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Government prepares for chemical trade restrictions

World wide there are moves to use safer chemicals. In July 2003 radical reforms in the use and assessment of chemicals have been proposed in a report published in the United Kingdom last week by the Royal Commission on Environmental Pollution.

The report, Chemicals in Products: Safeguarding the Environment and Human Health, warned that only 40 of the more than 30000 synthetic chemicals currently available on the UK market have been subjected to a systematic risk assessment. The long term effect of their use and dispersion into the environment is almost wholly unknown.

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The following is a summary of an early assignment for the Federal Government.

As reported by Jayne Mahoney editor in Hazardous Substances Alert of August 16. Hazardous Substances is published by Information Australia (Newsletters) Pty Ltd of 45 Flinders Lane Melbourne Victoria. Tel 03 9654 2800.

The Federal Government has initiated a study into the economic impact of overseas moves which could lead to restrictions on the trade and manufacture of hazardous substances.

Tim Fischer, Federal Minister for Trade, has written to 150 chemical manufacturers and users seeking help identifying the economic importance of 220 chemicals and pesticides Australia imports or exports.

This information will help the Department of Foreign Affairs and Trade (DFAT) determine how "possible international initiatives' to restrict the trade of "certain chemicals and pesticides considered by some countries to be hazardous to human health and the environment" will affect Australia.

Craig Chittick of DFAT's International Competitiveness Branch says there is "very little data" on the amount of hazardous chemicals imported into the country, making it difficult to determine "if Australia is a concerned player in the trading of hazardous chemicals".

In his letter, Mr Fischer says the Government recognises restrictions on Australia's ability to import and export chemicals and pesticides "may result in significant direct and indirect costs".

"It is therefore very important the Government is fully informed of the consequences of any factors affecting Australia's ability to trade in any of these chemicals and pesticides."

Overseas initiatives which may lead to trade and manufacturing restrictions include the possibility of the voluntary Prior Informed Consent (PlC) program becoming legally binding.

Mr Chittick says countries participating in the PlC program this year began negotiating whether to incorporate the London Procedures on which the PlC program is based into a legally binding instrument.

Under the PlC program, which is administered by the UN, participating countries should notify trading partners if they are exporting any of the 18 pesticides and chemicals which have been banned or severely restricted in some countries.

The importing country then has the option to refuse import of the chemicals. Chemicals on the list include aldrin, dieldrin, DDT, chlordane, PCBs, crocidolite and mercury and its compounds.

Currently, the requirement to notify is voluntary but Mr Chittick predicts it will become legally binding next year.

While there are no specific proposals for trade restrictions in the PlC procedures, the possibility exists.

"There aren't any trade restrictions in the PlC procedures per se," Mr Chittick explains, "but a number of countries have put in some... bracketed text which doesn't have consensus agreement."

"This leaves the way open for protocols to the convention which could contain trade restrictions in the future. There's certainly some desire on the part of some countries to leave that option open."

"The European Union is one proponent and there's a number of 0-7 countries who, while not coming out and explicitly supporting trade restrictions, in back rooms, they are certainly very positive about it."

Western Australian consulting company, ACTED, is coordinating the study.

Remco Van Santen, director of ACTED, says it will help identify chemicals which could be eliminated without significant economic impact if trade or manufacturing restrictions eventuate.

He has sent questionnaires to manufacturers asking them to list the chemicals important to their business and to indicate the cost of trade bans, elimination of chemicals and substitution with a less hazardous substance.

Users are being asked to estimate how much elimination or substitution of certain chemicals will cost their businesses and Australia.

In supporting information sent with the questionnaires, Mr Van Santen says if government representatives are to take Australia's particular interests into account in international negotiations, they must be aware of the short term and long term and direct and indirect costs of any regulatory action.

"Replacing one chemical with another normally presents the more visible cost. Other direct costs include [the purchase of] different processing or handling equipment or increased amounts [of chemicals needed] to achieve a similar function.

"Of course, for manufacturers, the greatest cost is from lost business - lost value added."

Indirect costs include reduced efficiency from replacement products and inability to achieve economies of scale for related products using the same raw material.

But, Mr Van Santen says, the overseas initiatives "need not always present net costs to the economy ."

"In most instances, especially in the short term, restricting a chemical in use will normally incur cost to the wider community, but there also may be economic benefits."

"Cessation of certain manufacturing or importing activities could create opportunities for new activities or promote the expansion of others. The gap in the market may allow for expansion of operations with lower production costs helped by scale economies."

Remco Van Santen says increased cost may be offset by "subtle" long-term gains and national gains may compensate for regional losses.

Manufacturers and users who want to participate in the study can obtain questionnaires from ACTED.

Responses must be received by August 28 1996

The results of the study are expected to be presented by the end of November.

Contact: DFAT (06) 277 7420; ACTED, (09) 447 6666.

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