Watering down of EU regulations on chemicals proves power of lobbyists

Special interest group lobbyists are an increasing - and effective - force behind the scenes in Brussels

Special interest group lobbyists are an increasing - and effective - force behind the scenes in Brussels. Samuel Loewenberg examines their (not always benign) role.

Lobbyists are an accepted part of the landscape in many political cultures, notably the United States. But the work they do at the heart of the European Union, and the extent of it, has so far escaped the sort of attention and scrutiny that regularly erupts in Washington.

This unelected group and the largely unaccountable way in which it operates has now become a substantial force in Brussels. The number of lobbyists in the city tops 15,000, according to estimates from government watchdogs.

More and more, the Brussels "influence trade" is adopting the strategies and tactics learnt from US colleagues. By the end of last year, EU lobbying achieved its most dramatic success to date: scaling back a major piece of environmental legislation that was expected to have saved thousands of lives.

The European lobby has not only adopted Washington tactics, it has magnified them, developing a form of lobbying that spans all 25 member states of the European Union. One key factor in this new form of political pressure has been the might of American companies. In at least one case, the Bush administration, working in concert with American manufacturers, became intimately involved in the lobbying campaign.

The Irish Government has also been an important target for industry lobbyists.

There is no better example of the growing power of the Brussels lobby than its success in fighting the European Union's plans to regulate the chemical industry. When proposed regulations first began being drafted in 2001 by officials inside the Commission, the only body in the EU that can initiate legislation, the suggestions appeared to be among the most comprehensive and far-reaching rules ever to be imposed on an industry in Europe. The proposals far surpassed anything in the US or elsewhere across the world.

The legislative proposals, known as Reach, (Registration, Evaluation, and Authorisation of Chemicals), were designed to rein in an industry that for decades had placed chemicals on the market often, in the eyes of its critics, with little oversight.

Ninety-nine per cent of the most commonly used chemicals had little or no publicly available safety and environmental information, according to environmental groups and EU officials, who cite concerns of increased incidences of cancer, allergies, birth defects, and reduced fertility in recent decades.

If given legal force by being approved by both MEPs and the EU supreme ruling body, the European Council of heads of government, and then ratified in each member state, the regulations would for the first time mandate testing on a range of chemicals found in common consumer goods, from childrens' pyjamas to computers, televisions to household cleaners.

In its first incarnation, the Reach proposal required manufacturers to conduct extensive safety tests on 30,000 of its most commonly produced chemicals, most of which had been around for decades. Of those, at least 1,500 were expected to be severely restricted or even banned. The EU estimated the costs to industry would be €3.6 billion over a decade. The chemical industry initially said its costs would be more than double that. As the debate became more heated, the industry cost estimates multiplied.

The benefits of the legislation were expected to be dramatic, according to its proponents. According to European Commission estimates, Reach was expected to prevent more than 4,300 occupational cancer cases per year, and would bring savings in health benefits of €50 billion over a 30-year period.

"At present we are unwittingly testing chemicals on both living humans and animals," said then-European environment commissioner Margot Wallström to a conference of chemical company executives in Brussels in 2003. "It is high time to place the responsibility where it belongs - with industry."

Since then the European Union's stance has changed dramatically. In what some European commissioners have said is the largest lobbying effort in the modern history of the EU, European and US chemical manufacturers orchestrated a multi-levelled and multi-pronged pressure campaign that encompassed all the original 15 EU member states plus the 10 new ones, as well as countries outside the continent like Japan, Mexico, China, and the US.

In the last two months of 2005, the testing requirements have been cut back by about two thirds. Of the original 30,000 chemicals that would have undergone rigorous testing, since last November only about 12,000 are now covered. This means that thousands of potentially dangerous chemicals will now slip through the testing procedures, according to environmental groups like World Wildlife Fund and the European Environmental Bureau. The environmental groups expect further loopholes to be opened as the legislation is debated in the coming months.

THE AMERICAN CONNECTION has proved to be among the most significant in the lobby battle.

In the early days of Reach, US companies had not taken the EU particularly seriously. "People thought the proposal came out of nowhere. They were not accustomed to having events in Europe have such a great potential impact on their businesses," said Fred McEldowney, a former top lobbyist for US chemical companies, when he was interviewed for a US magazine in 2003.

How multinational chemical companies based in the US worked with the Bush administration to fight the EU chemicals regulations is a story that has not been fully told.

By its nature, lobbying is done behind closed doors. And in matters of influence and political pressure, it is almost impossible to say why a politician acted in a certain manner or why a piece of legislation changed. That's especially true in the EU, with its triple-layered decision making process, with each mandate having to go through the European Commission, parliament, and council. The chemicals legislation, which began five years ago, is still being modified and is not expected to be finished until the end of this year.

