EU Exerts Power Over American Industry

From the February 2006 Trumpet Print Edition

The European Parlia ment approved a regulation Nov. 17, 2005, that could seriously handicap the U.S. chemical industry. This approval highlights a worrying trend that could severely cripple American industry in general.

The Registration, Evaluation and Authorization of Chemicals (reach) regulation 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, Nov. 17, 2005).

Under the European Union’s new regulation—ostensibly designed to protect the health of Europeans—American chemical manufacturers that export chemicals to Europe could be forced to spend millions of dollars testing, reporting and registering their chemicals in order to meet EU standards and conditions.

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 into the industries and economies of other nations outside of the EU.

Analysts at Stratfor noted: “[A] single body representing less than 5 percent of the global population would, in effect, be making chemicals policy for the entire globe” (Stratfor, Nov. 17, 2005).

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

This is an alarming trend. While reach’s primary motive may not have been to disadvantage America’s chemical industry, it could certainly prove a pleasant side benefit, in the EU’s eyes. Might the EU or other nations enact similar changes in order to deliberately harm American industries?

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 developing cumbersome internal regulations, these nations could put foreign companies at a serious disadvantage.

Because of its position as the industrial powerhouse of the world, the U.S. would bear the brunt of such hostility.

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 this possibility and could seek to hasten it.