Politics & Policy

The Long Reach of The Eu

Europe heads for bad regulation.

The European Union’s Council of Ministers is expected to vote soon on the proposed chemicals regulation called REACH, an acronym for Registration, Evaluation, and Authorization of Chemicals. Before they decide to burden faltering European economies with yet more unwise regulation, they should digest the findings of Europe’s Global REACH, a study released recently by the Hayek Institute in Brussels. It concludes that REACH will harm Europe and its trade partners economically–and there is no convincing evidence of health or environmental benefits.

REACH would extend to all chemicals produced in or imported into Europe the bogus “precautionary principle,” which holds that if the evidence about a product, technology, or activity is any way incomplete, it should be prohibited or at least stringently regulated.

Potential risks should be taken into consideration before proceeding with any new activity or product, to be sure, whether it is the placing of a power station or the introduction of a new flame retardant. But what is missing from precautionary calculus is an acknowledgment that even when technologies and products introduce new risks, most confer net benefits–that is, their use reduces other, far more serious, hazards. Vaccines have occasional side effects, for example, but they confer net benefits. The danger in the precautionary principle is that it focuses exclusively on the risks, which are often purely hypothetical, and diverts consumers and policymakers from seeking possible solutions to known, significant threats to human health. Its overall impacts may in fact be net-negative.

The costs of REACH’s precautionary approach will be prodigious. The European Commission’s own estimates range up to 5.2 billion, but according to a study produced by the Nordic Council, the price tag could be as much as 28 billion euros. This higher estimate includes both direct and indirect costs, and assumes that the latter may amount to as much as 2.5 times the former.

REACH’s supporters maintain that businesses can absorb this high price tag easily, but the Hayek Institute analysis offers a very different view. Its author, Competitive Enterprise Institute scholar Angela Logomasini, points out that cost estimates that are favorable to REACH are incomplete, fail to consider a host of direct costs, and often completely neglect the indirect costs.

Moreover, REACH’s advocates ignore its disproportionately harsh impact on small businesses and businesses in the newer EU nations. A study conducted by consulting firm KPMG on behalf of the European Commission concludes: “The heaviest burden will be on small and mid-sized enterprises which cannot consistently fulfill the REACH requirements and so it is predicted that most of them may face financial troubles, may be taken over by bigger ones, or even shut down.”

These prospects should raise serious concerns for Europeans. Small and mid-sized firms represent more than 99 percent of EU businesses, and account for two thirds of the jobs. The imposition of REACH will increase unemployment and diminish competition–which will lead to less innovation and higher prices.

Are there offsetting advantages to this draconian regulation? In a review of the benefits claimed for REACH, Logomasini shows that the studies that purport to demonstrate benefits depend more on unsupported assumptions and wishful thinking than on science or logic. The Commission’s only study of likely benefits from REACH, conducted by Risk and Policy Analysis Limited (RPA) in 2003, addresses occupational exposure to chemicals and attempts to estimate the extent to which REACH would reduce health problems among workers. However, it is based on sketchy, incomplete, and inconsistently collected data assembled from a handful of member governments, all of which is is of questionable relevance to REACH.

The RPA report explicitly assumes that problems related to currently known chemical causes will be addressed by existing laws, while REACH will prevent currently unknown health problems from chemicals. But if these cases are unknown, how can we know they are caused by chemicals or are even work-related? Obvious errors and insufficient documentation in the report only compound problems with the study, which makes no mention of having been peer reviewed.

The deeply flawed RPA report does offer persuasive evidence of one thing: The Burger King Principle–”you get it your way”–is alive and well in Europe. Some consultants will serve up whatever conclusion the Commission orders.

REACH’s presumed benefits are based on the assumption that testing chemicals, filing paperwork, and pursuing politically correct product bans will somehow reduce cancer rates. But as the Hayek Institute analysis makes clear, the vast majority of cancers are not related to chemicals. According to the World Health Organization, the major preventable causes are tobacco use, diet, and infections, which account for 75 percent of cancer cases worldwide. WHO bases these findings on a landmark study conducted by scientists Richard Doll and Richard Peto, which concluded that all environmental pollution might amount to only as much as 2 percent of cancers.

In the interest of free markets and economic growth, we need global regulatory policies that make scientific sense and that encourage innovative research and development. But by promoting the precautionary principle, EU politicians are performing a disservice. The only winners will be the European apparatchiks who will enjoy additional power, and the anti-science activists who will have succeeded in erecting yet more barriers to the use of superior technologies and useful products.

Henry I. Miller, M.D., is a fellow at Stanford University’s Hoover Institution and a former official at the FDA, 1979-1994. Barron’s selected his most recent book, The Frankenfood Myth, one of the 25 Best Books of 2004.


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