REACH. Main concerns resulting from the implementation of REACH. Within the Aerospace Defence and Security business VERSION 1.5

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1 REACH Main concerns resulting from the implementation of REACH Within the Aerospace Defence and Security business VERSION 1.5 This final document - version 1.5 issued on 16 May 2014 Cancels and replaces any previous version.

2 This document has been written by the ASD REACH Implementation Working Group thanks to the strong involvement of its members. With 28 member associations in 20 countries (Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey and the UK), ASD represents the aeronautics, space, defence and security industries of Europe. The total annual industry turnover amounts to some 163 billion euros and counts over 2,000 companies, 80,000 suppliers, many of which are SMEs. ASD represents the aeronautics, space, defence and security industries of Europe in all matters of common interest with the objective of promoting and supporting the competitive development of these sectors. ASD pursues joint industry actions which have to be dealt with on a European level or which concern issues of an agreed transnational nature, through generating common industry positions. This document contains information and recommendations which have been provided in good faith by the ASD Reach IWG, reflecting the best knowledge available from experts in their field. Companies have expressed their opinions for each subject raised; however, nothing in this document is binding, these views are not necessarily definitive but are opinions on each subject. ASD will not accept any liability regarding the content of this document or issues arising from its use. Updates tracking Version 1.5 : Withdrawal of part 3 Aerospace, defence and security business supply chain - disruption due to obsolescence ; Various adaptions to fit with current context Version 1.4: Change in part 4 (In the sub-part Support needed from Authorities : [...] their intention to incorporate them into updated versions of the candidate list) ; Various spelling mistakes Version 1.3: Various spelling mistakes Version 1.2: Front page note added regarding versions; Suppression of any reference to the involvement of companies/associations; Various spelling mistakes Version 1.1: Suppression of reference to hydrazine in part 2

3 EXECUTIVE SUMMARY The contribution of the Aeronautic, Space Defence and Security sector to the European economy and strategic defence capability is essential. This sector fully supports the need to improve both Environmental and Health protection and is committed to act accordingly. REACH, which stands for «Registration Evaluation, Authorisation and Restriction of Chemicals», is the European regulation which entered into force on 1st June 2007 with the purpose of managing all chemicals manufactured, imported or used in Europe. The cornerstone principles of REACH are: No registration, no market. All substances manufactured or imported >1 tonne per year at EU level must be registered over an 11-year period up until 2018; Evaluation of the hazardous properties of substances; Authorisation or restriction of uses for the most hazardous substances; Extension of the responsibility to the manufacturers and importers to assess the impact of chemicals; Obligation to declare the most toxic chemicals within products. It is expected that REACH will lead to: A significant reorganisation of the chemical supply chain; Additional and significant administrative and R&T costs. The Aeronautic, space and defence sector has the following particular issues: Very low volume of chemicals compared to domestic use and other industry sectors; Low production series and long production timelines for single platform and total production runs; International certification process (many change requests must be certified by Airworthiness Authorities); The need to keep the products containing SVHC in operational conditions over their long life cycle (>30 years); Supply chains which are both international and highly complex, holding stock for long periods of time, re-sale and re-use of second hand assets; Manufacture of highly complex articles; Some substances, including some SVHC s, are absolutely critical to ensure aircraft safety (e.g. chromates for anti-corrosion protection). It is expected that the consequences associated with the implementation of REACH will be significantly higher than for other sectors. Our sector concerns are: Business and supply chain disruption due to obsolescence cases that result from: o Non-registration of substances or non-coverage of use (See concern 1); o Non-authorisation of substance uses (See concern 2); Administration and flow of data to be exchanged throughout the supply chain, whilst ensuring compliance (See concern 3) Effective and consistent treatment for Defence and Security sector issues (See concern 4); Additional R&T costs, in particular linked to the development/qualification of alternatives and the adaptation of processes to match safety requirements (See concern 5).

4 RECOMMENDATIONS In addition to any activity undertaken at downstream user and supply chain levels, European Commission (EC), ECHA, the European Aviation Safety Agency (EASA) and Member States Competent Authorities (MSCA) could help to mitigate the risks associated with the above concerns by: Improving communication, reliability and transparency so as to anticipate and where possible prevent supply chain disruptions (ECHA), Ensuring longer term stability of the Candidate List of Substances for Authorisation (ECHA) Supporting the Aeronautic industry where authorisations are required as a result of the specific constraints and heavy certification process (EASA) Ensuring consistency within the various Member States by implementing mandatory REACH requirements, with particular regards to the disclosure of substances in articles, Supporting the Industry in developing alternatives by setting appropriate frameworks (ECHA) and providing adequate funding for research and re-qualification (EC, ESA, MSCA) Ensuring flexibility necessary to overcome any major potential supply chain breakage (EC, EDAMSCA). Details are provided within the following dedicated pages.

