By Jeff Mason

BRUSSELS, Dec 6 (Reuters) - The latest version of a draft European Union law governing the use of toxic chemicals will create legal uncertainty and higher costs for industry, business groups said on Wednesday before a vote on the bill next week.

EU lawmakers and governments struck a deal last Thursday over REACH (Registration, Evaluation and Authorisation of Chemicals), putting the proposal on track to come into force in the first half of 2007.

The wide-ranging rules, which have drawn fire from the United States and other EU trading partners, were designed to make companies prove that substances in everyday products such as cars, cellular phones and paint are safe.

Under REACH, the properties of roughly 30,000 chemicals produced or imported in the EU would have to be registered with a central agency. Those of highest concern, such as carcinogens, would require testing and authorisation.

Lawmakers and member states agreed the rules would require persistent, bio-accumulative and toxic chemicals be removed from the market if suitable alternatives existed.

Companies would have to submit a "substitution plan" when seeking authorisation for the roughly 1,500 chemicals expected to be considered of high concern. But if they can be adequately controlled, the substances will be approved.

Alain Perroy, head of chemicals lobby CEFIC, said "substitution plans", which require companies to lay out when and whether an alternative chemical could replace a dangerous one, would put the authorisation of the chemicals into doubt.

"There is the risk that greater legal uncertainly is introduced in the process," he told reporters.

If companies obtained permission to use a dangerous substance after proving that it could be adequately controlled but were still required to submit substitution plans, that could lead to legal challenges of the authorisations, he said.

INCENTIVE TO CHANGE?

The EU deal is a compromise from a previous version supported by lawmakers, which would have denied approval for all dangerous chemicals -- even when they could be "adequately controlled" -- if suitable alternatives exist.

Environmental and consumer advocates slammed the compromise deal last week, saying it would allow chemicals that cause birth defects and cancer to stay on the market. They said the substitution plans were not enough of an incentive for industry to get rid of dangerous substances.

"It's more or less a voluntary industry thing because it's up to the applicant to identify an alternative and only then do they have to provide a substitution plan," said Ninja Reineke, senior toxics officer at environmental group WWF.

Employers lobby UNICE said the plans would make implementation of REACH harder.

"This will generate an additional burden for chemical producers and downstream users alike," it said in a statement with other industry groups. "It will equally affect the supply of raw materials for different sectors of EU industry, and this without any clear benefit for the end consumer."

The bill goes before the full European Parliament for a vote on Dec. 13. Ambassadors from EU member states backed the compromise deal unanimously on Tuesday, a spokesman for current EU president Finland said.

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