Edited by Kevin P. Gallagher
Chapter 23: Does Environmental Policy Affect Trade? The Case of EU Chemicals Policy
23 Does environmental policy aﬀect trade? The case of EU chemicals policy Frank Ackerman Introduction Do the environmental policies of developed countries function as barriers to trade? This question has been extensively debated for years, often with a focus on developing-country exporters in agriculture or other low-technology industries. This chapter addresses the question from a diﬀerent perspective, looking at the eﬀects of one of the most ambitious European environmental initiatives of recent years: REACH, the new EU chemicals policy (the name is an acronym for Registration, Evaluation, and Authorization of Chemicals). Based on a series of research studies on the economic impacts of REACH,1 I conclude that: 1. 2. The costs of REACH, although measured in billions of euros, are very small compared to the massive EU market for chemicals. The eﬀects of REACH on many developing countries are concentrated in mining, a sector dominated by multinational and other large corporations that can easily aﬀord to comply with European regulations. For US exporters, compliance with REACH will be entirely aﬀordable, and will be essential to avoid repetition of the losses that have resulted from ignoring foreign standards in other cases. 3. As a number of researchers have noted, environmental standards set by Europe and other developed countries have the potential either to harm or to help developing countries (Nadvi, 2003). Rich-country standards can function as barriers to poor-country exports, thus impeding development (Copeland and Taylor, 2004). For example, food safety standards may turn...
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