17.3.2011   

EN

Official Journal of the European Union

C 84/25

1.1

The proposal seeks to reduce the frequency and impact of terrorist attacks by limiting access by the general public to, and reporting suspicious transactions of, widely and legitimately used substances (and mixtures thereof) which in high concentrations can also be used to manufacture explosives.

1.2

The proposal is directed at wholesalers, retailers and Member States. Chemical manufacturers already have controls and voluntary reporting codes in place for weapon and drug precursors, for instance, and should not be materially affected by these proposals. The tonnages involved are small compared to the total amounts sold. There are no concerns with respect to worker health or environmental exposure. Success will depend upon actions by competent authorities with respect to the gathering and sharing of relevant information.

1.3

The EESC supports actions to combat terrorism and agrees with the overall rationale for the proposal, specifically a Regulation under Article 114 preventing fragmentation of the internal market.

1.4

The EESC also agrees with the list of eight substances (and mixtures thereof) included in Annex I as requiring controls under this heading. It is therefore reasonable to allow sales in high concentrations to the general public to continue only under licence for legitimate end uses.

1.5

The EESC also agrees that it is reasonable to put in place centralised systems in the Member States to receive, share and respond to, reports of suspicious transactions of any of these eight substances plus the further seven listed in Annex II, together with any other transactions falling under this heading.

1.6

The EESC however regrets that there are a number of shortfalls in the proposal, with respect to the supporting evidence presented on specific substances; to the other possibilities for control, for instance maximum package size; to the practicalities of controls at the points of sale, including the definition of ‘businesses’ to be excluded from this proposal; and with some inconsistencies within the text, for instance, with regard to the eventual scope of the reporting requirement.

1.7

The EESC is also surprised that, although costs for the retail sector and for governments have been broadly quantified, this has not happened for the assumed benefits. Although the value of a human life saved is indeed subjective, this approach has been used in the past to balance the costs of EU proposals. The reasons for not doing so here are not discussed.

1.8

Despite these concerns, the EESC strongly supports the proposal. Communicating this to the affected groups and to civil society as a whole will be a major challenge. The EESC would be happy to contribute to this in any way possible.

2.1

Improvised explosive devices (IEDs), often incorporating home-made explosives (HMEs), are increasingly used by terrorists and other criminal groups and individuals to attack military or economic targets around the world and to instil terror in civilian populations in pursuit of political or religious ideals.

2.2

Although the bulk of these incidents have so far occurred outside the EU, and despite the best efforts of national intelligence agencies, the Member States and citizens of the EU have not been spared. Richer countries have become prime targets; no country can be wholly safe. The driving forces of ideology, together with practical guidelines on bomb making, are circulated globally on the internet. The required precursors are readily available from retail stores or on-line, often at low cost and in the high concentrations that are required for HMEs, as well as for other legitimate industrial and domestic end-uses.

2.3

Given that these other uses exist and that any control measures should be both effective and proportionate, there is a clear need to determine which substances should be regulated and how; what other measures are required in support; and which Treaty base is appropriate.

2.4

These questions were addressed in a previous opinion (1), on an amendment to Council Directive 76/769/EEC on the marketing and use of ‘certain dangerous substances’ including ammonium nitrate (AN) used in very large quantities world-wide as a nitrogen-based fertiliser and also as an effective low cost component of both commercial and improvised explosives.

2.5

As noted at the time, other bases for legislation addressing terrorism or explosive precursors could have been chosen, but, under the existing EU Treaty, would have required unanimity across the Member States. This was thought to have been difficult to achieve in the short time available before the repeal of this long-standing Directive and its replacement by Regulation (EC) 1907/2006 (REACH), to Annex XVII of which ammonium nitrate was eventually added.

2.6

A number of Member States have since adopted national measures to limit the availability of explosives precursors of particular concern. To avoid fragmentation of the internal market and to ensure that there are no gaps in intelligence gathering and other measures against terrorism, a proposal from the Commission is now required.

3.1

The Commission's proposal is for a Regulation restricting access by members of the public to specific substances in general use but which can also be misused as explosives precursors. To protect the free movement of goods, eight substances listed in Annex I may continue to be sold in concentrated form under a licence granted by a national competent authority for a documented legitimate purpose or, without a licence, at concentration levels which render them ineffective for the manufacture of HMEs. A further seven substances are listed in Annex II where no licences or concentration levels apply. However for all 15 substances, and indeed for sales of any other substance, mixture (or article?) not specifically listed in these Annexes but identified by the Commission from time to time as having been used for the manufacture of HMEs, any transaction deemed to be ‘suspicious’ on any ‘reasonable’ grounds should be reported to a single national contact point.

3.2

Professional users of these materials and business-to-business sales would not be affected. The rights of individuals to privacy must be fully respected. The regulatory process should be flexible enough to allow a rapid response to changing needs. Voluntary agreements, codes of conduct and improved information systems would all be required in support of these measures.

