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JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Thursday, 21 Apr 2005

Scrutiny of EU Proposals.

The subject for discussion is COM (2003) 644: Proposal for a Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals, REACH. I welcome Ms Margo Monaghan from the Department of Enterprise, Trade and Employment, who is leading the delegation; Mr. Adrian Devitt from Forfás; Ms Nuala Bannon and Mr. Pat Gilheaney from the Department of the Environment, Heritage and Local Government; Ms Marie McCarthy from the Health and Safety Authority; Ms Caroline Bowden from the Environmental Protection Agency; Ms Ita McStravick from Enterprise Ireland and Mr. Gerry Wrynn from the Department of Enterprise, Trade and Employment. I understand that Ms Monaghan and Mr. Devitt will say a few words about the proposal.

Before asking Ms Monaghan to commence her presentation, I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to witnesses appearing before the committee. Members are also reminded of the long-standing parliamentary practice to the effect that members should not comment or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.

Members will recall the extremely large submission made to the committee and will be aware of the pharmaceutical industry's importance to this country. Thirteen of the top 15 pharmaceutical countries in the world have substantial company operations in Ireland, while 83 foreign companies have 126 plants here at an employment level of 17,000 people. These companies export a total sum in excess of €33 billion so members can get a flavour of the importance of the item before the committee today. This figure demonstrates that Ireland is one of the largest exporters of pharmaceuticals in the world. I know that Deputy Howlin is operating under a tight timeframe so I will ask Ms Monaghan to begin the delegation's presentation.

Ms Margo Monaghan

The reason we have such a large delegation is that we have established an interdepartmental team to assist in the negotiations on REACH due to its complexity and importance as a regulation. I thought it would be useful if the members of the team were present today to help with the discussions. I will give a very brief overview of REACH, while Adrian Devitt will give a more detailed explanation of an impact assessment which we carried out.

The main objective of REACH is secure a high level of protection for human health and the environment. At the same time, REACH needs to ensure that the internal market functions properly and that innovation and competitiveness in the chemical industry are stimulated. The proposed regulation aims to increase knowledge of all the chemicals which are currently in use in the EU. It will replace approximately 40 existing pieces of legislation. It is a very large regulation that contains approximately 1,200 pages. REACH will lead to a harmonised system across the EU, which is important for the internal market. It also explains why this is a regulation rather than a directive because it will be directly applicable in all member states without any discretion for member states on how to implement it. The full implementation of REACH will take 11 years from the date it is adopted. This policy is deliberate because the regulaton is so complex and resource-intensive that it would not be possible to implement it all at once.

The chemicals relating to REACH are not simply chemicals in laboratories and factories. Chemicals are used in practically every item of clothing worn today. For example, there are chemicals in the suits we are wearing that prevent excessive creasing when we sit down.

They do not work.

Members should not interrupt the delegation.

Ms Monaghan

Regarding the background to REACH, the existing system for managing chemicals involves drawing a distinction between chemicals which were in use before 1981 and those which were used after that date. The chemicals in existence before 1981 are not very well regulated. There are about 30,000 of these chemicals in existence. The chemicals that came on to the market after 1981 are subject to a very demanding regulatory regime. The result is that very few chemicals have come on to the market since 1981 because it is very difficult to get them to market. This has led to a situation where hazardous chemicals have continued to be used and innovation in the chemical industry has been damaged because of the difficulties involved in bringing new chemicals to the market. The idea behind REACH is to rectify the faults of the existing system.

The European Commission took part in a very long consultation process over REACH. It began in 2001 with a White Paper. The Commission then issued various proposals, including an Internet consultation. There was so much interest in the Internet consultation that 6,000 responses were received. The Commission examined the responses in detail and came up with a revised proposal, which tried to meet the concerns expressed through the Internet consultation. From a competitiveness perspective, we believe the revised proposal is much better than the older proposal. Despite that, the chemical industry still believes there is room for further improvement. On the other hand, environmentalists are concerned that the revised proposal has gone too far in the competitiveness direction and would like to see some of the previous provisions re-enacted in the regulation.

