CHEM Trust – Written Evidence (UST0075)

1. CHEM Trust is a UK registered charity that works at EU, UK and international levels to prevent manmade chemicals from causing long-term damage to wildlife or humans, by ensuring that harmful chemicals are substituted with safer alternatives.

2. Our comments below address the Committee’s questions on regulation and standards setting and also closely relate to Question 4, as trade negotiations with the US do conflict with those of the EU. In our view, the UK should remain aligned with the international gold-standard for chemicals regulation, the EU REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Regulation, to maintain existing protections for the UK consumer and the environment. The extent to which the UK choses to align with the EU will affect, and limit, the room for manoeuvre for regulatory cooperation with the US. In light of the types of provisions the US seeks to include in its trade agreements, close regulatory cooperation with the US along the lines of the US-Mexico-Canada-Agreement could see the import of US products that contain chemicals that are banned or restricted in the EU and could even result in aspects of the US system getting imported into the UK, including areas in which it is at its weakest and least protective.

Regulation and standards setting

Q18 Would the UK aligning more closely with the US’ regulatory approach benefit either UK or the US business? How do you assess the respective benefits for US businesses of the UK’s alignment either with an EU or a US approach to regulation? How might the UK use a UK-US deal to advocate for the adoption of international standards?

3. The EU system is not perfect, but the gulf between it and the US is particularly wide on chemicals. Under the US Toxic Substances Control Act, the burden of proof falls on the regulator to demonstrate proof of harm. Under REACH, it’s on the companies seeking to bring a chemical to market, who have to generate enough data about it to demonstrate safety. A lack of adequate safety and use data is a pervasive problem in chemical regulation and can result in a perverse incentive where the regulatory system rewards those who do not deliver safety data to the regulator.

4. Advocates of the US system often falsely depict it as a ‘risk’ based system versus an EU ‘precautionary’ or ‘hazard’ based system. However, the EU REACH system uses a combination of both ‘specific risk assessment’ where an in-depth analysis is made of exposure to a specific chemical, and ‘generic risk assessment’. The latter says that chemicals that are particularly hazardous – e.g. those that cause cancer – shouldn’t be used in broad groups of applications, like in toys or cosmetics or sprayed in open fields. The broader approach taken under REACH to understanding risk can involve the application of the precautionary principle in cases where the scientific evidence is uncertain, but the risks are high.

5. The US system mainly uses specific risk assessment, which is much slower and more time consuming and can give a false sense of accuracy. It also requires safety data which is frequently not available. In the US the regulator needs to show a chemical presents an ‘unreasonable’ risk of injury to health and the environment, making it much harder to control harmful chemicals. The US regulator, the EPA (the Environmental Protection Agency), is caught in a regulatory Catch 22 in that it needs prior evidence that a substance presents a potential risk before it can start its own testing – and ask for more info from the manufacturer – but it’s primarily this information that shows whether or not there is a risk.

6. These differences are also clear when it comes to regulating cosmetics. While EU cosmetics regulations include, for example, restrictions on Carcinogens, Mutagens and Reproductive Toxins and on others known to provoke allergic reactions or skin sensitization, in the US, the regulator needs prior evidence that an unreasonable risk exists for each substance before it can even start its own testing. This gives the regulator, the US FDA, very little pre-market power to require testing of, or even to review, cosmetic ingredients. As a result, the FDA has restricted only 11 substances or groups of substances for use in cosmetics and the EU has banned 1623. For example, the EU has more thoroughly restricted the use of some phthalates and parabens in cosmetics, unlike the US. In 2019, when products from the retailer Claire’s – as well from other manufacturers including Johnson & Johnson – tested positive for asbestos, the FDA could only warn consumers not to buy them and they were voluntarily recalled by the manufacturers.[1]

7. The US-Mexico-Canada Agreement is seen as a template for future trade deals with the US, and we can see from provisions within this agreement that the US is likely to seek to push the UK to:

