1 Chemistry making a world of difference European Chemicals Policy Review EU Chemicals Policy Review REACH – Industry View CPCIA Seminar on REACH Beijing, 5-7 September 2004 Dr Uta Jensen-Korte, Director Chemicals Policy/Regulatory Affairs

2  Background  Challenges  Suggestions for improvement  Business Impact  Trade Aspects Chemicals Policy - REACH

3 Background and history Objective of current EU Chemicals Legislation  High level of protection to man and environment  Prevention of barriers to single European market

4 History of EU Chemicals Control Legislation Notification of new substances 79/83/EEC - 6th Amendment 92/32/EEC - 7th Amendment Restriction on Marketing and Use: 76/769/EEC Risk assessment: 93/67EEC (new subst) Reg 793/93 (existing subst) Revision Hazard assessment: 67/548/EEC Classification, packaging & labelling of Dangerous Substances

5 EU Chemicals Policy Review Co-decision process & timing New Chemical Policy in Force: ? Opinion Commission Final Legislative Acts Conciliation Process Development of the White Paper Feb 2001 White Paper Feb Stakeholder Consultation 2 April 2001 Council Common Position Parliament’s 1st Reading 2005? Parliament’s 2st Reading Directly applicable in Member States Council Conclusions Parliament’s Opinion April –Nov Legislative Proposals October 2003 Proposal DG ENV DG ENT April 2003 Internet Consultation May-July 2003 Proposal DG ENV DG ENT September 2003 Interservice Process Commission Interservice Process Commission

6 Chemicals policy review Proposal for a Regulation Commission Proposal for a Regulation on REACH COM(2003) 644 (29 October 2003) A single system for new and existing manuf./import. substances R egistration substances > 1t/y/manuf.import. 30,000 E valuation substances > 100t/y and of “suspicion” 5,000 A uthorisation of substances of “very high concern” 1,500 CH emicals

7 Main Features of REACH A single system for new (non-phase-in) and existing (phase-in) manufactured/ imported substances ”on their own”, in preparations or in articles  Legal basis Article 95 – ensures single EU market  Pre-registration: data sharing and avoidance of unnecessary testing  Registration of substances of 1 ton or more per M/I/year  Information in the supply chain; downstream users  Evaluation of dossiers by Member States  Authorisation for substances of very high concern  Restrictions – the safety net Agency to manage the system

8 Selected features of today’s and the future framework *) *) according to the COM proposal in futuretoday responsibility mainly the regulator mainly industry scope pre-market pre-manufacturing registration & testing requirements new substances ≥ 10 kg/a ) ≥ 1 t/a for all substances existing subst. none ) tailored for higher volumes new & existing subst. C & L (mktg.) C & L all exemptions new substances forflexibility for R&D subst. & R & Dintermediates, polymers restriction mktg. & use (76/769) manuf., mktg. & use, POPs authorisation none for CMRs cat 1&2, PBT, vPvB

9  Background  Challenges  Suggestions for improvement  Business Impact  Trade Aspects Chemicals Policy - REACH

10 Chemical industry view on CP The chemical industry continues to support the aim of developing a new chemicals regulatory system. We support  the overall political objective  the importance to ensure the protection of human health and environment However, even with the improvements, the system will not achieve its goals. It will have a negative impact on the competitiveness of the European chemical industry in the global market, its contribution to the economic wellbeing of the EU and its ability to finance innovation.

11 REACH - challenges Present achievements – existing law  Classification and Labelling (approx in 30 years)  New Substances Notification (approx in 20 years)  ICCA HPV (210 since 2000)

12 REACH - challenges The challenge for chemical industry  assess (including data generation)  document (Chemical Safety Report)  register (together with other producers and downstream users)  communicate (via Safety Data Sheet) 30,000 substances in 11 years

13 Key elements to improve REACH  Rationalise the Scope of REACH  Prioritisation of substances to be based on risk (including use & exposure) and requirements to be proportionate  Authorisation - Decisions must be based on sound science  Central Agency  Efficiency – a straight forward approach is needed, not “ping-pong” between different authorities  Must have full responsibility for all aspects of the management of the system

14  Background  Challenges  Suggestions for improvement  Business Impact  Trade Aspects Chemicals Policy - REACH

15 Chemical industry – what is at stake The European Chemical Industry  employs 1.7 million people directly, several millions more indirectly  EU’s economy is heavily reliant on the health and vitality of the chemical industry  but: EU share of global output reduced from 32% to 28% in a decade – success cannot be taken for granted  Need for coherent industrial policy: to remain competitive and innovative A workable and efficient chemicals management system is one of the essential pre-conditions for maintaining the competitiveness of the EU chemical industry and for ensuring a high level of protection of human health and the environment

16 Effects are limited only to EU chemicals industry  Chemical industry supplies virtually all sectors of the economy  Effects cascade down to users Business impact - First misconception

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18 Costs are negligible  20% of the total chemical industry will carry over 80% of the costs of testing and administration  The main companies affected are in the fine and speciality sector (SMEs) Business Impact – Second misconception

