The Government is lobbying Brussels to dilute proposed new environmental protection laws over fears they could place multinational jobs under threat.
Companies which import or manufacture chemicals will be forced to take costly new safety measures to protect human health and the environment under proposals being drawn up by the European Commission.
However, the Tánaiste, Ms Harney, is understood to believe the measures would pose a threat to Irish industry's global competitiveness, and place a major financial burden on multinational firms such as Intel.
Employers' group IBEC also says the impact of the laws would be "disastrous" for Irish jobs, and place industry at a major commercial disadvantage.
The Government's stance, however, has brought criticism from environmentalists, who say human health and the environment should take precedence over cost issues.
The European Commission, which is drawing up the proposals, believes the safety of chemicals cannot be guaranteed because of the lack of proper testing under the existing 20-year-old regulatory system.
The proposed policy, supported by the EU's Environment Commissioner, Ms Margot Wallström, would mean that all chemical substances over one tonne in volume which are manufactured or imported should be strictly regulated and tested.
The new legislation on chemicals, known as the Reach programme, would also allow the EU to restrict the use of any substance that it believes poses an unacceptable risk.
As part of a consultation process with EU member-states and interest groups, the Government has said the measures need major reform, and that proposals on the testing of chemicals are unnecessary in many cases.
However, the leader of the Green Party, Mr Trevor Sargent, yesterday criticised the Government's stance, and said the measures would help protect citizens.
"We need to be phasing out the use of dangerous chemicals rather than minimising their production costs. The laws of economics dictate that if the real costs are internalised in the price, it provides a greater incentive for the production of safer alternatives."
IBEC, however, says the regulations are too broad and entail major costs for businesses. It estimates that basic testing required under the proposed legislation could cost small firms hundreds of thousands of euro.
It also warns that the measures could mean that multinationals with manufacturing facilities outside the EU will remove productions sites to those countries where they could continue using the products without restriction.
IBEC's position paper states: "As the proposed legislation would only apply in the European Union . . . it would inevitably lead to a loss of business and a loss of jobs to other trading zones."