REACH takes its name from the fact that the system is concerned with the registration, evaluation and authorisation of chemicals. Registration obliges any manufacturer or importer which is manufacturing or importing in quantities above one tonne to get a certain amount of information on its chemicals and to register that information in a dossier with a central agency, which will be located in Helsinki, Finland. The information requirements become more demanding depending on the volumes of chemicals manufactured or imported. The information requirements are relatively easy if manufacturers or importers are manufacturing or importing just one tonne of chemicals. The information requirements are relatively difficult if 1,000 tonnes of chemicals are being manufactured or imported. If a company is manufacturing extremely hazardous chemicals such as carcinogens or chemicals that are toxic to reproduction, the information requirements become more demanding.

Owing to the resource-intensive nature of REACH, it was decided that it would not be possible to introduce it all at once. The Commission proposes a system whereby the highest volume chemicals will be registered first. Therefore, chemicals in amounts of 1,000 tonnes or more must be registered three years after the regulation comes into force. Chemicals in amounts of 100 tonnes or more must be registered six years after REACH comes into force and chemicals in amounts of one tonne or more must be registered 11 years after REACH comes into force.

The next step of REACH is evaluation, of which there are two types. There is an evaluation of the dossier to ensure that any of the tests proposed therein are not duplicated where animal testing is concerned. Tests may be undertaken to ensure the information contained in the dossier complies with the provisions of the regulation. Subsequent evaluation is probably more important. The idea behind this is that the authorities will decide which substances are likely to be the most hazardous and will evaluate them to assess whether the risks warrant further action. The outcome of the evaluation process may require companies to provide more information or the competent authorities to decide a substance is so dangerous it must be authorised or restricted.

The third step in the REACH process is authorisation. This does not necessarily follow from registration and evaluation as authorisation can happen for substances that have not been registered or evaluated. If a substance is in the lower tonnage range, it can still be subject to authorisation earlier in the process. Authorisation means that a list of substances will be drawn up on an incremental basis containing substances that the competent authorities, the Commission and the agencies believe are so highly dangerous they should be banned unless a company is specifically authorised for their use. A company applying for an authorisation for a listed substance must show it is either controlling the risks adequately or that there is no substitute for the substance. Economically and socially, it is better to use the substance than to ban it.

There is a restriction process in the regulation that is the same as the process in operation under the existing legislation and I will not dwell on it. I have mentioned that a new chemical agency is to be established in Helsinki and that each member state must nominate a competent authority for itself.

I will discuss briefly what has occurred in connection with REACH. The regulation is being negotiated in both the Council and the European Parliament. The Competitiveness Council is the lead council but the Environment Council is heavily involved. There is a special Council ad hoc working group that meets in Brussels every two or three weeks to which I am a delegate and these extensive negotiations are currently taking place there. Several hundred working documents have been prepared and significant progress has been made during the negotiations. The UK is taking over the Presidency on 1 July and it has indicated its hope to reach a political agreement on this dossier by the end of its term.

Eight committees of the European Parliament are examining this dossier due to its importance. There are three lead committees, including the Committee on the Environment, Public Health and Food Safety, the Committee on Industry——

We usually allow ten to 12 minutes for the total submission and Deputy Howlin must leave at 10 a.m. I wish to have his questions asked of the delegation. We are impressed with the submission but Ms Monaghan should conclude briefly.

Ms Monaghan

We have an interdepartmental group working on this and and are trying to get an agreed national position in the negotiation process.

I apologise for interrupting.

Ms Monaghan

It is not a problem.

I am sorry I am under a time constraint but I have another committee meeting at 10 a.m. I wished to be here for the opening session. There is no way we can do justice to this important issue.

