[Paleopsych] Nation: New Power for 'Old Europe'

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New Power for 'Old Europe'
    [from the December 27, 2004 issue]

    The Bush Administration has interpreted its victory in the 2004
    election as a mandate to take its free-market policies to further
    extremes. It is signaling its determination to unhinge US industry
    from what remains of regulations limiting the poisons in our water,
    our bodies and our air. But while they are newly emboldened at home,
    the Administration and its corporate allies are looking warily across
    the Atlantic to Brussels. Here, in the capital of the European Union,
    an unprecedented challenge to longstanding practices of American
    industry is unfolding.

    Since the fall of the Berlin wall, the European Union has been
    steadily transforming itself from a facilitator of trade to a
    sophisticated geopolitical power with the teeth to back up its
    policies--an evolution that has occurred largely under the American
    public's radar. Over the past decade, EU member states have ceded
    governing and enforcement authority to Brussels in areas ranging from
    environmental regulation to food safety, accounting standards,
    telecommunications policy and oversight of corporate mergers. As a
    result, US companies that do business in Europe--which remains
    America's largest export market--are quickly learning that "old
    Europe" is now wielding new world power.

    Just this year, US manufacturers of such goods as chemicals, cars and
    cosmetics have been confronted with EU regulations that force a
    choice: Either conform to the EU's standards of pre-emptive screening
    for toxicity--far tougher than US standards--or risk sacrificing the
    European market, which, with 450 million people, is now larger than
    that of the United States. In the process, the European Union is
    challenging US presumptions of unilateral decision-making on issues
    with tremendous consequences for American companies and consumers,
    treading on ground that has long been considered sacred turf.

    "Americans are in for a rude shock," says Clyde Prestowitz, a former
    Reagan Commerce Department official and author of Rogue Nation:
    American Unilateralism and the Failure of Good Intentions. "Other
    players are establishing their own standards, and they have the muscle
    to make them stick. We are headed into a new era."

    REACH and Ye Shall Find

    Last summer, while Americans were focused on the worsening crisis in
    Iraq and the intensifying presidential campaign, the US chemical
    industry was consumed by plans at the EU's Environment Commission to
    complete the details of a proposed regulation known as
    REACH--Registration, Evaluation and Authorization of Chemicals. For
    the $500 billion chemical industry, REACH threatens a revolution in
    chemical regulation--upending decades-long practices that were
    pioneered in the United States.

    In 1976 the US Congress passed the Toxic Substances Control Act, which
    required chemicals introduced after the law took effect in 1979 to be
    tested before being registered for use. The problem with TSCA--or what
    critics call the "Toxic Substances Conversation Act"--is that 80
    percent of the chemicals on the market today were introduced before
    1979. But Europe at that time followed the US model, so in effect TSCA
    established the global standard. No more. REACH is the first effort to
    secure environmental data on some 30,000 chemicals that have been on
    the market in the United States and around the world without any
    significant testing of their toxicity on human health and the

    These include an array of highly toxic substances that were
    effectively grandfathered into the market by TSCA, including
    industrial solvents like ethyl benzene, known to cause nerve damage;
    heavy metals like cadmium, an ingredient in many paints and industrial
    ceramics that can cause kidney failure; and a family of plastic
    byproducts, called furans, that are potent carcinogens and endocrine
    disrupters. Many of these chemicals have already been found in high
    concentration in the blood of Americans and Europeans; during a World
    Health Organization convention in Budapest last June, the World
    Wildlife Fund International revealed forty-four different hazardous
    chemicals in the bloodstream of top EU officials, including
    then-Environment Commissioner Margot Wallstrom, now the vice president
    of communications for the European Commission, the executive arm of
    the EU.

    The proposed regulations, according to Robert Donkers, one of the
    authors of REACH and now posted in Washington as environment counselor
    for the European Commission's US delegation, evolved out of the
    realization that little was known about chemicals contained in a vast
    array of consumer products. "There was great political anxiety in
    Europe when we discovered that carcinogenic chemicals were being
    released from consumer products like diapers and softeners in baby
    toys. We discovered that neither consumers nor the government was
    informed about the chemical properties of what is in those and other
    products and how they break down. An overhaul was needed."

    Under REACH, chemicals determined to be "carcinogens, mutagens or
    repro[ductive] toxins" would have to be taken off the market within a
    decade. According to the EPA's own standards, this could amount to as
    many as 1,400 chemicals. For other chemicals, REACH establishes
    several layers of testing for toxicity--with strictures that grow
    tougher as the quantity and risk increases. The proscriptions also
    apply to chemicals in manufactured goods: REACH encourages
    substitutions for chemicals that pose "potentially serious or
    irreversible threats" to human health. A new European Chemicals Agency
    would administer the program from Helsinki.

