POSSIBLE CHANGE MEANS RELIEF IN THE ESSENTIAL OIL BUSINESS
Central European Affairs has recently dealt extensively with the EU overregulating essential oils. We had a podcast here at CEA Talks with the expert on this proposal, Dr. Emil Panzaru, who works at the Consumer Choice Center as Research Manager and also ran an op-ed with our magazine in which he explained the problems of the proposed legislation. Now, we are going after the story, and we want to see what happens on the EU level when there is a push from experts, stakeholders, and civil society to cancel the proposal or change it if possible. It is fascinating looking at how the “Brussels bureaucracy” operates when we experience every day that the Hungarian government would never give in to anything coming from other actors but its politicians.
CEA: Dr. Panzaru, when we last talked, you enthusiastically outlined why the proposal by the European Union Chemical Agency is terrible for the industry of essential oils and, in the long run, bad for the consumer. Can you update us on whether there are any developments regarding this issue?
Emil Panzaru: First, I would like to reiterate what I told you last time. Placing essential oils with other harmful substances is a big mistake. When we see such an example of overregulation, we have to raise our voices, especially when we know those who will be hurt the most are mainly SMEs, small farmers, and, last but not least, consumers.
CEA: Would anyone benefit from the changes to chemical regulations outlined initially by the European Chemicals Agency?
EP: Regulations change the balance of costs and benefits firms must make. As such, there are always benefactors and losers of every regulation; in this case, those who need not comply, for example, outside competitors like the Chinese, would overtake their European competitors and take over the market with their essential oils products.
CEA: Do you see any positive change in the run-up to the decision-making?
EP: Definitely. Just over a week ago, a new amendment was put forward, which suggests that water or stem-based extracts like essential oils are safe as they are organic botanic products. The proposal also recommends a new category for these substances apart from existing legislation on biocides and natural pesticide.
CEA: Can the industry and consumers now be relieved that these products will continue to be produced as before?
EP: Not yet. This amendment still needs to be voted on and accepted. But I must say that this amendment is going in the right direction. Probably, some decision-makers finally realized that removing these products from the shelves just because one in a hundred substances might prove dangerous under laboratory conditions was not feasible and would have been downright economically harmful to European businesses and consumers. Based on the initial logic, anything can be labeled harmful.
CEA: Speaking of which, would the original proposal bring about extra costs for producers?
EP: It surely would. This is a solid argument as well. When you look at the extra procurement costs that it would entail in an economic environment of high inflation, which you, as a Hungary-based outlet, must understand much better than in some other parts of Europe, you will see that a lot of producers would have to close operations or increase prices, which would then be unable to compete with producers who are not affected by the original proposal and further drive the price momentum of inflation. Due to this unnecessary supply problem, consumers will have fewer items to choose from and be able to afford fewer of them in the first place.
CEA: Following this note, could you share more insights into how this proposal affected countries that are the leading producers and what this amendment means for their industries?
EP: Before the amendment, these regulations were causing significant concerns for countries heavily reliant on essential oil production. For instance, Bulgaria is the world’s leading rose oil producer, and the threat of their business being wiped out by irresponsible regulations was a real threat. Italy, France, and Estonia also faced the potential loss of substantial export revenue due to the overregulation. Amendment 32 provides much-needed relief for these countries, ensuring their essential oil industries can thrive without unnecessary hurdles and economic losses.
CEA: What are your expectations for the EU’s future of essential oil regulations?
EP: Recognizing essential oils as organic and safe in Amendment 32 is a step in the right direction, but there’s still work to be done in promoting sensible, risk-based assessments in regulatory processes. My expectation for the future is that policymakers and regulatory agencies will employ a risk-based (rather than hazard-based approach) and continue to listen to scientific evidence. That means prioritizing common sense in their decision-making and ensuring that essential oils and other natural substances are regulated in a fair and balanced manner to the benefit of both consumers and industries.