I am mindful of the Chairman's preamble in terms of the importance of this sector to the Irish economy and to Irish jobs. I will tease out a few points before I leave. There are two strong schools of thought on this, including the business community's outcry, in particular that of the German chemical industry, about the impact this will have on our competitiveness vis-à-vis Asian and North American competitors rather than within the EU. I wish to be assured because the counterpoint to this outcry is that we must have clean technologies and certification. If we are the first to the market with green technologies, there will be an advantage in the long term.

What type of dialogue has the Department of Enterprise, Trade and Employment had with the chemical industries located in Ireland and what is their reaction? Have they specifically given a view in terms of its impact on the Irish economy and Irish jobs? The chairman of the European Parliament's Committee of the Environment, Public Health and Food Safety put forward concerns, such as the fear that this directive may be a bridge to exporting jobs to the Far East. This is unusual as I would have expected this view from a different committee.

Will the testing laws and their application apply to Asian and North American manufacturers selling a product in Europe? Will this level of testing apply to the same product manufactured outside the EU if this directive comes into place? Is there a definite cost for this? The figures range from €2.3 billion in a Commission document to €3.5 billion in a Nordic Council of Ministers report, while one could also believe the industry's sum. Some argue that this is a great deal of money but it is only a fraction of a percent of the cost of chemicals in impact terms. We must know the answer.

Is there an analysis of the actual cost of cleaning up the environmental pollution that will be identified once the Helsinki centre is established?

Who will address these issues?

Ms Monaghan

I will start and ask for assistance as necessary. We have had considerable dialogue with the chemicals industry and are working closely with IBEC, which has established a special committee composed of their chemical and pharmaceutical industries and with which we have met on a regular basis.

We also asked Forfás to commission an impact assessment study. As part of this study, consultants visited and spoke with a wide selection of people from the pharmaceutical industry. We have been liasing very closely with them.

What are they saying?

Could a copy of the relevant documentation be given to this committee when it becomes available?

Mr. Adrian Devitt

The document is being published today.

Will we have a copy shortly?

Ms Monaghan

Yes. The results show the directive will not have a significant effect on the pharmaceutical sector because REACH will not apply in circumstances where chemicals are regulated under broadly equivalent legislation, of which there is much in the pharmaceuticals area. Without getting too technical, many Irish pharmaceutical companies are involved in manufacturing intermediates, which are subject to a lighter regime under REACH.

Chemicals imported to the EU will have to be tested in the same way as chemicals produced in the EU. The difference arises in articles imported to the EU. REACH will apply not only to the manufacture of chemicals but also to the use of chemicals. There are some fears relating to articles imported to the EU. They will come under REACH if there is likely to be a danger of any hazardous discharge from the articles. Otherwise articles from outside the EU will not be covered, and this is a problem we are examining. We undertook an impact assessment to get an understanding of the cost.

Mr. Devitt

I will respond on this specific question of cost. One of the key outcomes of this study is that users of chemicals will be more substantially affected by these measures than the companies producing chemicals. Although it is referred to as chemical production legislation, users will also be affected significantly. Based on our study we estimate the cost to chemical and pharmaceutical companies to be €180 million over an 11 year period of the introduction of the legislation

Is Mr. Devitt saying that the cost will be €180 million?

Mr. Devitt

Yes. That will be the cost to companies based in Ireland.

Will that be over 11 years?

Who will bear this cost?

Mr. Devitt

That cost will be primarily borne by the companies. Most of it deals with the cost of registering and testing chemicals.

Who are the users that Mr. Devitt mentions?

Mr. Devitt

Users of chemicals will also bear costs. If REACH is introduced chemicals may become more expensive and downstream users will have to pay for this. Some chemicals may be taken off the market and downstream users will have to find alternatives and substitutes. Estimating the cost to downstream users is more difficult as it involves more permutations. Research from the Commission indicates €300 million for Ireland. Most of those costs will be borne by the information and communications industry and small and medium sized enterprises, SMEs.

