Following the EU in banning key silicone components would ensure economic chaos
The European Union isn’t especially known for crafting well thought-out policy. More often than not, policy proposals from Brussels seem to have been drafted with horse blinders on, with no regard for the negative externalities. Usually that wouldn’t matter much for Canadians. If the EU wants to shoot itself in the foot with bad policy, that is its prerogative. Unfortunately, through an extra-parliamentary backdoor, bad EU policy could be making its way to Canada, threatening outcomes that could be economically disastrous.
The latest EU attempt to export its policies is via the Stockholm Convention, an international agreement meant to regulate the use of persistent organic pollutants or POPs. POPs are substances that persist in the environment over long periods and across vast distances. In order for a substance to be deemed a “POP” it has to be bio-accumulative, persistent and toxic. The convention itself isn’t controversial per se, but once a substance is added to the list, its import and export are prohibited in countries party to the convention, as Canada is.
The EU wants to add three variants of “siloxanes” (those classified as D4, D5, and D6) to the growing list of harmful POPs. Most of us have never heard of siloxanes, but they are essential building blocks of the much better-known silicones.
D4, in particular, is used to make the polysilicon wafers that are vital for the production of semiconductors. Siloxanes are thus critical to myriad consumer goods, from solar panels and wind turbines to computers and electric vehicles. If the EU has its way, global imports and exports would cease. The global silicones market was valued at $US18.5 billion in 2022, and is expected to grow at a compound annual growth rate of 7.8 per cent to $27 billion USD by 2027. The value of Canada’s imports of silicones was $241 million in June, while our exports were $173 million. If the EU has its way, this entire trade will evaporate.
And that is just the beginning of harm. Without these silicones it would be very difficult to produce semiconductors, mass shortages of which would mean higher prices and worse quality for consumers. We know how bad that can be because we’ve just lived through it. Semiconductor shortages in 2020-2021 drove the price of used cars up by as much as 25 per cent. Imagine that type of price chaos for everything that relies on semiconductors. Canada’s semiconductor industry is expected to be worth US$5.12 billion by the end of this year. But that’s just the value associated with the creation and sale of semiconductors. It doesn’t include the markets for goods where these chips are an input, which is everything from cars, to computers, to consumer electronics. The total cost of the impact is so large and complex that it is hard to estimate.
Of course, even economic chaos might be worth it if these substances were in fact so harmful they deserve to be added to the list. But the EU is the only entity in the world that has classified them as POPs and restricted the use of siloxanes in commerce. Our own government has investigated them and has concluded differently.
In 2018 a government assessment tested six different siloxanes, including D4, D5 and D6, and found no evidence of toxicity. They were also evaluated as part of Canada’s Chemical’s Management Plan (CMP), which concluded that these substances do not satisfy Canada’s criteria for being deemed persistent and bio-accumulative, which is why we have not imposed our own restrictions on their use. Most importantly, Canadian regulators concluded that realistic concentrations of these substances do not pose a threat to human health.
So what should Canada do? As a party to the Stockholm Convention, it should oppose the EU’s attempt to have these siloxanes listed as POPs under the Stockholm Convention. Doing so would be science- and evidence-based and, if successful, would spare Canadians from economic chaos.
Originally published here
