ten most burdensome EU legislation by European SMEs last year. According to the Czech chemical industry representatives, REACH increases costs of business in the EU and reduces its competitiveness in the world. Review of the regulation issued by the European Commission (EC) in early February admitted that REACH is burdensome and has negative impact on SMEs. The EC thus agreed to reduce fees for SMEs and increase those for large companies in a way that there would be no loss in revenue of European Chemicals Agency (ECHA).

The EC does not consider overall revision necessary at this time. Impact of REACH regulation that improved the protection of human health and environment in the EU was the topic of the discussion at European House in Prague on April 29th among representatives of the European Commission, Czech government, private sector and general public. Gustaaf Borchardt, Member of ECHA Board, believes that REACH has contributed to the rise in innovation in the chemical industry. Studies by the European Commission show that 40% of chemical companies have focused on innovation in the field of health, safety and environmental protection. He also says it is too early for an overall evaluation of benefits since registration is underway until 2018 and not all companies have registered their substances yet. The smallest companies will be integrated in the third phase. According to Jarmila Sládková from the Ministry of Environment of the Czech Republic, the REACH review is too optimistic. Only exemptions from registration for research and development purposes could be considered as an innovation support. This provision has been rarely applied by SMEs so far.

According to Ladislav Novák, Director of the Association of Chemical Industry of the Czech Republic, the implementation of REACH will cost Czech chemical industry around CZK 12 billion by 2020. “Costly procedures reduce the competitiveness of our companies, not only in the EU but also elsewhere. Upcoming substances authorization process may further jeopardize the competitiveness towards third countries,” said Novák. Authorization accompanied by a fee does not apply to imported goods containing substances from Annex XIV (SVHCs). EU producers who will produce the same product (containing the same substance in Annex XIV of the REACH Regulation) will need the authorization. “This brings a risk that production will move beyond the EU borders,” he stressed.