First of all, I would like to thank the American Chamber of Commerce for taking the initiative for organizing this timely and important event as well as my fellow ambassadors for their efforts. I would also like to thank Members of Parliament, Member State Representatives and Commission officials for coming here to gain a deeper understanding of trading partner concerns and hopefully to address these concerns before the completion of the second reading. I strongly believe there should be more opportunities in which all stakeholders inside and outside the EU are able to express their views on the impacts of significant pieces of legislation and to hold decision-makers are accountable for addressing concerns raised.

I am here with my colleagues from Japan, India, Canada, Australia, Israel, Mexico, Brazil, Malaysia, Chile, South Africa, Korea, New Zealand and Thailand to convey our serious concerns with REACH’s workability, its potentially disruptive effects on international trade, and our shared perception that third country concerns have not been factored into the legislative process. We have specific recommendations for improving the text of the legislation; we hope that you will convey these serious concerns and our specific recommendations to the highest levels in the Commission, the Council, the European Parliament, and the media.

Let me focus on the last concern first. In my past experience as a regulatory attorney and as someone who made regulatory policy, I believe that the more open the legislative and regulatory process is, the better the product will be. This is the assumption behind regulatory processes in the U.S., and has formed the backdrop for some of our most productive discussions in our regulatory dialogue with the EU. When we apply this principle to the REACH legislation, a number of observations come to mind. Let me share some of them with you. First, stakeholders should not be chosen – they know who they are and should be free to contribute to the process.

• Impact assessments should be used to inform policy, not justify decisions taken. To use impact assessments in an ex post manner just defeats the purpose.

• Council deliberations on environmental regulations, including REACH, should be open to the public.

• Related to the last point, stakeholders should not have to depend on leaks to review Council texts.

• In addition, the Commission’s suggested changes to the REACH text should be made completely public.

• Lastly, trading partners and international organizations working on chemicals management should regularly be invited to speak at conferences and hearings of EU institutions.

Now, to turn to our specific concerns with the legislation, let me say strongly that we believe it is not too late to make some important improvements to the text before the end of the year. We believe that these changes will improve the legislation and therefore increase compliance. Our principal concerns with the current text center on REACH’s workability and its potential impact on international trade.

If I were to capture our concerns on workability, I would say that the REACH legislation, including the registration and authorization processes, should be risk- and not hazard-based. The fact is that no government has the resources to monitor all chemicals and substances that are sold in commerce. In a world of finite resources, we must make informed choices. In order to focus our resources on what will benefit our citizens most, a scientific risk-based approach to registration and authorization is crucial. We should not regulate if there is no harm to address and there is no benefit of safety to confer.

A risk-based approach has ample support around the world. The U.S. and the EU and all the countries represented in this room agreed on a general framework for a scientific risk-based approach to chemicals management in Dubai this February; why are these principles not relevant to REACH?

During the first reading of the legislation, the European Parliament introduced some improvements to the registration process that link data requirements to use and exposure categories. Most of these risk-based changes were incorporated into the Council political agreement. These improvements would make the legislation much more workable and more in line with international standards.

Exposure-based data waivers make good sense, and more should be incorporated in the final proposal.

I am sure we all agree that environmental goals are not served by pushing substances and products off the market purely because of compliance costs of government-imposed legislation. Less chemical variety does not translate into fewer environmental impacts – but likely does mean less competition, and correspondingly higher prices, and perhaps more environmental damage due to the use of unproven replacement substances at the same, or in some cases, higher volumes.

The so-called candidate list for authorizations will be a purely hazard-based list that will surely be misinterpreted, if not misused, without providing the public with information they can use to make decisions on risks posed by these substances. Companies may be forced to reformulate their products and processes when no risk has been identified from the continued use of the original substance. According to the European Commission’s best estimates, it will take the Agency 65 years to review the expected 1500-1600 substances that will likely make it to this candidate list. Some of these substances may have already made it through their full life cycles before ever having been considered by the Agency. Thus, I once again see many negatives, but few positives to creation of such a list.

We are also concerned that REACH will have a disproportionate effect on international trade. Requiring registration and notification of thousands of substances in millions of articles is unworkable and enforcement of these measures will be impossible. The chances of trade disruption are too high to risk imposing such an unwieldy process on trade partners. Registration of substances in articles should be limited to those cases in which substances are truly intended to be released. Concerns with substances embedded in articles are better dealt with in vertical legislation.

If notification of substances embedded in articles remains in the REACH text, we would highly recommend that such cases be limited to notification, only when potential risks have been identified, that is, when they have been placed on Annex XIII after having undergone a European Chemicals Agency risk assessment. Notification when no potential risks have yet been identified could cause many SMEs to forego the EU market without corresponding environmental benefit.

The question of registering reacted monomers in polymers when the polymers themselves have no registration requirements makes absolutely no sense. Where is the risk-basis for requiring such registrations? If the monomers have already been reacted, they are no longer bio-available and do not exhibit any of the monomer qualities – good or bad. Thus, the Agency would be asked to review irrelevant risk data for the final polymer since the reacted monomers no longer exhibit their original characteristics. Although we question the value of reporting this information at all, the European Parliament amendment limiting reporting to notification would limit costs and avoid disclosure of confidential business information.

Companies have been testing their substances for decades to determine their properties and potential impacts on the environment and public health. In order to avoid any unnecessary animal testing or increased compliance costs, REACH should clearly allow for data from labs other than those certified for Good Laboratory Practices (GLP), especially if they are in line with programs such as OECD High Production Volume (HPV) Chemicals Program.

REACH could also have an unintended, negative impact on innovation. We agree with concerns raised by some MEPs that internal know-how of companies could be threatened by placing extensive duties to disclose information within the value chain. The REACH text should be crystal clear on the right of businesses to object to release of certain information due to its confidential nature. REACH information requirements are meant to ensure safe handling of substances and should not become a threat to IP rights holders. Mandatory substitution and uniform maximum time-limited authorizations are two other examples of policies that, if adopted, will harm innovation without providing corresponding environmental benefits. Mandatory substitution harms innovation by requiring researchers who would normally be devoting their time to developing new products to redirect their efforts to find replacement substances and test reformulations to ensure proper functioning. Simply replacing one chemical used in a product with another one could also have serious negative impacts on the function, safety, reliability, environmental footprint and quality of the product.

Innovation is expensive, and thus innovators need sufficient certainty of the opportunity to recover development costs. Companies are unlikely to invest the necessary financial and human resources required to research and develop new chemicals knowing that the license of an authorized chemical will expire after five years. When the associated costs of compliance become too high, and the market too unsure, valuable products will not be developed. I want to emphasize that the products will be removed from the marketplace for cost, and not ENVIRONMENTAL, concerns.

Clearly, we will not know the ultimate impacts of REACH until it is implemented. We have expressed our interest in contributing to the development of the guidance documents being prepared through the RIP process. I am confident that input from U.S. regulators, who have a wealth of practical experience in chemicals management, will improve the quality of the documents. I urge you to make the RIPs process more open, to solicit and welcome input from trading partners and to use this input to revise the documents.

I would like to be clear on one point, however: participation in the RIPs process will not allay our current concerns about the REACH text – we strongly believe changes must be made to the current legislation in order for it to work.

Much work remains to be done. We hope our input will be taken seriously and examined carefully. Making the changes suggested today would be a victory for better regulation. REACH will have broad economic impacts, and so needs to be done right from the beginning. I am personally committed to working with you to make this happen. So, let’s get it done.