3.3

The burden of costs would be shared approximately equally between the manufacturers and retailers (through the costs of compliance, labelling, reformulating and loss of sales) and the national competent authorities (who would have to set up and staff the necessary licensing and information gathering and reporting systems).

3.4

In the case of ammonium nitrate, included in Annex I of this proposal, references to the substance in Annex XVII of (EC) 1907/2006 (REACH), which does not provide for licensing or the reporting of suspicious transactions, would now be deleted. Specific derogations for use by farmers would continue.

3.5

The Regulation would come into force 18 months after its adoption and would be binding in its entirety on all Member States. A transition period of up to 36 months would be required to allow all existing stocks of high concentration substances listed in Annex I held by members of the public to be used or removed. The Regulation would be extended to the Member States of the EEA and would be reviewed after five years.

3.6

The proposal is accompanied by an explanatory memorandum, a Commission staff working document and summary of the impact assessment, and the impact assessment (IA) itself based on a Preparatory Study prepared by an external contractor (GHK in collaboration with Rand Europe and Comstratos) working closely with the Standing Committee on Explosives Precursors (SCP) established under the Action Plan for Enhancing the Security of Explosives agreed by the Council on 18 April 2008. The IA was reviewed by the Commission's Impact Assessment Board in March 2010 and a number of recommendations made.

3.7

Background is also available in the Commission's Communication on enhancing the security of explosives, dated 6 November 2007, and in the 2008 and 2009 Annual Reports of the SCP.

4.1

The EESC clearly supports the Council's 2004 Declaration on Combating Terrorism and the more detailed actions and documents that have followed and has noted the key role that civil society has to play in ensuring the safety of its citizens. The EESC therefore welcomes this proposal with respect to explosives precursors.

4.2

The EESC agrees that a Regulation applicable to all Member States is required, irrespective of their current exposure to or awareness of terrorist activity. Existing terrorist groups can cross national borders to purchase or store precursors or to manufacture HMEs. Global terrorists do not recognise borders at all. There is a trend towards higher impact explosives with a decreasing regard for human life. Although the majority of planned attacks are foiled, when they are successful, the effects are devastating.

4.3

The EESC also agrees that Article 114 is the correct legal base to prevent the fragmentation of the internal market for substances that are and will remain in wide circulation, with many legitimate and essential uses. In some cases alternative products may be available, however total substitution is generally impossible and complete withdrawal from the market would have a disproportionate effect on the manufacturers, retailers and consumers concerned. Conflicts with other legislation, for instance on drug precursors or the use of agro-chemicals should also be avoided. National derogations, in particular for substances listed in Annex I, should not be permitted.

4.4

The EESC notes that lists of controlled precursors tend to reflect local experience of recent attacks rather than a globally agreed minimum list which should be the eventual aim. However a convincing case can be made for each of the substances listed here, and there is a provision for prompt updating as new routes to HMEs are identified. The eight substances in Annex I will be available to the general public in high concentrations only under licence. This should be sufficient to limit occasional, individual, casual or opportunistic purchases. The control of more ‘professional’ and determined activity will continue to depend primarily on good intelligence being relayed to, and used by, the police or other centralised security agencies.

4.5

The EESC therefore welcomes the proposals for additional education and training initiatives and voluntary codes of conduct. These must be directed primarily at wholesalers and retailers who must take a greater share of responsibility for the goods marketed and for the reporting, in a reasonable and effective manner, of any transaction deemed to be ‘suspicious’. The need for good feedback to encourage good practice is also recognised – and this will be an interesting challenge for the regulatory authorities and law-enforcement agencies involved. Given the short time frame for introduction, and competing needs for public finance, the Commission will have a key role in facilitating the exchange of good practice between Member States who have already introduced such measures and those who have not.

4.6

However, the EESC regrets that it has proved impossible for the Commission, despite the best efforts of its consultants, to fully describe or quantify the impacts of this proposal on the retail sector and therefore on consumers. During the preparation of the IA it became clear that there are few, if any, representative organisations capable of addressing the wide range of products potentially affected. Response rates to questionnaires addressed to individual suppliers were generally poor. The practicalities of enabling check-out staff to manage goods sold only under licence or to identify and report suspicious transactions of many others were not addressed. The difficulties of defining a ‘business’, however temporary and established for whatever purpose, which would be exempt from any control, versus ‘a member of the public’ who might or might not be willing or able to provide identification or to disclose the final end use, were discussed in the IA but are not fully resolved in the proposal.

4.7

As a further complication, the impact assessment depends on an economic model which was developed in full for only 14 of the 15 substances now listed (hydrochloric acid being omitted at the last moment and ‘ammonium calcium nitrate’, normally sold as ‘CAN’, being added without comment or explanation). The substances and their markets are certainly not homogenous, ranging from hexamine, a specialty solid fuel for toys and cooking stoves with retail sales of less than EUR 10M, to AN (and CAN) and acetone sold in millions of tons for agricultural fertilisers and cosmetics and household goods respectively, with EU markets measured in billions of euro.

