By Hao Zhou (chinadaily.com.cn)

The European Union (EU)'s new chemical regulation will severely impact the Chinese chemical industry, suggested Yan Bangsong, deputy chairman of China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters (CCCMC), according to the Shanghai Securities News.

The new regulations, known as REACH, or Registration, Evaluation, Authorization and Restriction of Chemicals, were passed by the European Parliament and the Council of EU on December 18, 2006.

Officials said REACH's aim is to "ensure a high level of protection of human health and the environment," and "enhance competitiveness and innovation".

REACH entered into force on June 1 this year, and will be formally implemented on June 1 of 2008, said Zhou Chun, director of CCCMC's petrochemical department.

China's No 1 overseas chemicals market, the EU imported more than US$30 billion worth of chemical products, including energy and metallurgy minerals, raw chemical materials, petrochemical products, in the first eight months this year. That number is up 60 percent from the same period of last year.

However, according to REACH, within 11 years after the implemention of the regulations, all chemicals produced in or exported to the EU with a volume of more than one ton annually will have to be registered.

Chemical materials or products that include chemical substances must not be produced and sold in Europe, if they are not included in the new framework.

The overall estimated expense for a single kind of product during the licensing procedures accounts to between two and three million yuan (US$266,372 to 399,558) under REACH. Just the basic examination fees will total roughly one million yuan.

Based on CCCMC's calculation, total registration costs for Chinese products will rise by as much as five percent. Some small and medium enterprises will be eliminated altogether. And making matters worse is the fact that some 200,000 workers may lose their jobs.

Chinese chemical exporters will suffer the hardest as a result of this latest technical trade barrier. There will be no escape for chemical related industries, such as household appliances, textiles, clothes, shoes, toys, electronic products, automobiles, and medicines.

In the meantime, the export price of EU produced chemicals will likely go up, increasing competitive pressure on Chinese companies relying on those imported chemicals to survive.