The information and communication technology industry is particularly exposed as it uses a lot of speciality chemicals. It is also concerned about confidentiality, as it may have to share information on what chemicals it uses and how it uses them to produce computer products. We are also concerned about SMEs as they tend to be less aware of the legislation. Smaller companies have to spend a higher proportion of their sales revenues on environmental practices.

Has Mr. Devitt been in close contact with Irish Business and Employers Confederation, IBEC, regarding these proposed charges?

Mr. Devitt

Yes.

What is the view of IBEC?

Mr. Devitt

We recently made a presentation at an IBEC conference where we gave a broad outline of these proposals. IBEC welcomed our study.

I would like to expand the issue but I do not have time.

We may have to revisit it.

We might invite IBEC to present their point of view.

We will not be making a decision on this document today. Deputy Hogan has a great interest in this, and Deputy Ned O'Keeffe has considerable experience in this area. I propose that we continue until 10.30, when we have to go to the Dáil for the Order of Business. We will reconvene at an early date with IBEC, other interested bodies and Ms Monaghan's delegation.

What is the timeframe for this to be decided by Council?

Ms Monaghan

It has been going to Council for direction.

Is it subject to codecision? If so, what stage is that at?

Ms Monaghan

Yes, it is hoped that it may be possible to adopt a political agreement on this by the end of this year. Parliament is working on having its vote adopted by the end of the year. Council is hoping for the same, and that the two will dovetail. I think that is too optimistic but one never knows, as the UK is very determined on this issue.

We will go as far as we can this morning and we will try to reconvene before the summer recess when everyone is available. This issue is very important. I welcome the vice-chairman of this committee, Deputy Martin Brady, and I acknowledge the presence of Mr. John Fallon in our visitor's gallery.

Mr. Devitt

As the committee knows, Forfás is the policy advisory body to the Department of Enterprise, Trade and Employment on economic, scientific and technological issues. It was asked to undertake a study to assess the impact of REACH on Irish industry. We formed a cross-departmental team within the agency, which is broadly represented here today, and we commissioned Environmental Resources Management Limited, ERM, to assist with the study.

We examined two broad areas in the study. The first is companies that produce chemicals, such as chemical and pharmaceutical companies. Then we looked at the range of industries that use chemicals, such as medical device manufacturing, information and communication technology, SMEs, publishing and the food and drink industry. The objective was to assess the direct cost to the producers and to understand any potential implications for companies using these chemicals, either producing their products or using chemicals in a process.

There are some benefits to chemical and pharmaceutical companies. There are certain exemptions for research and development. A standardised internal market will be created and this will be good for trade. Occupational health and worker safety will also improve. These companies may also improve their business reputation if they are seen to implement this legislation.

The EU view is that REACH will cost the EU 25 approximately €4 billion over that period.

Is this the 11 year period?

Mr. Devitt

Yes. A further Dutch study has estimated that there may be significant additional costs of €2.5 billion for EU 25 in learning about REACH. We worked with ERM Limited consultants who have developed costing models for Europe and have tried to adopt that model to address the precise profile of Irish industry. We believe it will cost chemical and pharmaceutical companies approximately €180 million over an 11 year period. These are very rough estimates as REACH is very complex legislation. There are a lot of sensitivities, and in our report we undertake a variety of sensitivity analysis to provide more depth to these figures. This is our best estimate for the legislation in its current state. REACH has potential positive and negative implications for downstream users such as companies that use chemicals in their daily practice. As Ms Monaghan mentioned, almost every company uses some chemicals.

The key benefit reported by downstream users was that there would be a greater level of information available on the chemicals used and the potential risks. This was seen as of particular benefit to smaller downstream users who do not have the scientific knowledge to find this information for themselves.