    The REACH directive represents an upheaval in the basic philosophy of
    chemical regulation, flipping the American presumption of "innocent
    until proven guilty" on its head by placing the burden of proof on
    manufacturers to prove chemicals are safe--what is known as the
    "precautionary principle." REACH adds extra bite with a requirement
    that toxicity data be posted publicly on the new agency's website.
    Thus, test results that were once tightly held by chemical companies
    will suddenly be available to citizens and regulators across the
    globe. That prospect foreshadows trouble for US chemical producers.

    "The chemical industry is scared that the American people might not
    want to be second-class world citizens," says Charlotte Brody,
    executive director of Health Care Without Harm, a Washington, DC-based
    coalition of healthcare professionals. "If people in Europe have
    chemicals in their toys that are not dangerous, maybe we don't want
    those same chemicals for our kids." With REACH, the Europeans hit a
    powerful nerve. The chemical industry launched an intensive lobbying
    campaign, conducted in parallel with the Bush Administration, to
    derail the proposed directive before it becomes law.

    In late January, when Defense Secretary Donald Rumsfeld issued his
    now-famous slight of our European allies as "the old Europe," inside
    the State Department "old Europe" was causing panic: A draft position
    paper circulating inside Foggy Bottom expressed alarm at the evolving
    REACH proposal. By early March, the State Department sponsored a visit
    by Dow Chemical executives to Athens to lobby the Greeks--who at that
    time occupied the EU presidency--to oppose REACH. On April 29,
    Secretary of State Colin Powell sent out a seven-page cable to US
    embassies in all the EU member states claiming that REACH "could
    present obstacles to trade and innovation" and cost US chemical
    producers tens of billions of dollars in lost exports. The cable
    stated that REACH's precautionary principle was
    "problematic"--striking at the heart of the difference between the US
    and European regulatory approaches toward potential environmental

    The State Department's tone and apocalyptic predictions that REACH
    could adversely affect "the majority of U.S. goods exported to the EU"
    (over $150 billion last year) mirrored the position papers of the
    industry's main lobbying organization, the American Chemical Council,
    on REACH. The State Department claimed that REACH would be "unworkable
    in its implementation, [would] disrupt global trade, and adversely
    impact innovation." In June US Trade Representative Robert Zoellick
    reiterated that argument in a submission to the World Trade
    Organization's Technical Barriers to Trade Committee in Geneva.

    Those assertions have been vigorously disputed by the EU. In October
    the EU claimed in a countersubmission to the WTO that the costs of
    implementing REACH over the next eleven to fifteen years could total
    $3.5-$6.5 billion, but that those costs would be offset over time by
    profits generated from safer alternatives--and compare favorably to
    the $60 billion it estimates would be saved in chemical-related health
    costs alone over the next three decades.

    Zoellick's objections to REACH prompted Senators Frank Lautenberg and
    James Jeffords to request that he provide details about who the
    Administration consulted before issuing its position to the WTO. "We
    are troubled," the senators wrote Zoellick on October 19, "by reports
    that the Administration fashioned its position on REACH to reflect
    unsubstantiated cost concerns raised by a narrow segment of U.S.
    industry, without any genuine consideration of the likely health and
    environmental benefits that such policies would generate." Thus far
    there has been no response to their queries.

    EU officials I spoke with describe practically weekly visits from
    delegations representing the Commerce Department, the US Trade
    Representative, the State Department and/or the American Chemical
    Council. In April, then-Environment Commissioner Wallstrom complained
    to a meeting of EU and EPA officials in Charlottesville, Virginia,
    that REACH had been subject to "enormous interest and lobbying," but
    she insisted that the "consensus" for reform of the current system
    remains strong. The lobbying continues: In October the US mission to
    the EU sent out a joint appeal with the Australian mission to the EU
    missions of Canada, Japan and other Asian nations to attend a meeting
    to develop a "coordinated outreach" strategy among "EU trading
    partners" on REACH. Members of the European Parliament (MEPs) were
    invited to meetings with the US- and Australian-orchestrated
    delegations so the latter could communicate their opposition to
    REACH--an extraordinary intrusion of the United States into a debate
    over internal EU policy.