But occasionally the efforts of the lobby do come to light, as they did in a little-noticed report by a US Congressional subcommittee that was published in 2004. Drawing on secret diplomatic communiques and internal governmental memos, the report by the staff of US congressman Henry Waxman, the senior Democrat on Congressional investigations and the environment panels, revealed the multifaceted tactics and intricate strategies used by US chemical manufacturers like Dow and Dupont and the Bush administration to push its agenda across Europe.

At least four US federal agencies became involved in the lobbying effort, including the Environmental Protection Agency, the Office of the US Trade Representative, and the departments of State and Commerce. The Waxman report cites a document from the American Chemistry Council (ACC), the American manufacturers lobbying group, which said that "ACC rallied opposition to the draft proposal, including a major intervention by the US government . . . These efforts . . . brought about significant concessions in the draft."

The ACC declined or did not respond to numerous requests for a comment for this article. But there is no denying the chemical industry's clout with Republican officials. Since 2000, the chemical industry gave over €17.3 million ($21 million) in campaign contributions to elected officials, with nearly 80 per cent of the money going to Republicans. Nobody received more industry money than President Bush: €741,000 ($900,000) since 1999, according to the Waxman report.

The chemical industry first sought the Bush administration's aid in February 2001, one month after it had taken office. A US Department of Commerce document unearthed by the Waxman report said that US Commerce and Trade officials "have been actively meeting with the US chemicals industry to solicit their views and concerns . . . [ the US Department of] Commerce and USTR [ the US trade representative] have met with representatives from the Synthetic Organic Chemical Manufacturers Association (SOCMA), the American Chemistry Council (ACC), the American Plastics Council, ISAC 3, DuPont, and Dow to identify industry concerns. Officials from the US mission in Brussels have also met with a number of European and US chemical companies based in Europe to solicit their views on the strategy and its impact on their industry".

In the wake of this initiative, American lobbyists met American officials across Europe to figure out how to defeat the proposed EU regulations. According to the Waxman report, the US ambassador in Greece, Thomas J Miller, met Dow Chemical executives "to discuss how to engage the Greek government". According to an internal State Department cable, the embassy "advised them that they should activate their European industry colleagues" and "identified appropriate Greek government officials for industry contact and explained how best to approach them based on their political and philosophical orientation".

Another internal e-mail offered a strategy on how to take on powerful EU Commission members, like then-environment commissioner Wallström. "The only thing that will get the EU to stop is having the EU heavyweights come in and say that the Commission can't take this forward until a real cost-benefit analysis is done. But who will take on Wallström - the answer is only other ministers or heads of state. The USG [ US government] plans to send in our ambassadors to member states and Commission to make our case."

A key part of the strategy was to apply pressure not only within the EU, but worldwide with the result that the EU received opposition to the proposal not only from the US, which had threatened a trade war over Reach, but from Japan, Mexico, and a plethora of other key trading partners.

On April 4th, 2003, the US trade agency sent an e-mail to chemical lobbyists regarding EU member states that they needed "to get to . . . and neutralise". In particular, countries to be targeted were Germany, the UK, France, Italy, Netherlands, and Ireland. All have significant chemical and manufacturing industries.

The effects of the campaign were soon felt. In the autumn of 2003, the British Prime Minister Tony Blair, French President Jaques Chirac, and German Chancellor Gerard Schröder wrote to the European Commission expressing their concerns that Reach would hobble European industry.

American chemical companies told The Irish Times they did not want to discuss their lobbying effort. "It's not the kind of information that we share openly," said Peter Paul Van de Wijs, Dow Chemical Company spokesman in its Swiss headquarters.

IRELAND ALSO PLAYED an important role in the scaling back of the proposed legislation. The fact that the arguments to cut back Reach came from American companies was not a factor, said one lobbyist who spoke to The Irish Times on condition of anonymity.

"Ireland is always very receptive to listening to industry and how its competitiveness will be affected by regulation. It doesn't matter where the company comes from, you won't get any nationalist protectionism," said the lobbyist, who works on behalf of an American chemical and manufacturing company.

Ireland, as well as EU member states like Poland and Spain, continues to be a key target of lobbying efforts by US companies like Dupont, Dow, Honeywell, and GE, according to the lobbyist. The standard argument is that too many new regulations will hurt the country's competitiveness. The chemical industry is one of Ireland's largest, and US investment in the Irish chemical industry is $10 billion.

One of the key changes in the lobbying battle occurred after the legislation was put under the jurisdiction of the EU's Competitiveness Council in 2004, which was then headed by Tánaiste Mary Harney, who at the time was minister for enterprise trade and employment.

This was particularly significant, says Éamonn Bates, an Irish-born lobbyist for the US chemical industry who is based in Brussels, because it reflected the increased mobilisation of the broader European manufacturing industry to get involved in the chemical legislation. "Bit by bit people started to realise this affected not just the chemical industry but them as well," he said. "The industry lobbying has coincided with a broader malaise in Europe."

