INSIGHT: A Reach registration time bomb is ticking - consultant

07 February 2011 17:59  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--Chemicals producers and formulators may complain mightily about the burden of Europe’s Reach chemicals control regulation but many of those based in the EU are on to a winner.

Non-EU companies especially are finding the legislation extremely difficult to navigate and costly. Some are now realising that their EU importers are non-compliant with the first stage of registration, the deadline for which passed on 30 November 2010.

More complex and potentially difficult supply-chain issues are expected to be revealed as registration deadlines are approached for substances sold on the EU in quantities greater than 100 tonnes/year (in 2013) and eventually 1 tonne/year (in 2018).

“A Reach registration time bomb awaits many non-EU companies (and consequently their EU customers) that think they're Reach-compliant just because they source Reach-registered substances from non-EU suppliers; the truth is they may actually be non-compliant,” says Chris Eacott of UK consultancy Stewardship Solutions.

Non-EU suppliers of formulations and some polymers are slowly beginning to realise that their supply chain is non-compliant with Reach even though they believed they were covered by the registrations made by the major chemical producers which supply them.

“In particular, sourcing a Reach-registered substance of non-EU origin is not enough to assure Reach compliance,” Eacott says.

“In the absence of an undertaking by the EU-based representative of the non-EU supplier to fully cover these indirect imports of the substance, the non-EU formulators and polymer manufacturers are obliged to register the same substance themselves, switch to sourcing from EU registered suppliers, or cease supplying to the EU altogether.  

“Although many EU chemical suppliers won’t admit it, or perhaps even realise it yet, EU companies are actually in a relatively favourable position because of Reach,” he adds.

Some non-EU companies have discovered that it can also be extremely expensive to gain access to the sort of data they need now to complete substance registrations they understood in the first place they did not have to make.

Overall single substance registration costs can range between €10,000 ($13,500) and €90,000 for a substance needing to be registered in the lowest 1-10 tonne/year band. One chemical industry-led consortium is said to be charging €75,000 for certain 1-10 tonne/year Letters of Access.

This is not just theory. Eacott works as an Only Representative (OR) for several non-EU formulators and polymer producers who have been caught out by the intricacies of the legislation.

Some believed that as they were selling a formulation containing a substance already registered on the EU market their supply chain was compliant under Reach.

Subsequently, however, they have discovered that the non-EU primary manufacturer’s registration does not automatically cover them and the use to which they are putting the substance.

In these cases, Eacott has had to explore alternative compliance strategies on behalf of his non-EU clients, including full registration in some cases. 

“Once companies finally understand that they are affected in this way under Reach, and depending on the response of the authorities (including the enforcement stance they adopt), this issue could finally blow up,” he believes.

Formulators particularly are finding that they could be required to register a large number of chemicals if they want to continue to serve the EU market.

The users of some toxic monomers are in a similar position, even though the imported polymer is non-toxic.

The first phase Reach registration deadline was for substances sold on the EU market in quantities greater than 1,000 tonnes/year and for certain types of toxic and environmentally persistent chemicals.

Eacott has discussed the issue with ORs and others in various supply chains and there is general agreement that it is a major problem.

The issue shows that the complexities of Reach are only starting to be revealed. Chemical producers and others believe that more stumbling blocks will become apparent over time.

Chemicals supply chains can be complex and involve many parties, some of whom know little about others in the chain. The exchange of meaningful health and safety data up and down these chains historically has been quite limited.

Instances of non-compliance will only be discovered as the relevant regulatory authorities in the 27 EU member states spring into action on the legislation, since the policing of Reach is up to them. And no-one yet really knows how tough they will be in enforcing the letter of the law.

For the moment, where there have been inadvertent failures, there is evidence of a willingness of at least some member state authorities to work with affected companies to fix the problem. This includes sanctioned late registration of relevant substances that missed the first registration deadline of 30 November 2010.

The first phase Reach registrations, however, largely involved the bigger chemical producers and the better known higher tonnage products.

Chemical producers, and others, are concerned that the next stage registrations will reveal more supply chain and data issues that will add to costs and complexity.

Reach implementation out to 2018, the date of the final 1 tonne/year Reach registration deadline, substance evaluation and ultimately authorisation will be a costly business. Industry giant BASF, for instance, reckons the legislation eventually will cost it between €500m and €550m.

The next phase processes have also been called a different kind of ball game in which the number of players will be enormous and the health and safety data sets very different. The burden of costs on small-producing companies but also on numerous others will be significant.

But Reach is already hitting some important exporters to EU markets very hard. And they are having to make some tough decisions about continuing to supply to the EU  or not.

Supplying Europe from Europe because of Reach is hard enough but selling into the EU has become tougher.

($1 = €0.74) 

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By: Nigel Davis
+44 20 8652 3214

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