1. REACH: Impact on NAFTA Companies and Chemicals presented by Edgar Rodriguez Sierra

2. REACH April 7, 2009©ChemADVISOR, Inc. 2009  Registration  Evaluation  Authorisation and Restriction of  CHemicals

3. REACH – Across the pond April 7, 2009©ChemADVISOR, Inc. 2009

4. April 7, 2009©ChemADVISOR, Inc. 2009 Introduction to REACH  REACH applies to chemical substances  Registration is required for chemical substances manufactured or imported into the EU  Registration priority and data requirements are based on manufactured or imported annual tonnages  Benefit from extended registration deadlines through pre- registration or late pre-registration  Share and assess data for chemical substances within Substance Information Exchange Fora (SIEFs)  Submit registration dossiers before or by the registration deadline

5. Introduction to REACH April 7, 2009©ChemADVISOR, Inc. 2009

6. Introduction to REACH April 7, 2009©ChemADVISOR, Inc. 2009  Who can register ? Legal Entities based in the EU !  Manufacturers  Importers  Only Representatives (OR)  Only Representatives are appointed by non-EU base manufacturers/NAFTA based manufacturers to handle all aspects of Registration  Fees and Charges  Fees and charges are payable to the European Chemicals Agency (ECHA) pursuant to the REACH Regulation and apply to the registration of chemical substances  Fees and charges are based on the company size and the annual turnover

7. Impacts of REACH in NAFTA countries – Negative Aspects  Negative  NAFTA based manufacturers without EU based legal entities cannot register by themselves  Negative  NAFTA based manufacturers without EU based legal entities must appoint an Only Representative to handle Registration of their chemical substances  Negative  Only Representatives pay fees and charges based on the size and the annual turnover of the NAFTA based manufacturer they represent April 7, 2009©ChemADVISOR, Inc. 2009

8. Impacts of REACH in NAFTA countries – Positive Aspects April 7, 2009©ChemADVISOR, Inc. 2009  Positive  Benefit from extended registration deadlines by pre-registration through an Only Representative  Positive  Benefit from extended registration deadlines by late pre-registration through an Only Representative  Positive  Small- and medium-sized NAFTA manufacturers benefit from reduced fees and charges under REACH

9. Impacts of REACH in NAFTA countries – Negative Aspects April 7, 2009©ChemADVISOR, Inc. 2009  Negative  Certain chemical substances will become subject to Authorisation and Restrictions in the near future  Negative  Classification and Labelling for chemical substances will become subject to change in 2010  Negative  Data requirements for registration dossiers will lead to additional testing

10. Impacts of REACH in NAFTA countries – Positive Aspects April 7, 2009©ChemADVISOR, Inc. 2009  Positive  Joint submission of registration dossiers leads to reduced fees and charges  Positive  Protection of Confidential Business Information (CBI) by appointing an Only Representative and/or Third Party Representative (TPR)  Positive  All EU based manufacturers and importers must register their chemical substances too

11. What general tools are NAFTA companies using for REACH ? April 7, 2009©ChemADVISOR, Inc. 2009  NAFTA based manufacturer with EU based legal entity  REACH-IT and/or IUCLID5  Pre-SIEFs/SIEFs  Third Party Representative Services  Consortia  Supply Chain Communication  NAFTA based manufacturer without EU based legal entity  Only Representative Services  Third Party Representative Services  SIEFs  Supply Chain Communication

12. Are there any challenges for the NAFTA chemical industry ?  Complying with pre-registration and late pre-registration deadlines  Finding and appointing a Only Representative  Protecting Confidential Business Information April 7, 2009©ChemADVISOR, Inc. 2009

13. Are there any challenges for the NAFTA chemical industry ?  Collecting information up and down the supply chain  Authorisation of certain chemical substances  Restrictions for certain chemical substances April 7, 2009©ChemADVISOR, Inc. 2009

14. Are there any challenges for the NAFTA chemical industry ? April 7, 2009©ChemADVISOR, Inc. 2009  Sharing data with other registrants  Generating missing test data  Access to harmonized REACH approach of major EU industry associations (Cefic, AISE, VCI, FEICA, etc.)  Paying fees and charges

