The European Parliament approved a regulation last Thursday that could seriously handicap the U.S. chemical industry. In fact, this approval of a seemingly run-of-the-mill regulation highlighted a worrying trend that could severly handicap American industry in general.

On November 17, the EU Parliament approved the Registration, Evaluation and Authorization of Chemicals (reach) regulation. Conceived in Europe, the bill is designed “to protect consumers from the adverse effects of chemicals found in a wide range of products from soap powder, children’s toys, pesticides to building materials” (Deutsche Welle, November 17). The Deutsche Welle article identified some of the measures chemical-manufacturing companies will have to take in order to meet the regulation requirements and sell their products, including registering all chemicals used with a central EU database.

Ostensibly designed to protect the health of Europeans, the regulation no doubt has ramifications that will extend beyond European borders and significantly impact the entire global chemical industry. If implemented, certain chemicals would be flagged and banned—as would any products that use it. reach’s effects will likely be felt the most by America, the global leader in the manufacturing and export of chemicals.

Under the EU’s new regulation, American chemical manufacturers could be forced to spend millions of dollars testing, reporting and registering their chemicals in order to meet EU standards and conditions needed to be able to export chemicals into Europe.

The EU’s approval of this regulation highlights an aspect of globalization that has staggering implications. By creating and passing this bill, the EU is able to extend its influence beyond its own borders and into the chemical industries, and economies, of other nations.

reach essentially gives European nations the power to dictate global policy pertaining to the chemical manufacturing industry. When the details of this bill are finally ironed out (which is likely to be by the end of this year), every chemical manufacturing company that seeks to export chemicals to Europe could be forced to satisfy the conditions of the reach policy.

Within the confines of the reach regulation, the EU would have the leeway to demand that any number of tests or procedures be done before the products of the foreign companies are allowed to enter. Extra testing, reporting and registering to meet EU standards would likely cost foreign companies millions of dollars.

Analysts at Stratfor spoke of the likelihood of something it called the “California effect” coming into play. “This term, which refers to ways that regulatory changes in one jurisdiction can change regulations on a much wider scale, presents an intriguing example of how public policy increasingly is being forged through indirection. In the case of reach, a single body representing less than 5 percent of the global population would, in effect, be making chemicals policy for the entire globe” (Stratfor, November 17; emphasis ours).

In the case of America’s chemical exports, this legislation could seriously burden an industry already hurting economically and geographically.

This is an alarming trend. Consider the consequences if the EU was to enact similar changes in other industries. “Though inflicting further harm on the U.S. chemical industry and the U.S. economy was not the motivation behind reach, these side effects likely will spur considerable thought as to how policies might be deliberately formulated to achieve similar results” (ibid.). While the primary motive behind the reach bill may not have been to disadvantage America’s chemical industry, it could certainly prove to be a pleasant side benefit, in the EU’s eyes.

As global trade grows more competitive and new players enter the scene, don’t be surprised if regulatory authorities in the EU, China and other large markets seek to exploit this powerful weapon—made possible because of modern globalization. By deliberately developing cumbersome internal regulations, these nations could put foreign companies exporting products into their country at a serious disadvantage.

Because of its position as the industrial powerhouse of the world, the United States will bear the brunt of such hostility. American industries will increasingly come under hostile attack. In fact, we are already witnessing this trend.

The U.S.’s economy and industry have never been in such a fragile state. Both are on the verge of collapse. We can be sure that the EU and other foreign powers are acutely aware of America’s precarious position. Over the next few years, the EU and other foreign powers will exploit every opportunity to cut down America’s economic and industrial preponderance.