The estimation of cost is much more difficult for downstream users until REACH is implemented. One possible implication is a rise in costs passed on to downstream users. Depending on the competitiveness of the industry the chemical company may not be able to pass on the costs. In that case the company has to decide whether to continue producing the product. If chemicals are taken off the market there will be implications for downstream users. If a large information and communications technology plant uses a specialised chemical, and the chemical is no longer available, manufacturing processes may have to be restructured. This could be very expensive.

Our overall view is that this is difficult to estimate. The European Commission estimates that it will cost between €2.8 billion and €3.6 billion. Based on our assessment, we believe it will cost as much as an extra €300 million in Ireland over an 11-year period.

We examined a variety of industries to assess where it might have the greatest effect. The two key industries for which we have concerns are the information communications technology, ICT, the hardware industry — an industry that would be interested in discussing this if the committee returns to the topic — and the SME sector, primarily because of the size and lack of specialised staff and resources to address these issues.

I will conclude with the key issues that companies have identified within the legislation. Many European companies are concerned that their non-European counterparts will gain an advantage in intellectual property as European companies will have to provide information on the chemicals they are producing and using and also on how they are being used. That information is particularly sensitive in the types of industries, such as those in the ICT sector, we have attracted to Ireland.

Companies are also concerned with time to market. The REACH process may slow down the bringing of chemicals to the market and this could give potential non-European competitors an advantage. The degree of substance withdrawal is also causing concern because taking chemicals off the market creates uncertainty for their users. If one invests substantial amounts of money in a manufacturing facility, one must be certain of the supply of basic raw materials.

There is a significant lack of awareness of REACH, particularly among SMEs. In addition, REACH is extremely complex and understanding it and what it means for one's business is a significant challenge, even for companies that have regulatory specialists. One can imagine the position in which smaller companies find themselves. A lack of clarity in certain key areas as the legislation is progressing will have implications on how we assess the effect of REACH and how it will be implemented.

REACH is expected to have significant benefits for human health and the environment. The key finding from our study is that it may also have significant cost implications, both for the chemical and pharmaceutical industry and also for certain downstream user industries.

I thank Mr. Devitt. It could be said that the argument for this proposal is that, for the sake of health and environment, the precautionary principle must prevail. The other side is that many of these chemicals contribute to products that are the heartbeat of the modern world and they should not be banned or controlled unless it is proved that they kill. What research is being carried out on this in Ireland and Europe? Will these proposals provide the EU with one of the most progressive chemical management systems in the world? How does the proposed system compare to that in use in the United States? What economic effect is the proposal likely to have in Ireland, specifically in terms of employment and the 17,000 people employed in this sector which contributes €33 billion a year to our economy? Will the proposal safeguard the competitiveness of the Irish pharmaceutical and chemical sectors? Will the proposal enhance the innovation capacity of the Irish chemicals industry? If not, why?

I wish to add another simple question to that. Does the term "downstream users" refer to consumers?

Ms Monaghan

I will ask Ms McCarthy from the Health and Safety Authority to speak on research on the toxicity of chemicals, as she has some experience in this area.

I am not exactly sure what the Chairman means by his question. To date, much work has been done on a small pool of chemicals, namely, the so-called new substances placed on the market since 1981. All of the member state competent authorities implementing the new substances legislation have invested a substantial amount of resources, time and energy into researching and testing these new chemicals. People are confident that they know the hazards with the newer chemicals.

The difficulty is that there is a pool of existing chemicals on the market on which there is little data available in respect of their toxicological and atoxicological effects. For a number of years, attempts have been made to take the highest volume chemicals and subject them to the same testing regime as applies for new substances. Of those existing high-volume chemicals, 140 have been extensively tested. There is little information available on the remaining 30,000 chemicals and this legislation is aimed at addressing that. It is also designed to achieve a middle ground where we will have basic information on all other chemicals.

Is Ms McCarthy stating that, for example, the US or some other countries are already doing this and that we are not?

