Impact of the REACH Regulation (EC) n 1907/2006 Analysis of the consequences of REACH on the supply chain from the exporter s point of view. www.tuv.com/reach
Introduction The REACH regulation came into force in 2007 and after two closed registrations deadlines in December 2010 and May 2013, a clear picture of the consequences of the legal requirements for European companies and non-european supply chains can now be drafted. This response is not entirely correct and non-european companies should be aware that there are advantages to handling EU REACH directly and understanding the potential consequences that may impact European business. Both small and medium European enterprises consider EU REACH as the most burdensome EU law ever enacted. Many EU companies try to convince non-european suppliers to take responsibility for the registration and often mislead them about the regulation requirements. A common response to the regulation from non-european suppliers is As REACH is a European regulation, European companies should deal with the corresponding legal requirements. This White Paper provides an analysis of the consequences of REACH on the supply chain from the exporter s point of view and gives an overview about the general expectations from European importers. This document also provides an analysis of the risks for non-european companies and a better understanding of the REACH requirements, especially regarding business opportunities in the European market. June 1st 2007 Entry into force of REACH 1.5 years Pre-registration 3.5 years November 30th 2010 CMR 1 + 2 > 1 t/a R50/53 > 100 t/a and subs > 1,000 t/a May 31th 2013 Subs > 100 t/a May 31th 2018 Subs > 1 t/a 6 years 11 years 2008 2009 2010 2011 2012 2013 2014 2018 Registration timeline for improvement of REACH regulations What are the goals of REACH? Ensure a high level of protection for human health and the environment. Identify and minimize the risks of chemicals. Create transparency of the properties of chemical substances for the public. Promote alternative methods for the assessment of hazards of substances, limiting animal testing.
What is REACH? REACH is a European Community (EC) safety and environmental regulation that deals with the registration, evaluation, authorization and restriction of chemical substances. Effective since the first of June 2007, REACH requires that manufacturers and importers register all substances they produced in and/or imported to the European Union in quantities 1 ton per year with the Helsinki-based European Chemicals Agency (ECHA). Even though companies view REACH as a chemicals regulation, this law applies to plastics and metal products as well as articles imported into the EU. In other words, whatever the product exported to EU, it must be compliant with the REACH regulation. the non-european company in the event of an inspection by national competent authorities. One important fact is that 23 % of registrations performed by 2013 were submitted by Only Representatives. This high percentage illustrates that almost a quarter of the registrations thus far have been submitted by non-european companies. The OR option does have its advantages and non-european companies are capitalizing. When performing the registration procedure with higher tonnages of a chemical substance, more detailed information has to be collected for the registration dossier. The main aim of REACH is to assess the real hazards of chemicals. European legal entities are required to submit REACH dossiers. Non-European companies have two options when dealing with the European regulation. They can either use their own European legal entity or assign a European legal entity as a so called Only Representative (OR). The OR entity option assumes all tasks and duties according to the REACH regulation for its customers producing in or exporting to the European market. An important and critical point for the Only Representative is their obligation to have up-to-date information about the European importers. Accurate product quantities must be provided to the OR and European compliant material safety data sheets are critical. Many third parties providing the Only Representative function often overlook the incumbent legal obligations and are therefore not able to prove REACH compliance for Studies required are: physio-chemicals tests toxicological studies ecotoxicological studies If information regarding use is unavailable, many studies will have to be performed and the registration cost will increase accordingly. In fact, one must consider that for a substance in the highest tonnage band ( 1,000 Mt per year) without available information, studies cost can easily reach 1.5 million Euros. Even if companies registering the same substance share the costs, registration under REACH remains a big challenge for European companies, not only regarding the required financial investment but also the necessary knowledge and time needed to be successfully compliant with the EU REACH regulation. Manufacturers` obligations Importers` obligations Duty of REACH registration Duty of communication Communication of safe use Duty to communicate information to customer If necessary: REACH authorization Duty of REACH registration Duty of communication Communication of safe use If necessary: REACH authorization Notification (SVHC in articles) Duty of information (SVHC in articles) Distributers` obligations Downstream users` obligations Duty to communicate information down the supply chain Transfer to safety data sheets respective of information for safe use (downstream) Transfer of use conditions (upstream) Communication of usage Application of information from MSDS Preparation of chemical safety report for special uses
