New challenges as China REACH regulation matures

Understand how China REACH changes impact your company. China knows what works in global market supply chains and what doesn't. Do you? China's amendments to its 2003 new chemical substances environmental management regulation goes into force October 15, 2010. While the regulation community seeks harmonization with these types of regulations related to global markets and supply chains, the Chinese have learned quickly what works and what doesn't work from their engagement with U.S. and EU regulators. While rapidly maturing their regulations, the Chinese have incorporated some homegrown elements into their amendments. This article highlights some of the basic features of the new China amendments with a particular emphasis on what's new in China. Regulation scope The new China amendments (sometimes referred to as China REACH by outsiders) will regulate the activities of research, manufacture, importation and the processing and use of chemicals. The regulations are applicable in both the customs territory of China as well as in Chinese bonded and export processing zones. New chemical substances (defined as those not on the IECSC - inventory of existing chemical substances in China) that are registered in China will be issued a registration certificate containing risk control measures to protect human health and the environment. Downstream processors and users of registered new chemical substances will also need to fully implement these risk control measures as specified on the registration certificate. After a five year supervisory period, new chemical substance may be eligible to be placed onto the IECSC where the regulatory requirements for new chemical substances will then cease to apply. How will enforcement impact my company? Meanwhile, China is ramping up enforcement activities from two directions. As part of the registration approval process, China's ministry of environmental protection will develop supervisory protocols to be implemented by local environmental protection bureaus. The ministry will also inspect sites once every five years. In the event unregistered new chemical substances are identified, each agency has the authority to implement fines; to order corrective measures to be implemented, and to order activities to cease until registrations are completed and risks are assessed; classifications are determined, and risk control measures are defined for the new chemical substance. The regulated community will be required to file annual reports with the ministry. The ministry intends to be transparent by publishing information about applicants, registrations and exemptions on their public web site www.mep.gov.cn. The Chinese amendments do not specifically mention articles, except in the case where chemical substances intentionally released from articles, they will be subject to these regulations. The regulations also include a whistleblower provision which allows any institution or individual to notify in case of violations. Chemical classification Chemicals will be divided into two classification categories: general and hazardous. The hazardous category contains a subset of chemicals called key hazardous substances. To date, the regulatory guidance document has not been issued but it is likely the criteria for these classifications will be derived from a combination of key hazardous substances and REACH authorization. General chemical substances are those that are not deemed to be toxic to human health or to the environment. Hazardous substances will posses a toxic characteristic and key hazardous substances will include those having the capability to exert an adverse impact. It important to know, at least for key hazardous substances, that manufacturers and importers transferring new chemical substances to downstream processors and users will need to confirm their capabilities to implement designated risk control measures prior to shipping these chemical substances. Reports, reports, reports Annual reports will now be required to be submitted to the ministry of environmental protection detailing activities and volumes for the previous year. In addition to this, key hazardous substances will also need to report anticipated activities for the current year as well as an update to the ministry about the implementation status of risk control measures. Executives can anticipate the Chinese ministry and local environmental agencies will use this information during their site visits. Key hazardous substances will be registered for specific uses. When new uses are anticipated, new chemical registrations will be required. Key hazardous substances will also require that sites monitor, or estimate, exposures and emissions. If in-house capabilities do not exist, sites are required to use the services of a third-party. Finally, all shipments of key hazardous substances will be required to implement spill prevention measures and to have emergency response measures available in the event of an unplanned release. Exemptions, reduced requirements Certain categories of chemicals are completely exempt from registration provided they are regulated by another governmental agency in China. These include pharmaceuticals and veterinary products (active ingredients and formulated dosage products), pesticides, medicinal products, cosmetics and food additives. Corporate research and development can benefit from reduced requirements by filing a scientific research record to CRC-MEP (chemical registration center - ministry of environmental protection) for R&D volumes up to 100 kilograms / year and for samples sent to Chinese laboratories for testing. R&D volumes between 0.1 to 1 tonne per year qualify for a simplified notification (details forthcoming when the guidance document is issued). One tonne is 1 metric ton (1,000 kg). R&D activities conducted in pilot plants and in full-scale operations can utilize the simplified notification to qualify for a two year exemption for volumes up to 10 tons / year (20 tons total). One limitation for R&D chemicals is they cannot be sold into commercial markets. Commercial activities involving new chemical substances can also benefit from the simplified notification low volume exemption involving quantities less than 1 tonne per year. However, commercial activities generally require that two Chinese eco-toxicity tests (biodegradation and acute toxicity to fish) be performed in China. Special exemptions are available for intermediates and substances that are for ‘export-only', monomeric constituents within polymers with less than 2% content, and new chemical substances with volumes less than 1 tonne per year.  For these materials, no eco-testing is required. World helps educate Chinese companies The new amendments to the 2003 Chinese chemicals regulation utilizes many of the ideas of EU REACH, but they also incorporate some unique provisions specific to China. The biggest need for making this regulation a success in China is getting domestic companies in China onboard with understanding their obligations to comply with the new amendments. China anticipates foreign companies that utilize audit / assessment programs to qualify suppliers and third party manufacturers and foreign companies that utilize legal instruments (e.g., contracts, purchase order terms and conditions, master service agreement) as a means to gain supply chain assurance these processes will be instrumental in educating Chinese domestic companies of their regulatory responsibilities. VentureOutsource.com, March 2010