Unfortunately there are different testing regimes in each country but the level of testing is broadly similar in the US and Europe. The same problem exists in the US. They have high-volume chemicals that have been on the market for a long time and they have not been tested either.

Within the OECD there has been an effort to target high-volume chemicals and to accumulate data on them. The OECD has an equivalent high-volume chemical programme. Many measures to harmonise legislation between the United States, Canada and Europe are afoot within the OECD.

Regarding what Mr. Devitt stated, is confidentiality of intellectual property in any way interfering with this testing?

Yes. Companies have legitimate concerns regarding the sharing of information on chemicals and even the revelation that a company within a particular sector is using certain chemicals is potentially damaging to its interests.

I thank Ms McCarthy for her reply.

Ms Monaghan

On the confidentiality question, I wish to add that there are certain protections within the regulation on confidentiality and what can be disclosed. We are working hard to increase that protection and are trying to have provisions inserted that will mean companies will not have to identify themselves but will be able to work through third parties.

They are interested in the information on the chemical as opposed to——

Ms Monaghan

Yes. Under REACH, companies will not have to disclose the precise chemicals that they uses in preparations. That information is regarded as confidential, as is the tonnage used and other information.

The Chairman also posed questions about the economic effect on Ireland and the effect on research and development. I will ask Mr. Devitt to reply those questions.

Mr. Devitt

We believe that, in Ireland's case, the direct effect on chemical and pharmaceutical producers will be approximately €180 million, plus an additional €300 million in respect of downstream users. That simply measures the direct administration and testing costs of REACH. In terms of the other costs——

Is Mr. Devitt stating that it will cost us €480 million — split into €180 million in respect of producers and €300 million in respect of downstream users — over 11 years?

Mr. Devitt

Yes, over an 11-year period. The downstream users would have a potentially greater impact than the chemical producers.

REACH will cover tens of thousands of chemicals. ERM completed a study on our behalf which took a sample of chemicals and applied the basics of REACH to assess how much it would cost to register them, test them and so on. The study tried to build in estimates of how many companies could share the costs. It examined the kind of chemicals used in Ireland, in terms of their volume and nature, and these are the estimates arrived at. There are other factors that are not so readily quantified such as, for example, the potential effects on foreign direct investment. We worked very closely with IDA Ireland in assessing those but effects on foreign direct investment or employment are not easily quantified. These figures simply represent the direct costs of REACH.

The effects of this proposal on research and development are not clear because there are positive and negative aspects. The two positives are that the proposal creates exemptions for research and development and it breaks down the barrier between new and old chemicals. If chemicals are taken off the market because they are dangerous, that creates openings for companies to identify substitutes or alternatives. The latter provide a spur for research and development.

On the negative side, the resources in companies that are likely to be directed towards implementing REACH will probably initially come from research and development departments. In other words, resources are going to be diverted from research and development into dealing with REACH implementation. Over time the programme may also limit the pool of chemicals that is potentially available for testing, particularly if chemicals have been taken off the market. Many economists would have an issue with the idea that research and development should be driven by regulation and would believe that it should be driven by market needs. They would not favour governments determining in which direction research and development should be driven.

One major flaw is that this legislation only applies to the European Union and not to countries outside it. I would not be concerned about the cost of €480 million; the big problem is competition. If it is possible to produce a drug outside the EU at half the cost of producing it in Ireland, then we cannot compete. Has any research been done on whether the market would favour the controlled drug over the cheaper, uncontrolled alternative? These are key issues regarding what is very serious legislation.

I did not realise the importance of the chemical industry. There will definitely be problems regarding the finished products, as opposed to the raw materials, that will be imported cheaply from Third World countries.

There are chemical companies in the constituencies of many committee members. I live adjacent to the Shannon Estuary in County Clare. There was a recent case involving a company based at the Shannon industrial estate that had problems in respect of chemical emissions.

