The Bush Administration has interpreted its victory in the 2004 election as a mandate to take its free-market policies to further extremes. It is signaling its determination to unhinge US industry from what remains of regulations limiting the poisons in our water, our bodies and our air. But while they are newly emboldened at home, the Administration and its corporate allies are looking warily across the Atlantic to Brussels. Here, in the capital of the European Union, an unprecedented challenge to longstanding practices of American industry is unfolding.

Since the fall of the Berlin wall, the European Union has been steadily transforming itself from a facilitator of trade to a sophisticated geopolitical power with the teeth to back up its policies--an evolution that has occurred largely under the American public's radar. Over the past decade, EU member states have ceded governing and enforcement authority to Brussels in areas ranging from environmental regulation to food safety, accounting standards, telecommunications policy and oversight of corporate mergers. As a result, US companies that do business in Europe--which remains America's largest export market--are quickly learning that "old Europe" is now wielding new world power.

Just this year, US manufacturers of such goods as chemicals, cars and cosmetics have been confronted with EU regulations that force a choice: Either conform to the EU's standards of pre-emptive screening for toxicity--far tougher than US standards--or risk sacrificing the European market, which, with 450 million people, is now larger than that of the United States. In the process, the European Union is challenging US presumptions of unilateral decision-making on issues with tremendous consequences for American companies and consumers, treading on ground that has long been considered sacred turf.

"Americans are in for a rude shock," says Clyde Prestowitz, a former Reagan Commerce Department official and author of Rogue Nation: American Unilateralism and the Failure of Good Intentions. "Other players are establishing their own standards, and they have the muscle to make them stick. We are headed into a new era."

REACH and Ye Shall Find

Last summer, while Americans were focused on the worsening crisis in Iraq and the intensifying presidential campaign, the US chemical industry was consumed by plans at the EU's Environment Commission to complete the details of a proposed regulation known as REACH--Registration, Evaluation and Authorization of Chemicals. For the $500 billion chemical industry, REACH threatens a revolution in chemical regulation--upending decades-long practices that were pioneered in the United States.

In 1976 the US Congress passed the Toxic Substances Control Act, which required chemicals introduced after the law took effect in 1979 to be tested before being registered for use. The problem with TSCA--or what critics call the "Toxic Substances Conversation Act"--is that 80 percent of the chemicals on the market today were introduced before 1979. But Europe at that time followed the US model, so in effect TSCA established the global standard. No more. REACH is the first effort to secure environmental data on some 30,000 chemicals that have been on the market in the United States and around the world without any significant testing of their toxicity on human health and the environment.

These include an array of highly toxic substances that were effectively grandfathered into the market by TSCA, including industrial solvents like ethyl benzene, known to cause nerve damage; heavy metals like cadmium, an ingredient in many paints and industrial ceramics that can cause kidney failure; and a family of plastic byproducts, called furans, that are potent carcinogens and endocrine disrupters. Many of these chemicals have already been found in high concentration in the blood of Americans and Europeans; during a World Health Organization convention in Budapest last June, the World Wildlife Fund International revealed forty-four different hazardous chemicals in the bloodstream of top EU officials, including then-Environment Commissioner Margot Wallstrom, now the vice president of communications for the European Commission, the executive arm of the EU.

The proposed regulations, according to Robert Donkers, one of the authors of REACH and now posted in Washington as environment counselor for the European Commission's US delegation, evolved out of the realization that little was known about chemicals contained in a vast array of consumer products. "There was great political anxiety in Europe when we discovered that carcinogenic chemicals were being released from consumer products like diapers and softeners in baby toys. We discovered that neither consumers nor the government was informed about the chemical properties of what is in those and other products and how they break down. An overhaul was needed."

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