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European Influence Felt in Indiana Cornfields

Does Brussels Set the Agenda for American Farmers and Manufacturers?

New York, May 03, 2002

How influential are the guidelines set across the Atlantic to farmers' crops in the American heartland? Some assert that European regulations have a substantial impact on U.S. farming and manufacturing decisions, especially when those products involve the addition of chemical substances.

The Wall Street Journal (WSJ) recently published a provocative article suggesting that the rules governing U.S. consumption and production of a wide array of products are set by the European Commission (EC). As the executive body of the European Union (EU), a 15-nation trading body that comprises the world's second-largest economy, the EC "regulates more frequently and more rigorously than the U.S., especially when it comes to consumer protection…so even though the American market is bigger, the EU as the jurisdiction with the tougher rules, tends to call the shots for the world's farmers and manufacturers." The reason for this phenomenon is that it is more cost-effective for farmers and manufacturers to produce a product once to reach all markets.

Chemicals are a consistent component of many products including food, toys, software, clothing, automobiles and many others and the EC strictly regulates the import of chemicals and chemically treated products. Guiding principles for chemical imports into the EU are contained in a white paper adopted by the Commission in February 2001: "EU chemicals policy must ensure a high level of protection of human health and the environment…for present and future generations while also ensuring the efficient functioning of the internal market and the competitiveness of the [European] chemicals industry. Fundamental to achieving these objectives is the Precautionary Principle." Preferring to err on the side of caution, the EU will refuse the export and sale of a chemical substance for which conflicting scientific evidence exists concerning its potential harm to humans or the environment. [Editor's note: The EC white paper, Strategy for a Future Chemicals Policy, is included in the left-hand side bar in .pdf format.]

In addition, the paper announces the proposal of a new system to govern existing and new chemicals entering the EU. Called REACH, which is an acronym for Registration, Evaluation and Authorization of Chemicals, the requirements of the new system depend on the proven or suspected hazardous properties, uses, exposure and volumes of chemicals produced or imported.

It is interesting to note that the American Chemistry Council (ACC) reported that U.S. chemical exports to Europe reached their lowest point in two decades, declining from a record high set in 2000. Was Europe's new strategy a factor in the decline of U.S. chemical exports in 2001? ACC, an ANSI member representing some of the leading companies engaged in the business of chemistry recently published The Business of Chemistry: Situation and Outlook 1st Quarter 2002. The report cites possible causes for the sharp decline in 2001, attributing "the high value of the dollar, high energy prices in the beginning of the year and softening demand abroad" as combined factors in "[making] 2001 a challenging year for chemistry exporters." Although the report does not mention the EU white paper or the export restrictions published in the WSJ Europe article, it does point to value of the dollar and its rise relative to the Euro as hindering U.S. exports to the EU.

The regulation of global trade is a major concern to the ANSI Federation, especially in light of the fact that 80% of international trade is affected by standards and regulations that embody standards.[1] Perhaps some solutions to the questions raised in this article will be found next year during a series of annual conferences focusing on the chemical industry, which will be hosted by the International Organization for Standardization (ISO), a non-governmental worldwide federation of national standards bodies to which ANSI is the U.S. national member body. For the time being, farmers in the American heartland will have to raise their crops according to EU regulations in order to have any chance of selling their harvest to buyers who do business in Europe.

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[1] Source: National Institute of Standards and Technology Testimony before the House Committee on Science, Subcommittee on Technology, September 13, 2000.

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