I note that representatives from the EPA and the HSA are present. As this regulation is enforced in the coming years, will the expertise and manpower be available to monitor the chemical companies or will the onus be on the companies to self-monitor in terms of chemical usage? Enforcement is important, as the example in Shannon illustrates, because the health of the citizens is at stake. In that context, the cost of €480 million over 11 years is modest, though it may negatively effect small to medium enterprises.

I wish to clarify that Mr. Devitt stated that the cost of testing will initially be paid for out of research and development budgets. If that is the case and if chemicals are taken off the market, surely there will be very little replacement of such chemicals because there would be no research and development budget. This is the life-blood of the entire industry. Has this been definitively quantified? What level of damage will this inflict on the industry? We must be concerned about the effects on the environment and public health but we must also consider unemployment, which is equally devastating.

Ms Monaghan

I will answer the questions in the order in which they were posed. The first question——

Deputy Callanan's question was first.

Ms Monaghan

Deputy Callanan referred to the fact that this regulation only applies to the EU and not to the whole world. It is true that this has implications for industry in the EU. However, it is also of major concern to industry outside the Union. Those companies that export chemicals to the EU will have to comply with the stricter regime. Whether those two concerns balance each other out is unclear but we are uneasy about the fact that the regulation only applies to the EU. This is not just the case with REACH, however, it applies to many other areas where the EU is taking the lead in respect of regulations. There are also very demanding chemical regimes in other countries such as Japan.

Is Ms Monaghan saying that any drugs that are used within the European Union, regardless of where they are produced, will have to comply with these regulations?

Ms Monaghan

Yes. On the question of enforcement, every member state is required to designate a competent authority to implement the regulations. We are currently considering the best mechanism for this country. The HSA is under consideration as the most suitable competent authority but the Government has not taken a final decision in that regard.

Where would the EPA come in?

Is the EPA the end user?

Ms Monaghan

: The breadth of competence required to implement this regulation means that the competent authority will have to liaise closely with existing bodies that also have expertise in the area. It will be necessary to designate one competent authority with overall responsibility and that authority can make decisions on liaison with others in the field.

Mr. Devitt will answer the question on the cost of testing and how that relates to research and development.

Mr. Devitt

To put REACH in context, there are many pressures, particularly in the context of competition from India and China, facing the pharmaceutical and chemical industry in Ireland and the EU. REACH is but one factor among many in terms of determining where the industry is going.

The estimated cost of €180 million over 11 years equates to just over €18 million per annum which, in terms of the turnover of the chemical and pharmaceutical industry, is a very small amount. Forfás estimates that the two industries spend approximately €140 million per year on research and development. If we relate the figure of €18 million to that of €140 million, it helps our understanding of the situation. There are mixed views on how research and development will be affected. The results have not been clear.

Ms Nuala Bannon

I wish to add something about the relationship with innovation. Mr. Devitt has said that the difference between new and existing substances will disappear. The level of testing required for new substances, which is currently 10 kg, is being increased to one tonne. That should mean an enhancement for lower-volume chemicals, which is where much of the innovation will come. REACH aims to make more information available on chemicals and on the risks associated with them.

There will be requirements for information as to whether one substance is safer than another and there are potential opportunities there for substitution. If a less hazardous substance may be used, that requires less protection, less abatement equipment and so on. There are potential ongoing cost savings in that respect and there is also the once-off approval for the initial testing.

We will hopefully revisit this subject before the summer recess. I thank Ms Monaghan and the rest of the delegation for what was a very informative briefing. I thank the representatives of the various State agencies and look forward to their return. We will hopefully be hearing from IBEC, ICT Ireland and representatives of small and medium-sized companies. Mr. Pat Delaney and his team will probably be with us. This is a serious matter which presents a great challenge to the EU and Ireland. We are very well represented by Ms Monaghan, with whose presentation I was extremely impressed.

The joint committee adjourned at 10.30 a.m. until 3.30 p.m. on Tuesday, 26 April 2005.

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