Positioning yourself for EC regulations.

• Author: Vermeulen, C.A.P.
• Position: European Community - Meeting the Environmental Challenge

A guide to understanding the changing European environmental regulatory landscape.

The rapidly changing environmental regulations in the European Community (EC) will have an impact on U.S. companies' European operations. Companies are advised to educate themselves about these changes, to take steps to incorporate environmental issues into their corporate strategy, and to consider investing in countries that are in the forefront of environmental regulations and enforcement.

So far, more than 200 directives dealing with the environment have been passed by the EC. Despite progress toward constructing the Single Market, some variation in environmental regulations exists among the 12 EC Member States. Although in many areas EC-wide regulations are not yet as stringent as they are in the U.S., the regulations of some countries, in certain areas, have become more so. As EC-wide regulations catch up to the laws of some of its more progressive northern Member States, such as the Netherlands, Denmark, and Germany, EC regulations also may become stricter than regulations in the U.S. These environmental regulations and the rigor with which they are enforced will have an impact on U.S. companies investing in Europe. Whether their impact is positive or negative depends on companies' foresight and preparedness.

The EC's approach to protecting the environment continues to evolve. On March 18, 1992, the EC published The 5th Community Environmental Program. Titled "Towards Sustainability," the Program presents the EC's goals and plans vis-a-vis environmental policy, and states that its ultimate aim is to transform the patterns of growth in the Community.

The Program calls for environmental planning to be an integral part of economic development, both before and after the Single Market is constructed. It also expects a greater degree of cooperation and shared responsibility among business, government, and consumers than in the U.S. In the words of the European Commission, the EC's approach to protecting the environment combines commitments from all social and economic partners. As the regulations by which businesses must abide continue to develop, the Commission envisions a social commitment taking place on the level of each consumer, whose way of living, and buying, will grow to reflect both economic and environmental priorities.

The European Community first agreed to incorporate environmental objectives into planning of national and Community policies in the 1987 Single European Act. The December 1991 summit in Maastricht, the Netherlands, took the issue a step further. The Maastricht Treaty of Union calls for environmental protection to be integrated into the definition and implementation of other Community policies. It also calls for the Commission to add international dimensions to its objectives. The Commission will represent the Community in environmental negotiations with international organizations and non-EC countries.

The treaty also increases the power of the European Parliament to review and amend EC environmental legislation, and also calls for qualified majority voting in the Council in almost all environmental areas. In addition, a new Cohesion Fund, administered by the Commission's Environment Directorate, was created at Maastricht to assit poorer EC states, such as Spain, Portugal, Ireland, and Greece, to make improvements in environmental protection and infrastructure.

Trade and the Environment

EC leaders recognized that if they wanted to create a Single Market, they could not separate the issues of trade and environmental protection. With the air and water of Europe transcending national borders, regulations in one nation would have a bearing on the others. They did not want EC countries to offer incentives to boost economic growth that compromised environmental policy, nor did they want countries to impose trade barriers

] masked as stringent environmental regulations. In order to avoid these problems, and instead develop a symbiotic relationship between economic growth and environmental protection, the EC is working to strengthen and harmonize the environmental legislation of its Member States.

As reported in "Towards Sustainability," the Commission has identified the manufacturing, transportation, energy, agriculture, and tourism industries as having particular responsibility for environmental problems. In general, past directives dealing with such areas as factory emissions, hazardous material labeling, landfill registration, chlorofluorocarbons, energy efficiency, protection of endangered species and recycling have emphasized pollution prevention.

These directives, which are first approved by the European Commission, then have to be adopted by Member States in national legislation. While the Commission has drafted many environmental directives, some EC countries have been slow to implement legislation on the national level. In rare instances in which an EC country can argue that local environmental conditions warrant...