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20 Chemical industry is made up of big players who can easily bear the costs and administrative Burden  94% of all chemical companies employ fewer than 250 people and account for 27% of employment Business Impact - Third misconception

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22 Business impact is only a matter of costs  % of substances produced in quantities in the tonnage range t per year is at risk  Formulators must re-examine and re- qualify 20% to 100% of their formulations Business Impact - Fourth misconception

23 Chemistry utilities Polyamides Fluorinates Sulphurs Pigments Resins Additives Solvents Brominated products Intermediates Fine pharma chemistry Electronic specialities Fine cosmetics chemistry Specialities Source: Mercer segement analyses Mercer Management Consulting © 2004 Polyamides Fluorinates Sulphurs Pigments Resins Additives Solvents Brominated products Fine pharma chemistry Electronic specialities Fine cosmetics chemistry Chemistry utilities Intermediates Specialities Full cost in % Turnover 10 to 20% 10 to 40% Percentage of substance eliminations > 50% 7-15% 5% 20-30% 15-20% Impact of the cost of registration Estimate of stopping the commercialisation of substances 10-40% Proposal 29/10/2003 White Paper The most affected sectors will stop producing 10% to 30% of substances by 2012

Sources: Mercer studies of pilot companies Mercer Management Consulting © 2004 Disappearance of the product supply upstream Need for reformulation of the portfolio 10-20%30-60%Cosmetics 10-40% % Electronics Additives: % Pigments: 20% Resins: 15-20% Solvents: 5% Decorative paints: 15-20% Industrial paints: % Paints 20-30% Compounds: 20 to 50% Cable industry: % Plastic additives Impact on the cost structure (Full cost in % turnover) Theoretically 15 to 40% 9% after reduction of the portfolio 1-2% Formulators must reexamine and re-qualify 20% to 100% of their formulations 24

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26 REACH will promote innovation  Short term - resources devoted to registration and/or reformulation  Long term - innovation in new uses of existing substances hampered  Reduced investment Business Impact - Fifth misconception

– 180 bn Euro Estimates of total economic costs of REACH

28  Background  Challenges  Suggestions for improvement  Business Impact  Trade Aspects Chemicals Policy - REACH

29 Trade Aspects  China is the second largest trade partner of the EU-25, representing -4,9% of EU-25 exports (40.9 bn euro) -12.0% of EU imports (105.0 bn euro)

30 Trade Aspects 1.The EU Chemicals industry is the third Leading manufacturing industry accounting for nearly 10% of the total exports (Source : WTO Report) Non-electric machinery 28% Office and telecommunication equipment 18% Overall Chemicals 10% Electric machinery & apparatus 9% Automotive products 8% 2.EU Chemical Imports from China represent 4% of the total imports Office and telecommunication equipment 24% Clothing 13% Electric machinery & apparatus 10% Overall Chemicals 4% Textile 3%

31 Trade Aspects 1.EU chemical exports to China amount to 3485 bn euro and imports from China to 3650 bn euro (Data 2003) 2.EU chemical exports to China are roughly split as follows: Organics 29%, Plastics (18%), Pharmaceuticals (14%) Specialties (14%), Paints (11%), Inorganics (11%) Soaps and detergents (4%) and Perfumes and Cosmetics (4%) 3.EU Chemical Imports from China are split as follows Organics 47% Specialties 12% Inorganics 9% Paints 7% Plastics 6% Perfumes and Cosmetics 5% Soaps and Detergents 5% Pharmaceuticals 5%

32 Trade Aspects 1.EU Chemical industry is generating a trade deficit of € 165 million 2.Exports to China are growing by 8.7% on average while imports from China are considerably growing by 14% ( ) 3.The Chemical sectors generating a trade deficit for the EU are roughly split as follows : (€ Million) Organics Inorganics Perfumes and Cosmetics - 95 Man-made Fibres -56 Soaps and detergents -51

33 REACH requirements apply to manufacturers and Importers  With impact on global chemicals trade, effects might differ  Sometimes advantages for EU manufacturer, e.g. preparations  Sometimes advantages for third country manufacturer, e.g. articles, if no release, production of speciality and fine chemicals for non-EU markets Trade Aspects

34 REACH must be improved to make it work and to ensure level playing field in global trade! Conclusion

35 EU Chemicals Policy Review Co-decision process & timing New Chemical Policy in Force: ? Opinion Commission Final Legislative Acts Conciliation Process Development of the White Paper Feb 2001 White Paper Feb Stakeholder Consultation 2 April 2001 Council Common Position Parliament’s 1st Reading 2005? Parliament’s 2st Reading Directly applicable in Member States Council Conclusions Parliament’s Opinion April –Nov Legislative Proposals October 2003 Proposal DG ENV DG ENT April 2003 Internet Consultation May-July 2003 Proposal DG ENV DG ENT September 2003 Interservice Process Commission Interservice Process Commission

36  mpol/whitepaper/reach.htm       http//ecb.jrc.it  REACH: More info – useful websites

