US embassy cable - 03ROME3629

UNCLAS  ROME 003629 
 
SIPDIS 
 
 
SENSITIVE 
 
DEPT PLEASE PASS TO US EPA STEVE JOHNSON AND CHARLIE AUER 
DEPT FOR EUR/ERA AND EUR/WE 
USDOC FOR ITA/MAC DAVID DEFALCO 
 
E.O. 12958: N/A 
TAGS: ETRD, TPHY, TBIO, EIND, IT, EUN 
SUBJECT: REACH: ITALIAN CHEMICALS INDUSTRY'S STRATEGY 
DURING EU PRESIDENCY 
 
SBU- Not for internet distribution. 
 
1. (U) This is an action request.  Please see para 7. 
 
2.  (SBU) Begin summary.  On July 24, SCI Officers met with 
Francesca Poggiali (please protect), a Federchimica official 
responsible for External Affairs, who is working as a 
consultant to the Italian Ministry of Productive Activities 
assisting in the Presidency's work on REACH, the EU's 
proposed chemicals policy.  Federchimica, the Italian 
national association of chemical companies and the primary 
voice of the chemical industry, is wary of the new policy and 
expects it to have a negative economic impact on Italy.  SCI 
Officers received an advance copy of an economic impact 
assessment conducted by Federchimica, which will be publicly 
released in September.  The Federchimica official also shared 
the Italian Presidency's strategy on REACH for the coming 
months: see para 4 & 5.  End summary. 
 
 
New Economic Impact Study 
---------------------------- 
3.  (U) Italy is heavily dependent on the economic 
contribution of the chemicals industry and thus the effects 
of the highly restrictive REACH legislation would be acutely 
felt.  The Italian chemicals industry employs 133,000 people 
and when combined with the pharmaceuticals industry, the 
figure rises to 206,000.  The chemicals industry accounts for 
6% of total turnover in the manufacturing industry in Italy. 
In 2002, the chemicals industry turned over 44.1 billion 
euros in production, about 3.07% of the Italian GDP ($1.438 
trillion in 2002).  Federchimica's study of the economic 
impact of REACH in Italy reports that it could be up to 50% 
worse than the impact on Germany and France.  This is because 
Italy has more specialized sectors, such as fashion textiles, 
leather, consumer goods, automobiles, etc, which depend on 
inputs from the chemicals sector.  The best case scenario 
might mean a loss of 0.7% of GDP for Italy because of REACH, 
while the worse case scenario might mean a devastating loss 
of up to 7% of 
 GDP.  This wide variation in impact depends on modeling 
assumptions about the effects of REACH as they extend 
throughout the manufacturing sector in Italy. 
 
 
Italian Industry Prefers to Send REACH to Competitiveness 
Council 
--------------------------------------------- ---------- 
4.  (SBU) In addition to the dire economic predictions, 
Federchimica is very concerned about the effect REACH could 
have on competitiveness, and thus would prefer that DG 
Enterprise oversee and mold the final Commission proposal. 
However, there is currently a "tug of war" between the 
Ministry of Environment and the Ministry of Productive 
Activities for control of Italian leadership of the EU 
proposal.  The chemicals industry is looking to the 
Competitiveness Council as a way to ensure that the key issue 
of competitiveness is properly considered. 
 
5.  (SBU) According to Federchimica, the Commission should 
have the final REACH proposal ready by the end of October for 
consideration by the Council of Ministers.  However, the 
Italian chemicals industry is hoping that the Commission's 
work will not be finished in time for the Environmental 
Council to debate REACH at their meeting on October 27. 
Thus, consideration of REACH would fall to the 
Competitiveness Council when it meets later in November (Nov. 
10-11 and Nov. 27).  Federchimica hopes this juggling of 
dates and timing will allow the REACH proposal to be shaped 
more by the Competitiveness Council than the Environmental 
Council. 
 
 
Planned Presidency Meetings 
------------------------------ 
6.  (SBU) 
 
September 22-23: the Ministry of Productive Activities will 
officially present the results of the Italian economic impact 
study at the Competitiveness Council meeting 
 
October 17 (tentative): the Italian Presidency is planning to 
host a meeting of the EU High Level Competitiveness Group in 
 
 
Venice.  The USG has been invited to help organize and to 
participate in this meeting. 
 
October 27: meeting of Environment Council 
 
Late October/early November: Confindustria, the parent 
organization of Federchimica, will present its views on REACH 
to the EU Parliament 
 
November 10-11: meeting of the Competitiveness Council 
 
November 27: meeting of the Competitiveness Council 
 
 
7.  (U) Action requested: As noted above, the USG through the 
Embassy has been invited to the October 17 meeting.  EPA and 
Department are asked to consider and suggest appropriate 
people from Washington to attend this meeting.  Please 
contact EST Counselor at Embassy Rome with suggestions. 
Embassy will forward further details, draft agenda and list 
of other invited participants when they become available 
(early September). 
 
8.  (U) This cable has been prepared by Rome Embassy SCI 
Intern Lisa George. 
Sembler 
 
 
NNNN 
	2003ROME03629 - Classification: UNCLASSIFIED