    Never before has an EU proposal drawn fire from such heavy guns. The
    US chemical industry, like other American industries, has been
    discovering that a presence in Brussels is now a must--and has had to
    learn new ways to exert influence in a governing institution with
    three chambers, twenty-five countries and twenty national languages,
    and in which the usual cocktail of campaign contributions,
    arm-twisting and seduction are neither warmly received nor, in the
    case of campaign contributions, legal. "We've certainly had to learn a
    lot about a new parliament, new procedures, new political parties,"
    says Joe Mayhew, senior adviser to the American Chemical Council.

    The lobbying campaign has largely backfired. Its primary effect has
    been to delay a final vote on REACH in the European Parliament from
    February to the middle of next year at the earliest. But there is
    little doubt it will pass--almost a decade in the making, support for
    REACH in the Parliament stretches broadly across party lines. "It is
    not a question of if but when," says the EU's Robert Donkers. Hearings
    will commence in the Parliament on January 19. The current Dutch
    president of the EU has committed to forging political agreements
    around REACH for consideration by the Council of Ministers before the
    hearings begin.

    The fact that policies emanating from Brussels now threaten
    longstanding American industrial practices is a sign of how profoundly
    trans-Atlantic relations are shifting. "We used to have to deal with
    individual countries," comments Mayhew of the American Chemical
    Council. "We'd pay attention to, say, France. Not to be pejorative
    here, but we wouldn't really pay much attention to what Spain was
    doing. Having the EU as a single bloc with regulatory authority is a
    new thing for us."

    A Makeover for the Cosmetics Industry

    Every morning across America, tens of millions of women apply to
    themselves an average of nine "personal care" products. From tubes and
    bottles and delicate brushes come the tools of beauty and
    self-preservation known as cosmetics. Users of these products might
    assume that somebody is watching to insure that potentially toxic
    ingredients are kept away from intimate contact with their body. They
    would be wrong. Neither the Food and Drug Administration nor any other
    government agency regulates ingredients used in the preparation of
    cosmetics. The Food, Drugs and Cosmetics Act of 1938 established
    extraordinarily lax standards for the regulation of cosmetic
    ingredients. But earlier this year, when the Environmental Working
    Group compared the ingredients in 7,400 personal care products with
    potentially hazardous chemicals identified by the Centers for Disease
    Control and other leading medical institutions, dozens of varieties of
    skin and tanning lotions, nail polish, mascara and other personal care
    products were found to contain known and suspected carcinogenic,
    mutagenic and endocrine disrupting chemicals.

    The improvisational nature of the cosmetics industry is about to
    change. EU member states submitted plans to the European Commission to
    institute new guidelines established by what's known as the "Cosmetics
    Directive," which takes effect this coming February. The directive
    calls for the removal of ingredients suspected of causing "harm to
    human health" from cosmetics and personal care products in Europe. The
    effects of that directive are being felt around the world.

    The main regulatory body for cosmetics in the United States is the
    industry itself, represented by the Cosmetic, Toiletry and Fragrance
    Association (CTFA). What that means, in effect, is that several times
    a year a Cosmetic Ingredient Review board (CIR)--made up of
    toxicologists drawn primarily from universities and paid for by the
    CTFA--reviews the existing literature on ingredients and makes
    recommendations to the industry. There is nothing that requires any
    member company to respond to the board's safety or health

    Over the past three years the review board suggested that at least
    nineteen ingredients be removed from personal care products--including
    coal tar, a hair dye linked to high rates of bladder cancer among
    hairdressers; sodium borate, sometimes called boric acid, which has
    been linked to testicular development problems and is included in
    Desitin diaper rash ointment for infants, and which the CIR
    recommended "should not be used on infant or injured skin";
    iodopropynyl butylcarbamate, a mutagen in animal testing included in a
    South Beach tanning spray that the CIR recommended "not be used in
    products intended to be aerosolized"; and ethoxyethanol acetate in
    nail polish, which the CIR stated is "unsafe for use in cosmetic
    products." The FDA has done nothing to mandate removal of these or
    legions of other potentially dangerous ingredients, according to the
    Environmental Working Group.

    Last spring the Safe Cosmetics Campaign, a group of women's and
    environmental health NGOs, sent an appeal to some 250 firms that sell
    personal care products in the United States, asking that they conform
    to the health requirements of the EU's Cosmetics Directive as well as
    take other actions to insure more stringent controls over potentially
    toxic ingredients. Of those, the campaign heard from sixty-five
    companies; responses ranged from resistance to accommodation. Revlon
    and Estee Lauder replied by citing the CTFA's official response to the
    EU: On March 25, CTFA stated that the directive "represents an
    unnecessary change in the philosophy of regulation of cosmetic
    ingredients in the EU."

