The Global Economic Power Shift

America is no more the largest economic powerhouse. This title now belongs to the European Union. And Brussels is using this new found economic power to drive new regulation and force stricter environmental standards. In his new book titled "Exposed" Mark Schapiro from the Center for Investigative Reporting writes about how the European Union is setting the high ground for anything new on consumer product safety and environmental policy.
Everything from cosmetics and toys which are used on a daily basis to electronic waste whose impact on the environment is slow and steady have new set of regulations from the EU. And the funny part is some of the chemicals in cosmetics, toys electronics and other items that are banned in the European Union are still present in products in the US. Consider for example a chemical called as phthalates. The United States remains one of the few countries in the world which permits imports of toys made with polyvinyl chloride additives called phthalates. Phthalates help make the toys soft and malleable so that they can be sucked by kids. But scientific evidence suggests that phthalates impede testosterone production and sexual development in infant boys. Kids toys are not the only products which have phthalates. They are present from anything from shower curtains to cars. But infants are the most vulnerable of the lot to the harmful effects of phthalates. The EU has banned phthalates eight years ago.
In his book, Mark Schapiro argues that there is a fundamental difference between the EU and the US on how they look at regulation. In the US, concern to public safety from a product is not enough to have it taken out of the market. There needs to be irrefutable scientific proof of the harmful effects of the product on humans. This kind of proof is hard to come by most of the times. The Us also considers the current benefit to consumers from the product as well as the cost for the industry to make the change happen. The EU in contrast adopts a more precautionary approach. The EU does not wait for 100% scientific proof on harmful effects of chemicals and other substances. For them to wait for 100% proof is to wait and watch as the damage is being done irreversibly.
Mark Schapiro aslo points out that in the EU most of the healthcare is paid for by the government unlike the US. If you think about it, if the EU does not act on these issues, it will be paying from its pockets for the healthcare costs associated with all these chemicals for its consumers 20-30 years down the line. In the US there is less of an incentive to act on these issues from a healthcare point of view as most of the cost is borne by the consumers themselves. And this is not going to change.
But one can argue that changing regulations often can impede growth and hurt the economy and drive away companies to less regulated countries. Mark Schapiro argues that this is where the EU's economic muscle kicks in. Because EU is the largest economic power, companies cannot ignore them. They have less of an incentive to move out as they are losing on the sales. This forces the companies to innovate and develop new products which are compliant with the standards. These regulations remove the perverse incentive of not doing anything and maintaining the status quo. They spur innovation, create new jobs, are good for the economy, the consumers and the environment. In short every-body is a winner.

You can read more about the book Exposed at Center for Investigative Reporting
To read more about the battle in California over phthalates see the link Toxic Toys