New developments in the global REACH landscape: Asia-Pacific and beyond
By Aaron Stone
The responsible production, handling and use of chemical products is of paramount importance due to inherent risks chemicals pose to an individual’s health and the environment. REACH chemical control regulation refers to the registration, evaluation, authorisation and restriction of chemicals and places greater responsibility on the industry to manage risks and demonstrate the safety of products throughout the supply chain.
The implementation of REACH, or equivalent legislation, imposes specific obligations on chemical manufacturers, exporters and importers. Obligations typically cover manufacture or import of substances and preparations, importation of articles that contain and emit chemicals considered “substances of very high concern” (for example construction materials), as well as the process of mixing substances for end use. The use of formulated products professionally by a downstream user also requires registration. Base oils and blended lubricants are substances and preparations respectively and therefore impacted by REACH regulations.
The commitments under global REACH include a myriad of registration processes, guidelines, deadlines and can add significant complexity to your companies supply chain depending on the market you’re entering. For the most part, REACH obligations have been phased in over a prolonged period as environmental agencies attempt to close the data vagaries of existing chemicals and new substances and develop a single regulatory system.
James Eggenschwilder, director of global trade at The Redstone Group, based in Dublin, Ohio, U.S.A., recently provided a snapshot of key developments in the global REACH landscape during the Annual Meeting of the Independent Lubricant Manufacturers Association (ILMA) held in Scottsdale, Ariz., U.S.A. last October. Below we outline some of those key developments for you to consider when forging new markets for manufacture or importation.
Overview of key markets
The Frank R. Lautenberg Chemical Safety for the 21st Century Act was signed into law on June 22, 2016 by then U.S. President Barrack Obama, with bipartisan support from the U.S. House of Representatives and the U.S. Senate. This Act amended the existing Toxic Substances Control Act (TSCA). Key changes included a mandatory requirement for the U.S. Environmental Protection Agency (EPA) to evaluate existing chemicals with clear and enforceable deadlines; a new risk-based safety standard; and increased public transparency for chemical information.
The inventory reset does not impact status as an existing chemical and alternative nomenclature rules remain the same. Anyone intending to manufacture (including import) a new chemical substance must submit a pre-manufacture notice (PMN) to the EPA for review 90 days prior to manufacture. The U.S. offers full exemptions from EPA application for qualifying polymers, research and development, and export only. A desire for increased public transparency also means greater substantiation is required to maintain confidentiality of information.
The Act provides the EPA multiple options for Section 5 Notice Applications including approval, restricted use under a 5(e) order, or a 5(f) order to address unreasonable risks.
K-REACH in South Korea is a complex registration-based system, not an inventory creation system. As such, new registrations do not get added to the Korean Existing Chemical Inventory (KECI).
Unlike Europe, where companies have freedom to test the market with up to one tonne, KREACH has no minimum threshold for new chemical substances and requires Korean manufacturers, importers and sellers to submit an annual report detailing volumes. Existing chemical substances over one tonne also require prior volume reporting to remain compliant.
Korean regulations stipulate a registration to cover every importer. Additionally, downstream importers of non-Korean customers of a foreign manufacturer must register a substance themselves or be named in the manufacturer’s dossier for its direct importers. According to Eggenschwilder, this can add significant commercial strain to a manufacturer/importer relationship, forcing downstream customers to share commercially sensitive information on their Korean customers — even pitting them as a direct competitor when selling products with limited formulation.
All chemical substances in Taiwan are included in the Chemical Substance Nomination & Notification (CSNN) database maintained by the National Chemical Substance Registry (NCSR).
Taiwan aims to establish a record of chemical volumes entering the country from specific importers to develop a robust hazard profile. As such, they have implemented an alternative approach to Korea requiring corporations shipping existing substances in quantities above 100 kg per year per importer to file a phase 1 registration. This closely mimics the pre-registration required throughout Europe. Every first shipment is subject to this process. Registration must be completed 90 days prior to production or import. Thankfully, this is a one time deal. Once completed you do not need to repeat the process, unless you’re establishing new importers.
Once the desired hazard profile is established, Taiwan can identify the substances requiring full re-registration via a more complex three-step approach.