    Other major producers, like L'Oreal, Liz Claiborne and Gillette,
    responded that they were already beginning the process of
    reformulating their products to conform to the requirements of the
    Directive; the Gap and Alberto Culver indicated that they would do so
    if they discovered ingredients within the EU's range of health
    concerns. Natural product companies, like Aveda, Custom Aesthetics and
    numerous small firms, claimed they were already in compliance. Several
    of the largest companies, like Unilever, have yet to respond, while
    Procter & Gamble insisted to the campaign that it would continue its
    policy of formulating products on a market-by-market basis. After the
    Safe Cosmetics Campaign began running a newspaper ad in the fall about
    the potential health dangers from cosmetics, Revlon shifted gears,
    indicating its willingness to abide by the EU's new strict rules.

    "We are asking companies to be accountable for the safety of their
    cosmetics," says Janet Nudelman, program director of the Breast Cancer
    Fund. To accomplish that goal, public health advocates looked not to
    Washington but to Brussels--where the EU is now a force that enjoys
    transatlantic reach and is far tougher than our own FDA.

    A Car's Life

    Jean Tinguely was a Swiss sculptor renowned for his grand mechanical
    creations, huge machines full of whirring wheels and gears that were
    designed to self-destruct. His works, widely dispersed through
    Europe's finer art institutions--and showing up more rarely in the
    United States--evoke a kind of grinding perfection, a speed-up of what
    is built into every mechanical device: its own death. Much like the
    automobile, which may purr steadily for ten or twenty years or even
    longer. But ultimately those gears and crankshafts, like a Tinguely
    machine, will fail, and the automobile will die. Then what happens?

    Every year aging cars, left to decay in scrapyards or fields or
    suburban driveways, create more than 15 million tons of waste across
    the United States and Europe. Many components in those autos contain
    toxic ingredients, including metals like lead, mercury, chromium and
    cadmium, which are known to induce problems such as nerve damage and
    cancer in laboratory animals. The plastic in the seats and dashboards
    never biodegrades. Cars and their component parts are left to despoil
    the landscape, leach into the soil and poison groundwater. There is
    nothing to stop them.

    Across the Atlantic, the EU has implemented a program with the oddly
    philosophical title "End of Life Vehicles Directive." Starting in
    2006, all cars produced or sold in the EU must be built with at least
    85 percent recyclable components; by 2015 that figure rises to 95
    percent. The directive also bans toxic heavy metals like cadmium and
    requires that manufacturers take responsibility for disposing of their
    cars. According to the European Commission's administrator for the
    vehicles program, Rosalinde van der Vlies, European, Japanese and
    Korean car manufacturers are already beginning to adapt their
    production processes in anticipation of the new requirements.

    For US car manufacturers the directive presents a historic challenge.
    American car companies export virtually no cars to Europe; thus US
    manufacturers are under little direct pressure to adapt to European
    standards. But each of the US Big Three has substantial ties to the
    European market: Ford has its own Ford Europe production facilities
    and owns the Jaguar line in Britain. General Motors owns the German
    Opel, the Swedish Saab and produces its own line of vehicles in
    Britain under the Vauxhall label. DaimlerChrysler is owned by the
    German manufacturer Daimler-Benz.

    Glenn Mercer, an auto industry analyst for the consulting firm
    McKinsey & Company, says there is no sign of these reforms' being
    instituted by either US parent or subsidiary companies, nor is a
    serious effort being made to develop alternatives to the toxic
    chemicals included in American cars. The concept of being responsible
    for the ultimate disposal of those cars has been received in this
    country like a message from another planet.

    Mercer comments: "Every time you drive a car you've made a decision to
    pollute. With every car, you have the decision: Do you dispose of it
    in a controlled setting, as required by the European Union? Do you
    find alternatives to the chemicals and take the hit on sales that may
    result from a higher price? Or do you leave them in your car, and have
    them dispose themselves into the environment over fifteen years?" Thus
    far, the United States has been taking the latter approach--dual
    production according to dueling standards.

    At the core of the EU's regulatory approach is what van der Vlies
    calls "life cycle analysis": assessing the actual costs over the
    lifetime of consumer products, from their creation to their demise.
    The End of Life Vehicles Directive is intended to insure that those
    costs are shared by the manufacturer--while providing a powerful
    incentive to develop more sustainable alternatives.

