EU single market formula hits chemicals firms’ costs

The single European market has brought higher costs for most chemicals firms despite a decline in the costs of transport and finance, according to a report due next month. The European Commission report on the effects of the single market on the chemicals sector, will show that while the lowering of internal trade barriers undoubtedly […]

The single European market has brought higher costs for most chemicals firms despite a decline in the costs of transport and finance, according to a report due next month.

The European Commission report on the effects of the single market on the chemicals sector, will show that while the lowering of internal trade barriers undoubtedly reduced costs and increased competitiveness between firms – with more trade between member countries – the benefits were offset by the cost of complying with new laws on environmental protection.

Michael Littlechild, a partner at accountancy firm KPMG, which produced the report for the commission, said: `On balance, costs seem unchanged, which is not quite what the commission was looking for.’

Laws relating to packaging and eco-labelling and classifying and registering chemical substances had the most significant effect on costs, said Littlechild, who previewed the report’s findings at a Chemical Industries Association conference last week. Almost half of the respondents to the study said price differentials between EU countries had narrowed because of competition. But local market conditions, different specifications and the cost of distribution were the main factors preventing uniform prices across the EU.

Littlechild said that success of the single market depended on forming a European energy policy, harmonising taxation rules, and creating a single European currency.

KPMG interviewed more than 60 major chemical companies for the research and sent postal questionnaires to more than 7,000.