BACK-UP SLIDES

38 Registration process*: Manufacturer / Importer 1.Prepare and submit pre-registration 18 month before phase-in deadline (Art. 26). 3.SIEF shall be inquired for animal tests (Art. 28); negotiate shared use of studies; form consortia (Art. 10) etc. 4.Prepare and submit registration to the Agency (Art ). 7.Submit required further information to the Member State with a copy to the Agency. 8.  In the absence of any indication to the contrary from the Agency the substance may be manufactured or imported 3 weeks after RD (Art. 19(1)). In case of incomplete registration 3 weeks after receipt of Member State of the further information (Art. 19(2)). Duties to keep the registration up to date are given by Art. 20. European Chemicals Agency 2.Inclusion into the database “Substance Information Exchange Forum”, SIEF (Art. 27). 5.Communicate registration number, registration date (RD) to the registrant (Art. 18(1)). 6.Perform completeness check without quality assessment (Art. 18(2)). a) If registration is incomplete, requests further information from the registrant. b)  Rejects registration if registrant fails to complete the registration within a deadline 9.Agency communicates the registration dossier, number, date, and the result of the complete- ness check to the Member State (Art. 18(3)) Member State within which the manufacture takes place or the importer is established (Art. 18 (3))  Evaluation test proposals (Art. 39)  Compliance Check of registration (Art. 40)  Substance Evaluation (Art. 43a) * Flow-Chart shows the procedure for phase-in substances. Some separate rules apply according to Art. 24 and 25 for non-phase-in-substances.

39 Member States (MS) 1. Prepares draft decision for test proposals, compliance check or substance evaluation and communicates it to the registrants (Art 48 (1)) 3. Notifies draft position to the Agency specifying how comments have been taken into account (Art. 49 (1)) Commission 11. Prepares “Draft Decision” (Art. 49 (7)). Registrant 2. Submits comments on draft decisions within 30 d (Art. 49 (1)). 8. Comments on amendments within 30 d (Art. 49 (5)). European Chemicals Agency (ECA) 4. Circulates draft decision to other MS (Art. 49 (1)) 5. Possibility for MS and Agency to propose amendments to the evaluating MS (Art. 49 (2)).. 6. If no suggestions are submitted the decision is notified (Art. 49 (3)). 7. If proposals for amendments are submitted, the draft decision will be discussed in the Member State Committee. Any amendment shall be communicated to the registrants for comments (Art. 49 (4;5)). 9. If the Member State Committee reaches an unanimous agreement, the MS shall take its decision accordingly (Art. 49 (6)). 10. If the Member State Committee fails to reach a unanimous agreement, the draft opinion is transferred to the Commission (Art. 49 (6)). Committee (Art. 130 (2)) 12. Final decision on evaluation Evaluation process:

40 Member State A’) Member States can identify substances of “an equivalent level of concern” via a special procedure for inclusion in Annex XIII (Art. 56). Commission B) Prepares draft opinion for inclusion in Annex XIII (Art. 55) Prepares “Draft Authorisation Decision” (Art. 61(8)). Industry (“manufacturer(s), importer(s), downstream user(s)”) 1. Application for an Authorisation shall be made to the Agency (Art. 59(1)). 5. Possibility to comment on opinion (Art. 61(5)). European Chemicals Agency (ECA) A) Proposes priority substances to be included in Annex XIII “substances subject to authorisation” (Art.55(3)) Acknowledges receipt. Prepares opinion including risk assessment and socio-economic aspects (Art. 61(1)). 3. Publishes information on the internet with possibility for third parties to submit information on alternatives. 4. Sends opinion to the applicant with the possibility to comment (Art. 61(5)). 6. Considers the comments and adopts final opinion (Art. 61(5)). 7. Sends opinion to the Commission and Member States (Art. 61(5)). Publication of non-confidential parts on web-site (Art. 61(6)). Committee (Art. 130(3)) C) Decision on inclusion of substances on Annex XIII (Art. 55) Final decision on authorisation Authorisation (Inclusion in Annex XIII (A-C) / Authorisation process (1-9)):

41 Restriction process: Member State 1b.Considers a substance to pose risk to human health and environment; prepares a Dossier which conforms to the requirements of Annex XIV; submits dossier to the Agency in the format outlined in Annex XIV (Art. 66(2)a). Commission 1a. Asks ECA to prepare a Dossier (Art. 66(1)). 8. Prepares Draft-Amendment for Annex XVI (Art. 70). “interested Parties” 4. give comments on dossier and suggested restrictions / submit socio-economic Analysis (Art. 66(3)). 6. Comment on socio-economic opinion (Art. 68(1)). Committee (Art. 130(3)) representatives of MS chaired by Com. 9. Decision about restrictions. European Chemicals Agency (ECA) 2b. Conformity check of Member State dossier by RA- and SEA-rapporteur (Art. 66(2)b) 3. Makes publicly available on its web-site all dossiers conforming with Annex XIV and invites all “interested parties” for comments (Art. 66(3)). 7. Submits Committee opinions to Commission / Publishes opinions on website (Art. 69). Committee for Risk Assessment: 5. RA- rapporteur formulates opinion on restrictions; Committee adopts opinion (Art. 67). Committee for socio-economic Analysis: 5. SEA-rapporteur formulates opinion on s-e Analysis; publication on the website with possibility to comment; Committee adopts opinion (Art. 68).