    Every European diplomat I spoke with was careful to insist that
    Europe's new generation of environmental directives is not intended to
    "impose" Europe's will upon the United States. Camilo Barcia
    Garcia-Villamil, the Spanish consul in San Francisco, who spent
    fifteen years working with the EU in Brussels, comments: "The European
    Union now has increased decision-making capacity. And if American
    companies want to be active in the European market, they must take
    account of European rules. We are not imposing our standards. We are
    making foreign companies respect our standards when they are in
    Europe." This is diplomatic language that is new in the context of
    transatlantic relations--though its inverted formulation would be
    quite familiar to generations of postwar American policy-makers.

    "Economically, Europe stands toe to toe with the United States," says
    Clyde Prestowitz, now head of the Economic Strategy Institute in
    Washington. "We can't dictate to it any longer. We have to negotiate."

    The New Power of 'Old Europe'

    When Henry Kissinger was Secretary of State for President Ford in
    1977, he famously asked in frustration, "What telephone number do you
    dial to reach Europe?" Today, the area code for that number is clear:
    32-2, for Brussels, which has been transformed from the provincial
    capital of a small European country into an international metropolis
    bustling with a multilingual, highly educated EU workforce drawn from
    across the continent.

    The European Union has its roots in a simple "coal and steel pact"
    signed between France and Germany in 1951 to facilitate trade in those
    critical commodities to aid in postwar reconstruction. Over the
    subsequent decades of the cold war, an integrated Europe was supported
    by the United States as a restraint on Germany's resurgence and a
    critical Western bulwark against the expansion of the Soviet Union.

    The pact would later evolve into the Common Market and, finally, into
    the political and economic powerhouse of today's European Union. For
    the first time in history, a superpower has emerged that is not based
    on nationalistic ambitions or military power but upon a voluntary
    submission of national aspirations to a transnational authority. Its
    architects were well aware of the EU's departure from the usual march
    of political history: Jacques Delors, the visionary European
    Commission president from 1985 to 1994, used to refer lightheartedly
    to the evolving Union as an "Unidentified Political Object."

    On foreign affairs, Europeans continue to have trouble speaking with
    one voice--as the divisions in Europe over the US invasion of Iraq
    showed. But on domestic matters, the EU speaks for Europe--and it is
    those initiatives, emanating from Brussels, that are sending powerful
    messages across the Atlantic. "In Europe today, we are seeing a focal
    point of regulatory action other than the United States that, for the
    first time in the postwar period, is driving world markets," says
    David Wirth, a trade law specialist who negotiated the Montreal
    Protocol on ozone depletion on behalf of the United States and is
    currently director of international studies at Boston College Law

    Indeed, a broad spectrum of American industry has already felt the
    potency that comes from an integrated market and differing standards
    of environmental and consumer protection. Microsoft, for example, was
    fined $497 million earlier this year by the EU for its
    "anti-competitive practices," and General Electric's long-planned
    takeover of Honeywell was skewered in 2002 by the EU's Competition
    Commission, which has now emerged as a critical first stop by
    corporations en route to a merger. "It used to be," comments Amelia
    Torres, spokeswoman for the Competition Commission, "that the EU would
    be the last part of any deal. Now they know they have to come here
    first." The agribusiness company Monsanto became accustomed to
    contentious forays into Brussels while struggling to obtain EU
    acceptance of its genetically engineered seeds.

    EU politics are a complicated business; the Parliament is as
    tumultuous a democratic body as any. The recent controversy over the
    nomination of a new European justice commissioner with extreme views
    on women and homosexuals illustrated some of the social and political
    frictions that continue to divide Europeans, a passing storm to which
    much of the American media responded with smug condescension. These
    developments came on the heels of a European parliamentary election
    last June that drastically changed the composition of the legislature:
    Ten new member countries, most from the orbit of the former Soviet
    Union, sent delegations to the Parliament; 50 percent of the MEPs who
    won election had never before served in Brussels. But these changes
    show little sign of derailing the regulatory policies that are now
    embedded in the EU's machinery of government.

    Now that Europe has a phone number, US ardor for integration has begun
    to cool. "The White House is questioning whether it's a good idea for
    Europe to be speaking with one voice," says Fraser Cameron, who served
    with the European Commission's delegation to Washington until 2002 and
    is now director of studies at the European Policy Center in Brussels.

    Cameron points out that the United States and the European Union
    remain each other's most significant trading partners in the
    world--our entanglements are deep and abiding. But as Europe becomes a
    more assertive political force, the question will become, as he puts
    it, "Why shouldn't Americans enjoy the same standards as Europeans?"

    Such a basic question used to run in the other direction, when the
    United States set the gold standard for the world's environmental
    health. And the answer strikes at the core of the Bush
    Administration's most savored narratives--that we, alone, are masters
    of our nation's fate.

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