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NGO report: socio-economic analysis under REACH failing policy makers

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Echa’s approach to socio-economic analysis (SEA) under REACH overemphasises economic factors at the expense of social ones, according to a report from NGO ChemSec.

In particular, factors that cannot be expressed in financial terms, such as effects on human health or the environment, are "mostly ignored", the NGO says.

In the report, Lost at SEA: The information policymakers actually need from applicants and Seac opinions, published on 4 March, ChemSec is also critical of the way Echa handles these economic factors.

SEA is a key feature of the REACH process for obtaining authorisation, which companies must obtain to use a substance of very high concern (SVHC) listed in Annex XIV.

The company must first show that there are no alternatives to the use of the substance. Then it must show, in socio-economic terms, that use of the substance is justified. Typically, companies do this through cost-benefit comparison.

The report delivers a wide range of criticisms covering both the SEA dossiers submitted by companies and the Opinions adopted by Echa’s SEA committee (Seac), which has responsibility for evaluating them.

For example, the report says that authorisation applicants tend to overestimate the costs of changing their processes, citing analysis of the first 100 applications for authorisation conducted by Echa and published in 2017.

According to the report, applicants also do not:

  • account for the effects on companies that have the same requirements as the applicant but have already switched to an alternative substance or the effects on companies supplying those alternative substances;
  • account for the ability of the market to adapt;
  • use appropriately specific economic concepts, such as willingness-to-pay, and techniques, such as discounting;
  • account for all relevant hazard endpoints.

Seac, meanwhile, is taking an approach that fails to provide policymakers with accurate information on uncertainties, the report says. Seac can give a positive opinion about a product with no clear benefits to society because SEA "does not make any distinction about whether the product sold is important to society".

The report says Seac has concluded, for almost all applicants that have received authorisation, that the benefits outweigh the risks and that no alternatives were available – even when an alternative was available, when the benefits are questionable and when the risks are clear.

Frida Hök at ChemSec told Chemical Watch that the NGO did not agree with the "standard argument" Europe uses to defend the high proportion of positive Opinions.

The argument is that the high costs associated with applying for authorisation discourage speculative, low quality applications, meaning that the SEA dossiers that should be rejected never actually reach Seac.

"REACH states that the applicants need to prove the costs outweigh the benefits as well as prove there are no alternatives," Ms Hök said. "We know from speaking to many companies that if their economic benefit is high from continuing to use a chemical they will try to get an authorisation." REACH is not a legislative framework in which companies can simply pay for the use of hazardous chemicals, she added.

"Many Member states in the REACH Committee have for a long time argued that the information from Echa opinions are not useful to base policy-decision on since the uncertainties are not clearly spelled out," she said.

The ChemSec report calls for "a political discussion on how SEA is used in the regulation of chemicals".

Echa said it had agreed that ChemSec would present the report to Seac and that the agency would discuss it directly with the NGO in order to improve both the understanding and application of SEA.

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