The European Union’s new chemical regulations leave the bloc vulnerable to Chinese domination

The European Union’s Chemical Agency (ECHA) risks creating new problems for itself by moving from a risk to a hazard-based assessment of chemicals.
Emil Panzaru

By Emil Panzaru

Dr. Emil Panzaru is Research Manager at the Consumer Choice Center. He has promoted consumer welfare as the standard for regulation in topics ranging from PFAS to agriculture. His work has been featured in The Brussels Times, European Scientist, and Brussels Report.

25 May 2023

Sometimes, eliminating one set of problems only creates more dangers in their stead. The European Union’s Chemical Agency (ECHA) is about to do just that by moving from a risk to a hazard-based assessment of chemicals. Though seemingly just a change in words, the decision means regulators can label a substance as dangerous for its properties based on the material's hypothetical characteristics rather than real-world exposure to harm. Simply put, policymakers will be able to introduce severe warning labels or prevent a product from entering the market if just one of its molecules could be dangerous based on hypothetical assessments under controlled laboratory setups. The ECHA’s new regulations threaten to undermine the European chemical market while making the Union progressively dependent on China for raw resources.

The case of essential oils encapsulates the problem. Essential oils are water or steam-based extracts integral to anything from perfumes and cosmetics to shampoos and natural insect repellents. They are vital components for the emergent market in clean beauty, with nine hundred ninety-two mixtures (including household names such as lavender, rose, and citronella) giving makeup its cleansing properties and deodorants their unique scent. When highly concentrated in doses containing 10% or higher quantities of emulsion, citronella, sage, and cinnamon also provide one to four hours of protection from mosquito and tick bites. And, unlike traditional DEET or picaridin sprays, they remain harmless to bees and the environment.

The ECHA’s new regulations threaten to undermine the European chemical market while making the Union progressively dependent on China for raw resources.


Emil Panzaru

Despite all these benefits, essential oils’ designation as complex natural substances will have to change with the introduction of hazard-based thinking. Rule-makers will label the mixtures as dangerous chemicals or ban them entirely under EU regulation 2021/1902. In either case, European consumers tend to avoid buying products with skulls and crossbones stamped on them.

It is no understatement to say that the consequences for the 3.53-billion-euro EU market would be dire. Once the ECHA’s new rules are fully adopted, current EU and world leaders in the supply of essential oils, like Bulgaria, France, and Italy, stand to lose. Bulgaria will no longer be the top producer of rose oil, wasting between 800kg and two tonnes of the material and 92 million euros worth of exports. Italy is single-handedly responsible for 95% of the world’s bergamot production and will lose 174 million euros. France is the third-largest exporter and the second-biggest producer of lavender, worth 458 million euros in exports that it would have to give up on. Moreover, smaller producers in each of these countries stand to lose the most as it would be too expensive for them to replace essential oils with other products (putting the 4500 family businesses behind Italian bergamot in danger).

The story does not stop there. The ECHA’s decision will allow China to dominate the essential oils market with impunity. Chinese lavender production is already at an all-time high, with 40 tonnes harvested yearly, ten of which are reserved for exports. The contraction of the European market will allow China to step in and become the world’s substitute for essential oils, overcoming its previously estimated growth in the sector of 10.8% over the next eight years. The news would be welcome under ideal economic circumstances of free trade and open, voluntary specialization within a global market; however, in our world, the Chinese state controls Xinjiang Province’s lavender reserves. As such, the Chinese Communist Party could cut access to raw materials to make liberal democracies surrender. Far from being safer, consumers are left more exposed to geopolitical blackmail by authoritarian regimes.

Policymakers should urge the ECHA to reverse its hazard-based reasoning in favor of risk-oriented thinking. Regulators should emphasize safe levels of intended use, which, in the case of essential oils, means allowing the European market to thrive (stepping in only to prevent force and pseudo-scientific fraud).  In so doing, the European Union can benefit from diversifying its essential oil sources, thus protecting consumers from the vagaries of great power politics.