5 1 Aeronautic, space, defence and security-business and supply chain - disruption due to non-registration of substances or non-coverage of uses Description of the issue: The supply chain for the Aerospace sector is both complex and very competitive. Due to this, it is impossible to know whether manufacturers or importers are registering, and covering our uses. The relationship between potential registrants, the supply chain and the end user is long and complex and this creates a lack of visibility as to continued supply. This issue is made more difficult where SME s are involved due to their relative unawareness of REACH. The ability of the end user to be assured of continued supply and to be able to provide commercial support if needed is severely hindered by this lack of visibility. Due to product complexity and rigorous safety standards, the Aeronautic, space, Defence and Security industry cannot adapt supply chains and products easily or quickly to mitigate supply chain disruption. As the Aerospace sector is only a minor actor within the chemical market place, it has minimal leverage on the chemical supply chain decision making process. This issue therefore represents a significant obsolescence and business risk to the Sector. Downstream users and Supply Chain initiatives: Agree and implement best practices for flowing information on formulations, substance content and uses along the supply chain. Seek assurance of supply continuity on a medium/long term basis. Suppliers should communicate as early as possible along the supply chain to identify any substance at risk of non-registration. Continue cross-sectors exchanges. Share outcomes with ECHA. Support needed from Authorities: Action is needed to improve the information flow within the supply chain, to facilitate contact between potential registrants and downstream users, and to mitigate unforeseen supply chain loss. From ECHA: To extend ECHA web-site capability to allow Downstream Users (formulators and substance users such as article manufacturers) and potential registrants to make contact with each other; To, in a timely manner, disclose outcomes and decisions from SIEFs; From European Commission: To update and adopt a non-registration mitigation proposal such as proposed by the European Commission in 2011 (CARACAL Document CA/39/2011) to allow recovery of supply chains broken by non-registration. The situation which could lead to obsolescence issues can then be addressed on a case by case basis. It is recognised that such a mechanism would require the cooperation of the Member States Competent Authorities.

6 2 Aeronautic, space, defence and security business supply chain - disruption due to non-authorised substance uses Description of the issue: A range of critical substances have sunset dates (date from which trade and use are prohibited-see precise definition in glossary page 9) in Annex XIV of REACH. For these substances, alternatives have to be found months prior to their sunset date and if alternatives are not available in time, an authorisation has to be requested and granted. Many of these substances have no alternatives available that can satisfy the requirements for airworthiness and safety within the imposed timeframe. Their typically long life cycle is > 30 years. Where potential alternatives do exist, the validation of these alternatives used in processes and in products may take years to ensure that they satisfy aircraft safety requirements and thus obtain certification, or that they are qualified for risk-free implementation in space programmes. It is also worth noting that the preparation of authorisation dossiers will require extensive and sometimes sensitive communication and coordination between downstream users and the very complex supply chain (more than 10 levels). This will include SME s, many of which cannot afford the corresponding cost. It will take time to identify all of the suppliers, the uses of substances subject to authorisation, and the socio-economic impacts of any potential changes. Consequently, in some cases it could be extremely challenging for the sector to have the necessary dossiers ready in time (several months before the Latest Application date). For substances used in very small quantities, but performing critical functions in specific equipment, the cost of authorisation could be too high with regard to the products/markets considered, questioning the economic viability of the authorisation process. An Authorisation application from an OEM will only cover its own use and its immediate suppliers right to supply the substance but not the supplier s uses. To cover the entire supply chain, authorisation application should be done by the substance manufacturer, importer or formulator. Downstream users and Supply Chain initiatives: Establish guidance on the authorisation process (including integration of Airworthiness requirement impacts on substitute available). Develop common approach per substance (including strategy regarding authorisation application who will apply?). Set up or participate in relevant consortia as appropriate. Support needed from Authorities: From European Commission, ESA, ECHA and Member States Competent Authorities: Consider other schemes in accordance with an appropriate Risk Management Option Analysis (such as targeted restrictions), incorporating Aeronautic, space and Defence sector specificities. Ensure there is adequate time given (latest application date and sunset date) to organise Authorisation applications in the context of complex supply chains. Aid awareness of Authorisation consortia for all supply chain actors, and especially SME s, for example through dissemination of known consortia and contacts on the ECHA web-site. Take into account airworthiness requirements as detailed in the EASA/ECHA paper in opinionforming, relating to the analysis of alternatives and economic impact as presented in Aerospace and Defence sector Authorisation applications <hyperlink>. Take into account the entire product lifecycle in setting Authorisation review periods for flight safety critical substances.

