3 July 2007
Reaching For Reward(HKTDC Enterprise, Vol 07,2007)
New EU Chemical Rules
Increasing health and environmental concerns are driving new product legislation in key markets such as Europe
A new law described as "the most important European Union legislation in 20 years" that has wide-ranging implications for both buyers and suppliers came into effect in June this year.
REACH (Registration, Evaluation and Authorisation of Chemicals) will require the registration of some 30,000 chemical substances, according to Brian Au, assistant project manager for leading inspection, verification, testing and certification company SGS.
"The registration process requires that manufacturers and importers generate data for all chemical substances produced or imported into the EU above one tonne per year," explains Au, adding that companies required to comply with the regulations must also identify appropriate risk management measures and communicate them to users.
The implementation timeframe calls for REACH to enter into force progressively from June 1, 2007, and the registration process to be completed in 11 years.
The calendar for registration depends on the risk of the substance and the quantity produced, but all covered substances imported into the EU will have to be registered by 2018.
Au says that the administration and compliance requirements are the responsibility of the newly-established European Chemicals Agency. "REACH puts the onus on business to show that the chemicals it uses are safe," he stresses. "It also aims to encourage the replacement of hazardous chemicals with safer alternatives and to spur the chemicals sector into researching and developing more new products."
Equally importantly, REACH replaces the current 40 legislative texts with a single regulation system. "REACH is currently the most ambitious chemicals legislation in the world," Au maintains. "It will provide more information about substances in everyday products, and it is expected that most dangerous substances will be progressively substituted with safer alternatives."
The new legislation also includes obligations of duty of care for the industry, communication to the public about dangerous substances in products and provisions to avoid duplication of animal testing.
"REACH aims to help improve human health and avoid environmental damage related to the chemical industry in much the same way the Restriction of Hazardous Substances directive (RoHS) was designed to help improve human health and avoid environmental damage related to the electronics industry," Au advises, adding that REACH is also designed to increase consumer confidence in manufacturers' products.
It is important to note that the REACH regulations only apply to chemicals manufactured in or imported into the EU - they do not apply to the use of chemicals in finished products.
However, products such as marker pens that contain chemicals would be subject to the regulations if the total amount of chemicals imported into the EU exceeded one tonne per year and the chemicals are intended to be released under normal application.
"The new regulation places greater responsibility on businesses to manage the risks from chemicals and to provide safety information on the substances they use," Au says.
Manufacturers and importers will be required to gather information on the properties of the substances they use, which will help them manage them safely, and to register the information with the central EU database.
Au recommends that suppliers and their global partners and distributors set in place processes and strategies that will help them comply, noting that trading companies involved will also need to identify their involvement or exposure to the new legislation. "Businesses and buyers need to establish quickly whether REACH has a direct or indirect impact on their operations and make plans accordingly," he advises.
This primarily involves identifying the chemicals used and establishing a system of compliance management along the supply chain. "Education, training and awareness incentives need to be coordinated and implemented," adds Au.
He speculates that manufacturers and suppliers who make early preparations could build a competitive advantage by making themselves attractive to EU buyers and distributors. "The most important point is to narrow the gap to comply as quickly as possible," Au reiterates.
To enable a smooth transition from the existing chemicals legislation, the European Chemicals Agency has developed an interim strategy to ensure that all stakeholders, especially industry and public authorities, are adequately prepared for the practical application of the new system.
The chemical authority has prioritised 141 high-production-volume existing substances for testing and evaluation since 1993, and these will spearhead the new REACH process.
The new legislation replaces the current system that includes approximately 4,300 substances placed on the market when formal authorisation was first required by EU legislation in 1981.
Ultimately, the new regulation transfers the burden of proof regarding testing and evaluation of the risks of chemicals from the existing authorities to industry. "Any chemical produced or imported in significant quantities has to be tested unless sufficient safety information already exists - the cost of testing is the responsibility of the producer or the importer," notes Au.
The European Commission has estimated that REACH will cost industry between 2.8bn and 5.2bn euros over 11 years, but it also calculates that it could save Europe 54bn euros over 30 years because fewer people would fall ill as a result of exposure to chemicals.
"The cost to companies operating in Hong Kong and the Chinese mainland will vary considerably and depend on the chemicals they use, how they are used and the volumes imported into the EU," Au admits.
A timetable for registration in phases has been drawn up to ensure that the most hazardous chemicals - known as 'substances of very high concern' - and those used in the largest volumes are registered first.
Chemicals in the 'substances of very high concern' category include those:
- with the potential to cause cancer or mutation, or interfere with the body's reproductive function (CMRs)
- take a long time to break down, accumulate in the body and are toxic (PBTs)
- take a long time to break down and accumulate in the body (vPvBs) plus those that have serious and irreversible effects on humans and the environment - for example substances that disturb the body's hormone system
The European Chemicals Agency has set a November 2010 registration deadline for substances in quantities of 1,000 tonnes and above, as well as carcinogens, mutagens and substances toxic to reproduction above one tonne per year and substances classified as very toxic to aquatic organisms above 100 tonnes.
The Agency also calls for the progressive substitution of the most dangerous chemicals when suitable alternatives have been identified. "When fully up and running, the European Chemicals Agency would have the power under REACH to ban the use of a chemical in certain products or prohibit it completely," Au explains.
Business will be able to use 'substances of very high concern' only if they have authorisation from the European Chemicals Agency, which will only grant approval under specific conditions, and permission will have to be regularly renewed, thus encouraging companies to seek safer alternatives.
Au says this provision particularly applies to substances that cause cancer, infertility, genetic mutations or birth defects, and those which are persistent and accumulate in the environment.
"The authorisation system will require companies to switch progressively to safer alternatives where a suitable alternative exists," Au concludes.
"REACH is therefore one of the most wide-ranging and important pieces of EU legislation in recent years, with benefits outweighing the costs for producers and consumers alike."
WRITTEN BY CHRIS DAVIS
- REACH (Registration, Evaluation and Authorisation of Chemicals) is a new European Union legal directive that requires manufacturers and importers to generate data for all chemical substances produced or imported into the EU above one tonne per year.
- REACH requires the registration of approximately 30,000 chemical substances over the next 11 years
- manufacturers and importers must also identify appropriate risk management measures governing the chemicals they use and communicate them to the users
- the REACH administration and compliance requirements are the responsibility of the newly-established European Chemicals Agency
- companies using chemicals considered to be 'substances of very high concern' will be encouraged to develop or use safer alternatives