Expectation from the European importers The legal requirement of the REACH regulation applies to substances (as such or contained in preparation), meaning that European importers considering registration need detailed information about the composition of the imported products. Without this information, European importers cannot be compliant to the REACH regulation. In many cases, substance/preparation information is considered as highly sensitive. Non-European suppliers can keep this information confidential via the use of an OR and may also choose to assume the registration obligation. The OR option will protect proprietary products, not burden importers with meeting the REACH requirements and provide a REACH compliant product that EU importers desire. A similar problem occurs with Material Safety Data Sheets (MSDS). In fact, the European Commission has adopted the so called CLP regulation n 1272/2008. The CLP regulation encompasses the classification, labeling and packaging of chemicals substances and mixtures according to the recommendations made by the United Nations for the globally harmonized system. Product MSDS s shall be compliant with both regulations, REACH and CLP. Once again, without composition information, European companies are not able to develop fully-compliant MSDS and could face potentially high penalties from European competent authorities in case of inspections. What industries are affected by REACH? Chemical industry Plastics industry Metal industry Paint, coating and ink industry Drapery and leather industry Plastics processing Cosmetics industry Petroleum processing Printing industry Furniture industry Sports equipment industry Toys industry Recycling industry Electrical engineering industry Fine mechanics industry Optics industry Engine and plant production industry Impact on the non-european supply chains Due to the general lack of awareness of many non-european companies, some critical and essential consequences of the REACH obligations for their importers could lead to critical situations for their business. In fact, if the registration obligation is passed on to the importers, each of those importers should be REACH compliant. In regards to future business, each new potential customer must be REACH compliant before initial importing of corresponding products. Legal requirements could also lead to European buyers extending decision processes and possibly result in lost contracts. Potential buyers will choose an already REACH compliant product rather than try to meet REACH regulation requirements. However, non-european companies can create a win-win situation by taking over REACH compliance to relieve European importers of registration responsibilities and build longer and stronger relationships with European customers. Communication of the REACH regulation within the supply chain is becoming increasingly important and even transgressing communication between non-european and European companies. In fact, more and more companies (mainly formulators) located in non-european countries are requiring EU REACH compliance from their raw material suppliers in order to guarantee the same to their own customers. One important point to consider is that registrations performed by European importers refer only to the importer s name, regardless of the number and location of suppliers involved. In this situation, European importers have a higher flexibility regarding the supply of a substance and therefore less business opportunities for a REACH noncompliant supplier. This methodology can be observed specifically in countries where the supply chain is aware of REACH and is particularly evident in countries setting up short-term regulations similar to REACH. Considered as the most complex but also the most comprehensive chemicals regulation in the world, many countries would like to adopt such a regulation and add similar local laws.
The Chemicals management will also be harmonized little by little and companies knowledgeable and experienced in European REACH would definitely be more confident with REACH-like regulations. One of the main principles of REACH is no data, no market ; requiring EU companies to be REACH compliant in every case, as products can no longer be imported without a registration number and REACH inspections are already being conducted on a large scale by European competent authorities and customs officers in all European countries. Due to the financial and general resources required for REACH compliance, a growing number of European companies consider REACH as an important determining factor during the acquisition process. Therefore, REACH compliant products have more opportunity in the European market and many non- European suppliers use the REACH compliance of their products as a selling point. Therefore, the European REACH regulation should not only be considered as legal requirements to be fulfilled by European customers, but as an integral part of strategic decisions affecting future business opportunities in Europe. All non-european companies should therefore at least analyze the situation of their products under REACH and define the consequences for their own business. TÜV Rheinland Group supports companies worldwide as an external and neutral partner to define their obligations, chances and risks under REACH and to achieve REACH compliance for their products. Our expertise your benefit Backed by the professional REACH services of TÜV Rheinland you can: Secure access to the European market by ensuring the mandatory registration of your product s chemical substances. Rely on our qualified and trusted REACH registration experts. Achieve REACH compliance cost-effectively and reliably. Minimize your risk of liability with documented safety standards. Boost confidence in the quality of your products and services. Use your financial and human resources more efficiently. Benefit from the one-stop-shop of TÜV Rheinland services. About TÜV Rheinland: Founded more than 140 years ago, TÜV Rheinland is a global leader independent inspection services, ensuring quality and safety for people, the environment, and technology in nearly all aspects of life. As an experienced partner, TÜV Rheinland offers professional REACH services for the efficient REACH registration of products. Our international network of REACH consultants, supported by our international competence center Luxcontrol S.A., can assist companies at each stage, providing consultancy and testing for manufacturers, distributors, importers and exporters on all requirements for successful REACH registration. Your contact: TÜV Rheinland Group Industrial Services is@tuv.com www.tuv.com/reach