1 REACH Department of Defense Briefing July 16, 2008

2 Agenda How the automotive industry is addressing REACH REACH impacts for military equipment What can be done to protect DoD capabilities

3 EU Chemicals-in-Products Regulations All Substances 30,000+ Substances REACH (2007) Increasing Complexity, Cost and Level of Information Divulged PbHgCdCr +6 ELV (2003) PBBPBDE RoHS (2006)

4 International Material Data System (IMDS) –Developed in 2000 in response to EU’s End of Life Vehicles Directive –130,000+ users, secure transfer of confidential chemical substance information for vehicular components –Automotive industry may use IMDS to track and manage SVHCs, but will not solve all problems

5 Other tools and processes are being developed AIAG has established a collaborative relationship with global REACH Task Force and trained 750 suppliers in Detroit -- Supplier risk management methodology (Plan, Assess, Handle, Monitor, Document..) being established. Risk factors include –Small market –Small supplier capacity –Complex supply chain –Foreign headquarters deciding REACH strategy –Product contains SVHC

6 REACH Impacts for DoD Same risks from automotive as for other industries Increased costs Decreased availability of parts and materials Product delivery delays Alternatives meet military specs?

7 REACH Impacts for DoD (cont’d) OEMs are currently specifying materials and parts for 2012 products, may not be able to remove banned substances (SVHCs) in time Generally a 3-5 year lead time needed for design Testing and qualifying for military specs may take longer in some cases Preliminary list of SVHCs (16 proposed per ECHA released June 30, 2008) may affect following automotive applications Plasticizers Semiconductor materials Fire retardants Chromium pigments and dyes Metal surface treatments Adhesive additives

8 REACH Impacts for DoD (cont’d) Installations are not part of the EU, thus REACH-exempt if vehicles are shipped directly to bases However, purchases from off-site, within customs area of the EU (plus Norway, Iceland and Liechtenstein) are subject to REACH. This could affect service part availability for vehicle maintenance Joint venture and foreign military sales may have increased requirements due to importing/manufacturing in the EU ITAR – what information should not be disclosed to foreign entities?

9 What Can be Done to Protect DoD Capabilities ? Work within framework of REACH’s provisions Propose defense exemptions for all allied states, especially those with installations Coordinate comment on proposed SVHCs (Aug 15 deadline for current list) Coordinate authorization activities for military applications Collaborate with industry Identify suppliers of critical substances which are at risk, using a standardized tool or process. Identify alternative substances and suppliers and communicate with industry on how to replace Ensure confidentiality for suppliers to protect military secrets Provide funding for processes, tools, trainings Provide training/education for DoD agencies

10 Questions ? AJ Guikema

11 Supplemental Slide (1)

12 Proposed SVHCs per ECHA 4,4'-methylenedianiline 4,4'diaminodiphenylmethan e Bis(2-ethylhexyl) phthalate; di-(2-ethylhexyl) phthalate; DEHP Anthracene, pure Arsenic pentoxide; arsenic oxide Diarsenic trioxide; arsenic trioxide Triethyl arsenate Hexabromocyclodecane (HBCD) Bis(tributyltin)oxide (TBTO) Cobalt dichloride Lead hydrogen arsenate Sodium dichromate, dihydrate 1-(1,1-Dimetyletyl)-3,5- dimetyl-2,4,6-trinitrobenzen Dibutyl phthalate; DBP Alkanes, C10-C13, chloro (short-chain chlorinated paraffins) (SCCPs) Benzyl butyl phthalate BBP Cyclododecane