A variety of paths exist for new substances, some of which include inventory submission. These include Standard, Simplified and Small Volume paths – the complexity of which, and timeframe, vary contingent on the situation.
Very significant changes have occurred in the lucrative Chinese market. Most notably, China has opened up the market to foreign manufacturers. Foreign corporations now have the ability to directly register new substances in China (although still via an agent). Importantly, individual foreign corporations now own their dossier and registration – affording them the ability to sell to any Chinese importer. Clearly this provides boundless commercial opportunity and reduces the regulatory burden on foreign manufacturers.
China has no polymer exemption, however they do administer four different paths of registration — one for regular substances, the rest of which are somewhat streamlined for various polymers and provide faster approvals and a lesser data requirement. Eggenschwilder warns “while China presents a big market and they are freeing up the possibilities of getting in, they’re not necessarily the easy one to navigate and maintain without some guidance,” particularly when attempting to protect confidential information.
Registration in Japan can be a long, expensive and arduous process. Japan is an inventory-driven country. Getting registered requires approval from three different ministries: the Ministry of Environment (MOE), the Ministry of Health, Labor and Welfare (MHLW) and the Ministry of Economy and Trade (METI). There are very specific data requirements, and very few exemptions, all of which require approval regardless.
While Eggenschwilder pronounces that, “not too much has changed in the Japanese market. From a practical standard he suggests the inclusion of a MITI number is of upmost importance as a condition of entry — otherwise products will be flagged in customs and detained. The Ministry of International Trade and Industry (MITI) is the integrated enforcement agency that allocates import numbers to approved chemical substances.
Japan tracks all volumes and substances and requires annual reporting if volumes exceed one tonne. Full disclosure of substances and volumes is sometimes mandatory, necessitating an elevated level of trust in your partners.
Malaysia has adopted a fairly traditional approach to registration and is relatively easy to deal with for foreign manufacturers. They operate a hazard-driven type inventory with two different hazard categories. Notification can be made in English, and electronically, and registration is not required at polymer level.
Nevertheless, this is set to change in the near future as Malaysia shifts to a more comprehensive national inventory to support their registration system, analogous to Korea or Taiwan. The timing and details of this change remains to be confirmed.
The Philippine system is very different to their Asian neighbours South Korea, Taiwan and Japan. Their registration and inventory is similar to TSCA, boasting a simple notification system and reduced obligations for substances on the TSCA inventory or other approved inventory. Substances not on a recognised inventory face a significantly more complex process to approval, and while Eggenschwilder categorises the Philippines as relatively easy to deal with, he does forewarn that the size of the organisation can make it a very slow process to realise approvals.
Singapore does not possess a national chemical inventory, instead relying on their hazardous chemical inventory. While registering a product is not necessary, you do need to quality for a permit through the National Environmental Agency (NEA). The permit process can be particularly complicated commercially, and similar to Japan can require the release of confidential or sensitive information. The process to circumnavigate the publishing of confidential information can take considerable time and effort.
Thailand & Vietnam
Thailand is currently operating what could be described as a “cumbersome” hazard-driven approach. They are however in the process of implementing a REACH-like registration system. Importers have a window until December 31, 2016 whereby substances can be nominated for the new national inventory, rather than registering them, at which point the new system will begin to roll out.
Vietnam is in an almost identical situation to Thailand, although the shift to a national inventory and new substance registration system is still in its formative stages. Early indications suggest it remains at least 12 months away. This change will be integral to reducing commercial misunderstandings.
Australia & New Zealand
The Australian Inventory of Chemical Substances (AICS) maintains more than 40,000 chemicals – both searchable and confidential. A long-term registration certificate automatically updates the AICS. Unfortunately, long-term certificates are automatically public in the inventory – disclosing all data entered in the dossier.
In order to restrict the release of confidential information, a short-term permit-based submission is required. This requires a less stringent review, and is less costly, but does not update the AICS. After five years availing of the permit system, corporations can apply for a confidential long-term registration.
Conversely, Australia’s neighbour down under – New Zealand, has an entirely different classification, and (according to Eggenschwilder) it is “not an inventory and registration system like the others.” If a product falls into New Zealand’s pre-existing substance approval it gets endorsed, otherwise submissions are required via a specific application process for a new substance.