For many people, the European Union and its institutions have always meant overregulation and bureaucracy. Their beliefs are fed from time to time by specific rulings or proposals. This time it is the European Union’s Chemical Agency (ECHA) that has set sight on essential oils as substances needing strict control. You are most likely using essential oils without knowing it and with no harm done. Hundreds of such water or steam-distilled extracts make it into insect repellents,perfumes, cosmetics, and other toiletries like shampoos in small doses that havepassed skin and allergy testing. But the ECHA is not planning to consult their safety record and actual levels of exposure (what, in public policy speak, one would call ‘risk-based thinking’). Instead, it will amend CLP (Classification, Labelling, and Packaging ) and REACH rules to mark essential oils as hazardous complex chemicals of more than one constituent substance. Suppose one molecule in the mix could be characterized as a threat under isolated laboratory conditions or deduced via statistical reasoning. In that case, policymakers can label these natural oils dangerous or ban their usage altogether.

Legitimate producers and European consumers alike have no reason to welcome the news. Inflation, the rise of prices across the European economy, has not yet subsided – the EU’s average annual rate stood at6.4% in the EU (5.5% in the euro area), above the ECB’s price stability target of 2%. However, the average masks considerable variation in which poorer EU countries are affected more than their well-off counterparts. Luxembourg’s annual rate is amere 1%, whereas Hungary registers 19.9% (the highest in the EU), Poland at 11%, Romania at 9.3%, and Bulgaria at 7.5%. Because consumers in poorer countries tend to spend more of their income on essential goods and find saving money hard, they are likely to suffer disproportionately because of inflation.

Similarly, legal producers (who make it an objective to comply with the rules fully) in these countries will see a generalized rise in the cost of services, leaving their financial prospects uncertain. By demanding more onerous procedures, the ECHA’s ruling makes it harder for suppliers to bring their goods to the market. As fewer goods are available to buy, the measure is fuelling the momentum of rising prices, which leaves consumers even worse off than before.

The ECHA’s decision is particularly damaging when considering how the European essential oils market works. Notably, smaller companies drive the industry in the EU. No less than 95% of the world’s supply of bergamot comes from 4500 Italian families cultivating it in the Calabria region. The Essential Citrus team in Portugal extracts oil from over 350 citrus varieties in Alejento. Estonia’s Tedre-Farmuses a one-of-a-kind carbon monoxide method to distill oil from 2.5 hectares of raspberries. As such, these enterprises have much smaller profit margins, meaning they are less likely to be able to afford to operate in an environment with costlier restrictions and where their dedicated buyers are scared away by frightening warning labels. With their loss comes a loss of revenue, potentially endangering the 2.29 billion euro European clean beauty market and more economic woes for consumers.

Policymakers, producers, and consumers should encourage the ECHA to reverse course and avoid this outcome. Preliminary discussions began on the 30^thof June when the EU’s Permanent Representative Committee requested that the EU Commission re-evaluate the classification for essential oils four years from now. But that should only be the start. Better still, regulation should focus on the genuine threat from fraudsters who overpromise and underdeliver on the medical effects of essential oils using concrete evidence (like safety tests grounded in plausible levels of exposure) rather than hypothetical reasoning.  Consumers can then stay safe without making the cost-of-living crisis more complicated than it already is.

Originally published here

A new red-tape mission is about to worsen the lives of Eastern European consumers, producers, and suppliers.  Under the influence of the Green Deal, the European Union’s Chemical Agency (ECHA) will transition to a hazard-based approachpremised on preventing any potential threat. Regulators will no longer focus on concrete exposure levels to determine whether a product is safe for consumers, as they used to in the older risk-oriented assessments. Instead, policymakers will use lab-related hypothetical scenarios or advanced statistical tests to label a consumer good as dangerous or remove it entirely from store shelves if it could constitute a problem in any way, shape, or form.

However, trying to achieve zero dangers comes at a high cost. In the case of the ECHA’s revised rules, increasing regulatory pressure raises the costs of complying with said rules. This increase leaves many smaller companies unviable, making perfectly safe goods unavailable to consumers. The effect will be decisive for Eastern European countries already heavily invested in chemical markets, which therefore have the most to lose from any disruption.

The best example of this dynamic comes from an unlikely source – essential oils. Often assumed to be just relaxation tools, these steam or water-based plant extracts are widespread ingredients in most toiletries, cosmetics, and perfumes and are the economic bread and butter of many Eastern European countries. Bulgaria is the world’s top producer of rose oil, with up to two tonnes of rosesharvested yearly in the famous region of Rose Valley. Not to be outdone, the Tedre farm in southern Estonia has cultivated a waste-efficient carbon monoxide method of extracting oil from its 2.5 hectares of raspberries. Though not comparable to Bulgaria or Estonia in terms of output, Lithuania does produce important essential oils like mint, chamomile, juniper, and spruce.

However, hazard-based regulations would have essential oils on the chopping block. Policymakers plan to replace their current designation as complex natural substances with the nebulous idea of ‘more than one constituent substance.’ In practice, this redesignation means that essential oils will be treated the same way as synthetic mixtures – subject to the complete restrictions of hazard-based rules.