Environmental groups like Greenpeace say that the broad industrial opposition to the Reach legislation was due to scaremongering. They argue that costs to industry were wildly inflated, pointing to internal industry studies that suggest the testing requirements would not materially affect large chemical enterprises.

The most effective lobbying, nearly everybody agrees, has occurred in Germany where the new centre left/right grand coalition government has agreed to make Reach more industry friendly. This demonstrates the exceptional power of German industry, according to Maria Tydecks, a lobbyist who was involved in the debate.

"It's extraordinary in the sense that the German government will use its influence and its power to change the EU directive," said Tydecks, who heads the Berlin office of Apco, a Washington based lobbying firm. The German chemical industry is one of the most influential industries in the country, she says. "They have access to both parties [ in the government]," she says, the result of "long term networking."

Yet for all of the insider connections upon which lobbyists depend, it seems that, ironically, it is the greater democratisation of the Brussels process that has been particularly helpful to corporations.

The chemicals legislation was at its strongest when it was being drafted by the bureaucrats in the EU Commission. It was when the legislation reached the parliament, which has recently gained much more power, that the lobbyists made some of their greatest gains.

Further complicating matters were the 10 new members states, all of which now had a say in the legislation. Many of these countries depend on heavy industry, Poland is a case in point, and it is believed they were especially receptive to competitiveness arguments.

Environmentalists say that many of the health concerns that gave rise to the original, more robust proposals from the Commission, had become lost in the babble.

Throughout the parliament, key legislators reported being contacted by one or more lobbyists every day. For many of them, with only one or two staff members to support them, this was a deluge of information.

"Most of the EU and German parliamentarians I talked to told me it was the first time they got such massive lobbying," said Dr Andrea Paetz, a lobbyist for German chemical manufacturer Bayer, AG.

And on this occasion, it seems that the lobbying worked. Good for the lobbyists; less good perhaps for the consumers of Europe.

FREE FOR ALL: Lobbyists operate without oversight or restriction

Despite its reputation for wanting to regulate almost everything, the EU seems to have forgotten about lobbyists. Other than a requirement to write down one's name in order to gain access to EU buildings, lobbyists in Brussels operate without oversight or restriction.

By comparison, the US Congress requires lobbyists to file twice-a-year reports that list their clients, how much they are being paid, and what issues they are lobbying on.

No such regulations exist in Brussels. While the industry has a voluntary code of conduct, there are no mandatory regulations and self regulation does not seem to impress even the Commission. Vice president Siim Kallas has said the code is not comprehensive and does not provide much information on specific interests represented, nor how they are financed.

The organisation that represents EU lobbyists, the Society of European Public Affairs Professionals, is against mandatory disclosures, on the grounds that the voluntary code of conduct is sufficient. But the code offers plenty of leeway, such as the society's rule on "financial inducements". It states a lobbyist should "not offer to give, either directly or indirectly, any financial inducement to any official, member of staff or members of the EU institutions, except for normal business hospitality".

By that standard, much of the scandal that is now rocking Washington, including golfing vacations, free restaurant meals and box seats at sporting events, are all fine in Brussels.

One of Washington lobbyists' favourite tricks has made its debut in Brussels, and is already quite popular. It's the practice of front groups, by which a corporation faced with regulation, such as banning a toxic product, hires a public relations or lobbying firm to produce seemingly rational scientific arguments against the new rules.

Hence the Bromine Science and Environmental Forum and the Alliance for Consumer Fire Safety in Europe, organisations which tout their concern with science and the public interest. In fact, both are the creations of the international public relations firm Burson Martstellar, working on behalf of a consortium of manufactures of the chemical bromine. For years, the EU has been trying to limit the substance severely or ban it altogether as a flame retardant in household appliances because of its toxicity.

Another Washington favourite now evident in Brussels is the revolving door, the process by which lobbyists for an industry and members of government overseeing that industry, simply trade places. As well as having inside information, former officials also have established relationships with the people they will lobby.

The chemical industry lobby, known as the European Chemical Industry Council, embroiled in battles on the Reach chemical regulations, has taken advantage of this dynamic. Its director for Reach policy is Lena Perenius, who spent six years in the chemicals unit of the EU Commission's enterprise and industry division. Meanwhile, Uta Jensen Korte, a lobbyist for the chemical council, has now gone to work for the Commission.

Also taking advantage of the revolving door was Microsoft. After getting smacked in numerous regulatory tussles with the EU, the software giant hired Detlef Eckert, the former head of policy planning for the European directorate of information technology.

Multinational companies are also targeting member states. One US investment bank executive said his company had well-connected former high-level officials on retainer in almost every European country. "We can get access to anybody we want to," he said.