John Maré
4 September 2007
opinion
Johannesburg — THE European Union (EU) has a reputation of being one of the most regulated markets in the world, which accompanies the reality that it is the largest market. Its emerging Reach programme sees it aiming for new heights to ensure environmental and health safety standards for EU citizens. This will set a new benchmark regulatory framework for other countries to emulate, as is so often the case with EU governance systems.
The far-reaching implications of this policy often seem to escape many South African businesses. The EU Registration, Evaluation, Authorisation and Restrictions of Chemicals (Reach) programme consists of a set of regulations that substantially changes existing EU chemicals policy, with considerable new legal obligations introduced for industry. It was implemented at the beginning of June. Its essence is to establish a comprehensive system for the management of chemical substances in industrial use in the EU. Reach also has localised characteristics in the various EU member states.
EU manufacturers and importers of all types of substances will have to supply data on the properties of the chemicals with which they work, registering such data in a central EU database. They will be forced to develop safety assessments and implement risk-management measures for such substances, especially where they could be hazardous.
The newly established European Chemicals Agency will act as the central clearing point in Reach and will manage central registration, co-ordinate evaluations of suspicious chemicals and operate a public database for consumers and professionals to identify dangerous substances. Businesses found to be using toxic substances have to apply for authorisation and eventually substitute with less toxic substances.
While some basic substances, such as natural gas and minerals, are exempt from the Reach system, the variety of goods that fall under Reach range from packets to tin cans, textiles and ballpoint pens. Substances such as pesticides and others used for the production of food are exempt from Reach, but this is only because they are already dealt with in other sets of EU regulations.
The responsibilities placed on EU industry by Reach are great, but such responsibilities are also transferred to exporters selling to the EU market because they will have to provide considerable data to enable EU importers to fulfil the Reach requirements. The impact on African exporters is considerable. Although basic resource exports are now exempt, of noteworthy relevance for African economies is that efforts to move towards exports of manufactured goods, including beneficiated agriculture and mineral and gas products, will now bring such imports directly into Reach focus if they have anything to do with EU usage.
African textiles, together with treated hides and leather goods, will be among those that now have Reach relevance for their EU importers, and exporters will have to help them by supplying the necessary data. African agricultural exports are already running into a range of phytosanitary compliance problems for exports into the EU, but they will now face new hurdles if they are beneficiated in any way and because of packaging substances.
While no-one can doubt the good intentions of a Reach programme, in the immediate term the increased obligations for African exporters are onerous at a time when many are still striving to achieve compliance with existing requirements. It certainly makes the markets of such countries as China more attractive to African exporters. Nevertheless, not all products can divert easily from EU destinations and in the globalised economy the impact of EU requirements are often transferred to other economies.
The need for South African industry to understand Reach and try to interact with it is urgent. In many cases this relevance seems to be taken too lightly. The increasing role of South African companies in the international marketplace, especially in Africa, extends their exposure to Reach and its implications. Examples of this include the contribution by some local companies towards the supply and production of plastic containers in the economies of many African countries, often for foodstuffs to be exported. While South African industry can try to divert from the EU market, it is often more difficult for others in Africa.
Opportunities such as the current review of the Trade, Development and Co-operation Agreement between the EU and SA, as well as parallel negotiations between the EU and sub-Saharan Africa to establish economic partnership agreements, could be used to get EU support to help African exporters comply with Reach better. However, this may be subsumed in other crucial detail such as improved market access. The fact that such access is undermined without the building of capacity to meet EU import criteria often goes unnoticed.
Reach brings with it challenges and a renewed need for South African business to strive for improved international standards and a more sophisticated understanding of the international economy, where it plays an increasingly important role. A positive spin-off is possible encouragement for African standards on potentially hazardous imports that could be dumped on it by countries having difficulty exporting to the EU and US markets.
Dr John Maré is an adviser to multinational companies, governments and international organisations on international public affairs and diplomacy. He is a senior adviser in the AEAC consultancy network focusing on EU/African business issues.
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