Most Eastern European firms will quickly find their businesses unviable because of the ECHA’s decision. Like the Tedre farmers, Bulgarian cultivators in the Rose Valley, and Lithuanian agriculturalists, these producers and retailers tend to besmaller domestic enterprises. Scaring consumers away with severe warnings on labels and prohibiting products are extra costs they can ill afford to take on (which is why 85% of all firms signed up to onerous legislation are large international conglomerates).

The economic consequences for the essential oils market in countries like Bulgaria, Estonia, Lithuania, and others in the region will be severe. Looking at export numbers alone, Bulgaria could lose 445 million euros from its sale of essential oils and associated toiletries. Lithuania and Estonia’s numbers are more modest but still significant, at 379.9 million euroand 19.1 million euro, respectively.

Eastern European member states should encourage the ECHA to abandon its cause before it is too late. Tentative steps occurred on the 30^th of June when Bulgaria and seven other states in the Permanent Representatives Committee urged the European Commission to prepare a report four years into the future on essential oils. The analysis will outline different norms regulating the ‘more than one constituent substance’ category. Estonia, Lithuania, and all other Eastern European countries should join Bulgaria in this endeavor.

Yet they should aim to do more. They must encourage the revival of risk-based thinking in the EU’s attitude towards chemicals. Risk-bearing is the only form of decision-making grounded in concrete toxicological data, aware of the fundamental economic trade-offs, and sensitive to the consumer experience. The time to end destructive campaigns (no matter how well-intentioned they may be) is here and now.  

Originally published here

Essential oil products generate hundreds of millions euros for several countries in Central and Eastern Europe. New rules threaten the industry.

New rules by the European Union’s Chemical Agency (ECHA) would significantly impact the commercialisation and use of essential oil products. 

This includes a wide variety of products consumers use, including everything from perfumes and other fragrances, to humidifier scents and insect repellents. The agency intends to adopt a new way of measuring harm caused by chemicals that doesn’t take into account the actual dosage that consumers will be exposed to.

It is unfortunate that the ECHA has chosen this exact moment to put overly restrictive chemical regulations in place. 

Following the European Green Deal’s footsteps and its vision of a toxic-free environment, the ECHA is replacing careful risk assessments based on actual exposure levels with a sweeping hazard-based approach grounded in hypothetical scenarios. The difference in practice between the two is radical. Where the first allows the use of a substance so long as it satisfies a safety threshold, the latter would prohibit compounds so long as something could go wrong.

The regulations will not spare even safe natural products from this effect, including steam and water-distilled (or manually pressed) extracts like essential oils. Under the current framework, policymakers classify them as complex natural substances. But all that would change with the hazard mentality, which would identify essential oils as mixtures of “more than one constituent substance” and restrict them as though they were volatile artificial materials, by legislation EU 2021/1902 on “toxic cosmetics”.

Impact in Central and Eastern Europe

The new ECHA guidelines will make it unfeasible for the sizeable Central and Eastern European essential oils industry to bring goods to the market. 

The businesses in Bulgaria’s famous Rose Valley harvest around two tonnes of rose oil yearly and earn 445 million euros for the country in exports of essential oils and toiletries. Similarly, the Tedre farm in Estonia produces 2.5 hectares of world-class raspberries and extracts raspberry oil based on a proprietary carbon monoxide method. Lithuania created 379.9 million euros worth of cosmetics exports from mint, chamomile, juniper, and spruce emulsions. 

Finally, Hungary benefits from 713.78 million euros of beauty industry exports. If only one part of a rose, raspberry, or mint product could be toxic or highly allergic, their goods will receive a harsh warning label at best. At worst, policymakers will make sure that they cannot commercialise these products at all. 

Firms in Bulgaria, Estonia, Lithuania, and other Central and Eastern European countries are smaller than most international conglomerates and cannot pay the extra costs of compliance; instead, they will withdraw their goods from exchange entirely.

The last thing Central and Eastern Europeans need right now is needless red tape complicating consumers’ daily lives.  The ECHA’s overly cautious approach would only add fuel to the fire. Inflation, the general rise in prices across the economy, has hit Central and Eastern European countries harder than most, leaving most people unable to afford as much as they did before and devaluing their savings. 

Annual inflation rates are projected to be higher than the 2023 EU average of 7.1 per cent (6.1 in the euro area) in countries such as Bulgaria (8.6 per cent), Lithuania (10.7 per cent), Estonia (11.2 per cent), and Hungary (a whopping 21.9 per cent). Yet the hazard-based process will ultimately exacerbate inflationary pressures.

Convincing the EU to change course

As the insights of economics show, the lower supply coupled with the same demand results in higher prices, driving inflation forward and causing more suffering to ordinary buyers. For all its good intentions, the hazard-based mentality will deteriorate Central and Eastern European consumers’ purchasing power and living standards.

The way to stop the worst scenario from materialising is to convince EU regulators to change course. 

Some member states, Bulgaria among them, have already acted via the Permanent Representatives Committee. 

On June 30 this year, the Committee requested the European Commission re-evaluate the status of essential oils as “more than one constituent substance” four years into the new legislation. All Central and Eastern European states should support the request. 

Moreover, they should champion the reinstatement of a risk-based mentality as the only science-driven option that keeps consumers safe without sacrificing their economic well-being. 

Central and Eastern Europeans would have one less thing to worry about.   

Originally published here