• Adopt its weaker, exclusively risk-based approach to regulating chemicals.
• Agree to a process by which the US government and US companies are consulted on and could obstruct draft regulations and could retroactively review existing regulations if they can be viewed as a restriction on trade – that could result in ‘regulatory chill’.
• Regulatory cooperation on chemicals that could cause significant delays to regulating harmful substances and, in particular, could stifle progress in regulating chemicals that disrupt sensitive bodily processes including the endocrine (hormone) system, the immune system and neurodevelopment.
• Restrict the information that can be used by government to support regulation and that can be accessed by businesses, which could also undermine the consumer’s right to know about substances of very high concern in products they are using everyday (set out in Article 33 of REACH)
• Keep information about food additives hidden from regulators and the public
• Adopt the US ‘market first, regulate later’ approach later to cosmetics.

8. In relation to one of these risks (above), the USMCA includes an annex devoted to cosmetics (12-B) which includes provisions which requires that domestic rules cannot be used to prevent imports of another party’s cosmetics, that should “be accorded treatment no less favorable than that accorded to like products of national origin”. It also includes fairly extensive regulatory cooperation provisions which effectively involve aligning with some US norms and processes. For example, it requires each Party to “endeavor to use a risk-based approach” which could undermine the broad limits on carcinogens, mutagens, reproductive toxicants, and allergens and skin sensitizers. It also follows the US ‘market first, regulate later’ approach, so that “no party shall require a marketing authorization for a cosmetic product, unless a Party identifies a human health or safety concern, and a less trade-restrictive alternative, such as a notification or post-market surveillance, is not reasonably available to effectively address the risks at issue.” Provisions such as these would require aligning with features of the US system for regulating cosmetics that are weaker and would leave consumers more exposed to harmful chemicals. Polling suggests that consumers would prefer the EU level of precaution and safety for products they use on their bodies and this approach has clearly not harmed the European cosmetics industry or availability of cosmetic products on the EU market.

9. In response to Q18, in our view aligning more closely with the US regulatory approach would be considerably more beneficial to US businesses. Moving away from alignment with the EU could negatively affect UK manufacturers who may have to find new export destinations for their produce while being undercut by lower standard US imports that are cheaper to produce, that could ultimately put downward pressure on UK production and standards. While the UK complies with the higher EU chemicals standard, this does not stop us from exporting to the US, while harmonising with the weaker US regulation has much greater benefits for the US in facilitating more US to UK trade.

Q18. How might the UK use a UK-US deal to advocate for the adoption of international standards?

10.                     In its published objectives for UK-US trade negotiations, the UK confirms it is seeking to reduce Technical Barriers to Trade (TBT) and in a more detailed section on reducing non-tariff barriers on goods, gives a case example of a multinational chemical manufacturer.[2] The case study gives the example of a chemical manufacturer that believes “that seeking alignment on the basis of the consistent building-block approach set out in UN Globally Harmonized System of Classification and Labelling of Chemicals (GHS) and achieving harmonisation of classifications, would improve market access and reduce costs”.

11.                     These standards do not, however, provide the same level of protection as REACH – international standards are often the minimum any country must meet – as they only describe an approach to classification and labelling of the properties of a chemical and not the controls on the use of the chemical. The EU was heavily involved in the creation of GHS, but the EU still uses some classifications that go beyond GHS. In addition, REACH sets out additional requirements for substances that fall into particular hazard classifications. So that those which are identified as carcinogenic, mutagenic, reprotoxic (CMR) are automatically restricted from use in consumer products and those classified as CMRs and persistent, bioaccumulative, and toxic (PBT) are identified as Substances of Very High Concern that are eventually destined to be phased out. Furthermore, the EU’s Classification, Labelling and Packaging (CLP) Regulation is based on the GHS, but the European Commission has announced in its new “Chemicals Strategy for Sustainability” that they plan to extend it next year to include new hazard categories for endocrine disruption, PBTs/vPvBs and persistent and mobile substances – setting higher standards than the GHS - that it will then propose to the UN GHS in 2022-24. We already have much stronger rules and should not base alignment on rules that only relate to one part of chemicals regulation, and to a weaker standard.

