The State Department says the proposed rules could cost American companies billions of dollars and force an array of U.S. products off the European market. Secretary of State Colin Powell has ordered U.S. Embassies in Europe to protest to their host countries.

American business leaders are deeply worried. "At its most extreme, they can tell you what chemicals can be used to make your automobile or paint your automobile, or your telephone," said Michael Walls, senior counsel for the American Chemistry Council. "It's the products we use every day."

The proposed rules, which would not take effect for several years, would require companies to provide detailed, costly analyses of the environmental and health impact of chemicals made or used in Europe. This could apply to products from plastics, frequently made of toxic chemicals, to computer chips, which may be cleaned with toxic solvents.

Burden on manufacturers

The proposals would mark a dramatic departure from traditional regulations because they would put the burden on manufacturers to prove their products are safe, rather than requiring regulators to prove they are dangerous.

The spat is erupting as U.S.-European tensions are already high. Some Europeans believe the U.S. regularly flouts international opinion and is indifferent to environmental threats such as global warming. And some U.S. officials say Europeans are hostile to business and are seeking any opportunity to take a swipe at the U.S.

This week, U.S. officials threatened to file a complaint against the EU on another subject, alleging that the Europeans are blocking imports of genetically engineered crops from American farmers.

Under the proposed European chemical rules, substances believed to pose major risks would require approval from a new European agency before they could be sold in any European Union nation. The policy would include the 10 Eastern European nations joining the EU next year. Europe could even ban certain chemicals or products.

A spokesman in the EU's Washington office said it is premature to debate the rules because they are still being drafted by European Union officials.

Environmental groups say the new European approach is a revolutionary improvement. Thousands of products used by consumers every day--from cosmetics to computers to carpets--are made with chemicals that have never been fully tested for their health impact, these groups say.

"There is a de facto `don't ask, don't tell' policy" in current environmental rules, said Daryl Ditz of the World Wildlife Fund. "The consequence of this policy of ignorance is that every few years, we get surprised by another chemical that turns out to be toxic." Ditz pointed out that widely used chemicals such as asbestos have left legacies of health problems that linger for years after the chemical is banned.

In the U.S., new chemicals brought to market do face detailed scientific scrutiny by regulators. But thousands of chemicals that were in use before those rules took effect can still be used with no detailed analysis. In contrast, the European plan seeks to provide detailed analysis of chemical risks before products reach the market.

But Walls, whose group represents major chemical manufacturers, says the European proposals would require U.S. industry to spend billions of dollars generating risk assessments for more than 30,000 chemicals already in use. He said few of these pose significant environmental risk.

"The whole approach here is kind of backward," Walls said. He argued that chemicals that present a risk should be identified first, and then officials should focus on those.

Jennifer Guhl, director of international trade policy for the American Electronics Association, which represents 3,000 high-tech firms, said her industry uses plastics and solvents that could be toxic if swallowed but offer no threat when bound into a computer chip.

"The U.S. high-tech industry exported $46 billion in goods to the EU in 2002," Guhl said, and nearly all of those products could be affected.

The State Department agrees that the European rules would have a devastating effect.

In an April 29 memo to U.S. Embassies in Europe, Powell said the proposal "would adversely impact production and trans-Atlantic trade in tens of billions of dollars in chemicals and downstream products--from autos to textiles. We're concerned that the economic implications are not being addressed."

The EU has posted the draft regulation--called REACH, for Registration, Evaluation and Authorization of Chemicals--on the Internet and will accept public comments for eight weeks.

Then the rules will be reviewed by the European Commission before being submitted to the European Parliament. That could take several years.

Powell speaks out

Powell's memo urged the embassies to meet with ministers in their host countries to express U.S. concerns. Individual countries, Powell wrote, may be more receptive to the American arguments than the European Commission as a whole, because their companies would suffer too.

"As their own industries will be impacted, we anticipate that they will be much more sensitive to impacts on EU competitiveness, employment and other implications than commission bureaucrats," Powell wrote.

What most concerns U.S. businesses is that the EU rules could evolve into a worldwide policy that could hurt American exports. "They are attempting to set a global standard," Walls said.

European standards often become a model for countries elsewhere, Guhl said.

"The EU tends to set the precedent for other markets, particularly in environmental issues," she said. "If other nations begin adopting policies based on an EU model that limits the ability of U.S. manufactures to sell semiconductors, the impact could be devastating."