4.8

Given these limitations, the best estimate appears to be that around EUR 300M sales, 10 % of the total value, of high concentration substances listed in Annex I would be directly affected, with perhaps half continuing under licence and the remainder being substituted or lost. Sales of concentrated hydrogen peroxide, a well known and widely used HME precursor, account for around 60 % of these totals. The rather larger markets for products listed in Annex II, dominated by sales of concentrated sulphuric acid and acetone, also common HME precursors, should not be significantly affected by the reporting requirements; if they are, then perhaps the Regulation could indeed be taken as working.

4.9

The off-setting economic and social benefits of limiting access by the general public to HME precursors and thereby reducing the frequency and intensity of terrorist attacks were addressed in the Preparatory Study but have not been quantified in this proposal. The assessment of proportionality between costs and benefits is therefore not easy. However, on balance the EESC believes that the measures do meet all relevant guidelines and should therefore be fully supported. Continuing actions by, in and between Member States will however be critical to ensuring longer term success.

5.1

Both the EESC and the Commission recognise that any proposal on this topic has to be a careful balance between restrictions on the unlawful use of specific substances in the general good, and the rights of citizens to follow their own interests with a reasonable degree of privacy. It is also accepted that security issues and remedial measures, by their nature, cannot always be fully documented. However, as far as possible this should be the case.

5.2

The EESC therefore regrets that the final proposal is not fully supported by the Preparatory Study and IA, in particular with respect to the deletion of hydrochloric acid, even from Annex II, and by the addition of CAN, without any supporting evidence of use or market impact. As the proposal quite reasonably suggests that other substances may be added in future, there is a clear need to ensure that proper procedures are followed – and seen to be followed, by all those affected. Even at this late stage, an addendum to this effect would be helpful.

5.3

The rationale behind splitting the 15 substances into two groups, with only eight selected for restrictions on sales in high concentrations, is also not fully discussed in either the proposal or the working documents, although such discussions certainly took place in the SCP and were made available on request. Ideally these too should be included in the proposal and in any subsequent explanatory notes.

5.4

The EESC is also surprised that, given the relatively short list of very disparate substances, that there were no opportunities identified or discussed for actions under EU rules on the classification, packaging and labelling (CPL) of dangerous substances and mixtures – for instance to limit the size of individual packages and thereby highlighting unusually large and therefore ‘suspicious’ transactions at any stage in the supply chain. Whether or not this is reasonable depends on the scale of purchases required to make an explosive of the required size; information on this could have been included in the original IA and would have helped focus the proposed ‘intelligence’ gathering systems.

5.5

Specific proposals under this heading would also be helpful to resolve the practicalities of control at the points of sale where labels, bar codes or other internal control systems will be essential to limit unlawful or undesirable transactions. Given the free movement of all goods across the EU, a unified system will be essential to allow manufacturers and wholesalers to meet these obligations in a cost-effective manner.

5.6

As a small detail, it is noted that mixtures of all the substances in both Annexes are shown as having the same CN code (3824 90 27); although this has been confirmed as being correct, it does highlight the difficulty of identifying cross-border movements of products or mixtures of concern.

5.7

It is noted that business to business (b2b) transactions are excluded – but the definition of what constitutes a business is unclear. Not all self-employed gardeners, builders, dentists or hairdressers will be able to provide VAT numbers, for instance, or to show any other evidence of an ongoing business. Even if the evidence is provided, and the business is shown to be ongoing and legitimate, it still seems possible that a transaction could reasonably be regarded as ‘suspicious’ – and therefore some provision must be made for reporting at this stage of the supply chain as well.

5.8

Finally, there are no restrictions on sales on the substances listed in Annex II, merely a requirement to report ‘suspicious’ transactions. Given that any ‘suspicious’ transaction can, and probably will, be reported, whether or not the substance, mixture or article is actually listed, it is surprising that this list is not longer, to include a wider list of precursors and supporting materials. This would allow some freedom at national level to identify local preferences (for instance the use of black powder or propane cylinders) and to react quickly to newer formulations and trends.

5.9

It would also help to clarify the text and the underlying assumptions on the scope of the reporting requirement. The Explanatory Memorandum, under the heading ‘impact on fundamental rights’, states that this will apply ‘only to the chemicals listed in the Annexes and will be based on a risk assessment carried out be the economic operators’. This is however extended in Article 6, indent 4, to ‘any other non-scheduled substance’. Given that the evaluation of a transaction as being ‘suspicious’ is itself a value judgement reflecting local norms and attitudes, this cannot be made either obligatory or 100 % complete; neither can reports of transactions of substances not listed or not relevant be totally excluded. Given the myriad of retailers involved and the difficulty of raising awareness or sharing best practice, let alone of imposing controls, the problems of the quality and quantity of the data provided to the national contact points will also have to be addressed before this can be considered a source of useful ‘intelligence’.

5.10

Despite the above concerns, the EESC strongly supports the proposal and believes that it will contribute to the security of citizens both in and outside the EU. There will be a continuing need for the exchange of best practice, in particular in communicating to and with front-line retailers and other affected groups in civil society. The EESC would be happy to contribute to this in any way possible.