12.                     The UK Government has not set out how it might respond to likely US demands on chemicals, if it has any redlines or defensive interests. It has not yet given any clear statements about whether it intends to uphold existing chemical protection standards and the ability to strengthen future standards. It makes reassuring statements throughout the UK-US Free Trade Agreement document about upholding environmental standards, echoing its manifesto commitment that any agreement will “ensure high standards and protections for consumers”, “will not compromise on our high environmental protection, animal welfare and food standards” and “will strongly defend our right to regulate in these areas”. However, it has so far resisted attempts to underwrite these commitments in law, via amendments to the Trade and Agriculture Bills on maintaining import standards. Import restrictions on low-quality goods are not only necessary to protect UK farmers from being undercut by US food imports produced to lower standards, but also to defend against downward pressure on environmental standards in the UK. Without such a commitment in law, as well as transparency in negotiations, we cannot be sure that the UK will resist this downward pressure.

13.                     The Government has pointed to the fact that any weakening of regulation would require a change in the law. The fact that any weakening of UK standards or regulatory processes might require new legislation in Parliament does not, however, provide a barrier against it happening. In addition, as demonstrated above, while changes to some aspects of REACH may require primary legislation, other standards or processes could be easily changed via under-scrutinised secondary legislation or even by administrative decisions (e.g. which is the case in relation to some controls on pesticides[3]).

Q19. We have heard from witnesses that the UK should not agree to mutual recognition of standards, for example because US standards are less consensus-based than those that apply in the UK. What is your view of how the US, at all levels, sets standards for, and regulates the safety of, products?

14.                     In our view, given the very wide divergence between the EU and US systems, neither regulatory harmonisation nor mutual recognition is feasible or desirable in the area of chemicals. We would very much not support the proposition that standards and regulatory processes developed in the US should be accorded a presumption of equivalence with UK regulatory requirements.

15.                     The Department for International Trade identifies the chemicals sector as one of a handful of sectors that would make the biggest contribution to increases in GVA from an FTA with the US and finds that this contribution would increase the greater the degree of regulatory harmonization. However, the overall economic contribution from a US-UK FTA would be very low. Even with significant liberalisation and deregulation of import controls, it would result in an estimated increase to the UK's gross domestic product (GDP) of between 0.07% and 0.16%, depending on the exact terms of the deal. This would be dwarfed by the hit to UK growth from even an FTA with the EU, in comparison to the status quo, or by a fall in UK GDP of 7.6% over 15 years if the government fails to reach a trade deal with the EU.[4] We should consider whether sacrificing our high standards is worth the very limited economic benefits the deal will bring and the wider costs to consumers and the environment.

Q4. To what extent do the ongoing negotiations with the EU on a future relationship conflict with negotiations with the US on a trade deal? What are the major trade-offs involved?

16.                     The decisions the UK makes now about which system it would like to be more closely aligned with will be critical in determining the level of protection for human health and the environment from harmful chemicals for years to come.

17.                     If regulatory cooperation is a worthy aim, it would be better to align with the EU standard and harmonize standards upwards. There are also strong economic benefits of remaining aligned to the EU on new REACH controls. The industry has little to gain from any deviation from EU rules and will need to ensure its products are REACH compliant at the point of sale anyway in order to access the EU single market, its biggest export market. Coming out of REACH will also cost companies an estimated £1billion pounds to provide duplicate safety data to the new UK regime, which is already available under REACH. Given the significance of chemicals regulation as a trading standard, a mid-Atlantic position is unfeasible; the UK is not going to start setting international trading standards on its own.

30 October 2020