Small businesses face disproportionate costs

Europe’s small to medium-sized businesses will be hit hard by costs planned for the European Chemicals Agency, industry representatives have warned.

The latest budget for the ECA will make Europe’s chemicals regulation scheme Reach (registration, evaluation and authorisation of chemicals) 25 per cent more expensive, they claim, and small to medium-sized firms will bear the brunt. 

The European commission has revised the budget for the ECA, which will oversee the running of Reach. The latest figure of €1189 million (?804 million) is almost four times higher than 2003 estimates of €359 million. 

The agency will be based in Helsinki, Finland, and must be up and running 12 months after Reach comes into force. The agency’s role is to receive and manage the data sent by companies as they register and test chemicals.

Thomas Jostmann, executive director responsible for Reach at Cefic, Europe’s chemical industry council, said the new budget will make Reach 25 per cent more expensive. The extra costs will inevitably be paid in part by industry and will hit small and medium-sized enterprises (SMEs) extra hard, he said. For small volume substances (one to 10 tonnes), produced mainly by SMEs, these extra costs could make registration fees as high as the testing fees (two fees of €9000 for each substance). ’This is a bad message,’ Jostmann told Chemistry World. ’It could be not only double but triple the price that was quoted when we started the discussion.’

An extra burden for the fees cannot be put on bigger companies, Jostmann said, because this would force them to raise prices. ’Any cost increase will destroy and hamper competitiveness in European industry,’ he said. 

The draft budget will be up for discussion by the European council early in September, said council spokesperson Victor Flavian. ’Until the whole [Reach] regulation has been agreed in all its terms, the ECA doesn’t exist,’ said Flavian. ’These figures are not final.’

The UK’s Chemical Industries Association (CIA) called for the commission to bring the ECA into existence quickly, to minimise pressure on industry. ’Reach already presents an administrative hurdle to many companies and the lengthy timescale that the commission is proposing for having the agency up and running will only exacerbate the issue,’ said Tim Jessel, commercial director of CIA’s advisory service on Reach, the REACHReady network.

The British chemical distributors traders association (BCDTA - due to be renamed the Chemical Business Association on 1 September) was shocked to discover the revised budget during a routine search of the commission’s website. Their calculations, an extrapolation of current fee models, predict a 446 per cent fee increase for producers of 10-100 tonnes of chemicals. ’We were expecting a cost increase,’ said BCDTA director Peter Newport, ’but increases are going disproportionately on the lower volume substances and onto SMEs.’

Newport was critical of the ’political’ decision to house the ECA in Helsinki, rather than Ispra, Italy, home of the European chemicals bureau, which advised on the drafting of Reach. Running costs in Finland are substantially higher because of higher living costs, and recruiting people to work in Finland is difficult, Newport said.

’If you say the central agency has a lot of things to sort out, we agree. But that doesn’t mean we have to have such an expensive agency,’ Cefic’s Jostmann said.

Katharine Sanderson