Agent–Principal Dilemma and the EU Chemical Management

In 2007, the EU adopted the most comprehensive chemical regulation in the world. The so-called REACH requires all chemical producers and importers to register and evaluate their chemical products and, when necessary, replace them with safer alternatives. For the administration of REACH, a new European Chemicals Agency (ECHA) was established. Establishment of this specialized body under the close supervision of the European Commission created in many ways an untraditional relationship which differs from the agent-principal model. The main aim of this article is to explore the specific nature of the agent-principal relationship between the ECHA and the European Commission in the areas of delegation, information asymmetry, motivation and control structures and emphasize how specific measures may limit the negative outcomes of the agent-principal dilemma.