7 Put in place a fast-track Authorisation process for re-submitted applications. Support identification and endorsement of existing cases of exemption from authorisation (e.g. Hydrazine in space programmes). 3 Aeronautic, space, defence and security business and supply chain - administrative burden due to communication obligations for substances in articles Description of the issue: Traceability of information within the Aerospace industry is well developed, but it is not fully adapted to the new REACH requirements. REACH is creating a new need of data exchange both along the supply-chain and inside each company, for which the existing rules, processes and tools within the sector have to be further refined. There are many requirements (e.g. airworthiness) to take into account as well as a large variety of information systems used by companies. Our ability to provide information to customers and stakeholders as per REACH and other existing legal requirements is dependent upon our capability to upgrade our substances tracking systems and upon an efficient and effective gathering of information along our complex supply chain down to the end user. Moreover the following increases the difficulty of this: the continuous evolution of the list of substances (candidate list) that need to be tracked, some dissenting Members States position (rule Once an Article, Always an Article see glossary), the existence of multiple requirements and formats to report information on substances in products Downstream users and supply chain initiatives: Increase awareness on REACH in the supply chain and develop global standards for chemical reporting (e.g. standard list of declarable substances...) in the supply chain via IAEG, addressing IP rights and export control issues. Support needed from Authorities: From European Commission/ECHA: Seek greater stability in the Candidate List of Substances of Very High Concern, reducing the frequency of updates and with earlier notice of potential additions, thereby reducing the bureaucratic burden throughout the global supply chain. From Member States Competent Authorities: Ensure a common understanding is agreed with respect to the rule Once an article always an article» and its practicality of implementation.

8 4 Aeronautic, space, defence and security business and supply chain - lack of inter-state consistency and recognition of defence exemptions Description of the issue: REACH allows Member States to exempt defence equipment manufacturers and suppliers from some aspects of REACH, in particular from sharing data with the European Chemicals Agency, however: There is no common system for defence exemptions across member states, leading to major difficulties in multi-national partnership programs and impacting trade and defence cooperation, both within the EU and with non-european countries. Also, compliance with REACH can conflict with compliance with technology Export Controls in both military and civil aerospace applications, including under US law. All these potential issues affect multinational partnership programmes. The ability to source Defence products or their components in other EU member states is a major issue as defence technology sharing cannot be trusted without a common framework for inter-state recognition of exemptions. The combination of the above has created significant uncertainty within the Defence sector. Currently the EDA is not seen as the lead EU authority for REACH defence issues, yet it is the natural EU institution for co-ordination of Defence issues and has produced a code of conduct on REACH Defence Exemptions Support needed from Authorities: From European Commission and ECHA (including its Members States Committee): Support the EDA s work in developing a Code of Conduct on REACH Defence Exemptions, which can form the basis of a mutual recognition system to be used by member states to recognise other states defence exemptions.

9 5 Aeronautic, space, defence and security business and supply chain - additional costs for development of non-toxic alternatives Description of the issue: Critical substance substitutions are going to be one of the major challenges that the sector will have to address. Indeed, where a substance will have to be substituted, finding alternative solutions on new products/processes or on products/processes already in service will be particularly challenging. This is primarily because of EASA safety requirements imposed on the Aerospace sector, but also because the sector must remain economically competitive. Downstream users and Supply Chain initiatives: Share priorities for R&D, and propose areas of common interest for EU Framework potential funding. Voluntarily commit towards the development of standardised less hazardous alternatives, where possible, and their implementation within the supply chain. Regular exchanges of information through the supply chain on substitution planning and achievement Support needed from Authorities: From ECHA: In order to avoid duplication of work and to guarantee efficiency in finding alternatives, adequate platforms are needed to facilitate the exchange of views between concerned industries so that the best technical and economical solutions can be adopted. From European Commission and Member States: In order to maintain the European industry competitiveness and a fair and level playing field, dedicated funding must be identified and secured. This should be included in the Common Strategic Framework so as to both develop and implement relevant innovative solutions. To aspire to a fair and level playing field, a worldwide extension of a REACH type regulation must be sought through adoption of common principles.

10 GLOSSARY The terms used within this document shall be understood as per the definitions incorporated into the REACH regulation n 1907/2006 Chapter 2 and as provided within the ECHA glossary EASA: European Aviation Safety Agency ECHA: European Chemicals Agency ELV: End of Life Vehicle (directive) ESA: European Space Agency IAEG: The International Aerospace Environmental Group is an association formed by major aerospace companies which is dedicated to minimising the impact of global laws and regulations related to health and environmental issues for the worldwide supply chain. IP: Intellectual Property Latest application date: Annex XIV (list of substances subject to authorisation) will specify for each substance included in that Annex a date or dates (called «the latest application date») at least 18 months before the sunset date(s) by which applications must be received if the applicant wishes to continue to use the substance or place it on the market for certain uses after the sunset date(s); these continued uses shall be allowed after the sunset date until a decision on the application for authorisation is taken MSCA: Member States Competent Authorities Once an article always an article: Several Member States regard articles within a «complex» article as a collection of several individual articles within an article. Restriction: Any condition for/prohibition of the manufacture, use or placing on the market of a substance. The substances restricted under REACH and the conditions of their restrictions are included in Annex XVII of the Regulation. SDS: Safety Data Sheet SIEF: Substance Information Exchange Forum SME: Small and Medium Enterprises Sunset date: Annex XIV (list of substances subject to authorisation) will specify for each substance included in that Annex the date (called «the sunset date») from which the placing on the market and the use of that substance shall be prohibited unless an exemption applies, an authorisation is granted or an authorisation application has been submitted before the application date specified in Annex XIV, although the Commission decision on the application for authorisation has not yet been taken. SVHC: Substance of Very High Concern