15. Is there any direct or indirect financial loss due to REACH ?  Implementing REACH into their Supply Chain will cause an increase of costs for NAFTA based manufacturers  Fees and charges payable to the European Chemicals Agency  Costs for Only Representative or Third Party Representative Services  Costs for generating test data  Costs regarding compensation for sharing data  NAFTA based manufacturers are considering carefully the costs paying for REACH versus REACH exports April 7, 2009©ChemADVISOR, Inc. 2009

16. Are there any NAFTA industry specific REACH exemptions ?  Example: Brazilian Chemical Industry is asking the government for tax relief under REACH in order to pay the large fees for registration  No NAFTA industry specific REACH exemptions in place or planned until today April 7, 2009©ChemADVISOR, Inc. 2009

17. Are there any REACH consortia in the NAFTA region ?  Several REACH Consortia already in place and working in the EU  No REACH related Consortia in place in the NAFTA region April 7, 2009©ChemADVISOR, Inc. 2009

18. Conclusions  Failure to meet REACH compliance means that NAFTA based manufacturers will lose access to the export market in the EU  Substantial production, use and export by NAFTA based manufacturers of chemicals already identified by the EU as so called Substances of Very High Concern (SVHCs) will lead to Authorization and Restrictions  Increasing costs regarding REACH compliance is an additional burden for NAFTA based manufacturers  Small- and medium-sized NAFTA companies have to cope with REACH fees and charges April 7, 2009©ChemADVISOR, Inc. 2009

19. Conclusions  NAFTA based manufacturers without EU based legal entities must use external support to comply with REACH  NAFTA based manufacturers exporting into the EU have to ensure that their chemical substances (products) fully comply with the new regulation  NAFTA organizations will be in closer contact with European groups and associations  No Data (No REACH Compliance) – No Market ! April 7, 2009©ChemADVISOR, Inc. 2009

20. Do Similar Regulations Exist in the United States? April 7, 2009©ChemADVISOR, Inc. 2009

21. Potential Impacts on Brazilian Exports of Chemicals to the U.S. No but the United States has ChAMP April 7, 2009©ChemADVISOR, Inc. 2009

22. April 7, 2009©ChemADVISOR, Inc. 2009 Chemical Assessment and Management Program (ChAMP)  In 2008, the U.S. Environmental Protection Agency (EPA) launched the ChAMP.  The ChAMP encompasses EPA’s efforts to meet U.S. commitments under the North American Security and Prosperity Partnership (SPP), as well as enhancements to the Agency’s existing chemicals program under the Toxic Substances Control Act (TSCA).

23. April 7, 2009©ChemADVISOR, Inc. 2009 U.S. commitments under the SPP  Assess and initiate action, as necessary, on over 6,000 existing organic chemicals manufactured in or imported into the U.S. at or above 25,000 pounds per year (lbs/yr)  Includes High Production Volume (HPV) and Moderate Production Volume (MPV) chemicals

24. April 7, 2009©ChemADVISOR, Inc. 2009 HPV Chemicals  Manufactured in or imported into the U.S. at or above 1 million lbs/yr  EPA developing Risk-Based Prioritizations (RBPs) using hazard data obtained under the HPV Challenge Program, use and exposure data obtained under the Inventory Update Rule (IUR), and other available data  HPV Chemicals to be classified for follow-up actions as Low Priority, Medium Priority, High Priority, or High Priority with Special Concern

25. April 7, 2009©ChemADVISOR, Inc. 2009 MPV Chemicals  Manufactured in or imported into the U.S. at or above 25,000 lbs/yr but less than 1 million lbs/yr  Use and exposure data available under the IUR only for MPV Chemicals manufactured in or imported into the U.S. at or above 300,000 lbs/yr at any one site  EPA developing Hazard-Based Prioritizations (HBPs) using Structure Activity Relationships (SARs), Canadian categorization results, and other available data  MPV Chemicals to be classified for follow-up actions similarly to HPVs, but the nature of the actions will likely differ

26. April 7, 2009©ChemADVISOR, Inc. 2009 TSCA Program Enhancements  In September 2008, EPA announced two enhancements to its existing chemicals program under the TSCA: 1. TSCA Inventory Reset 2. Inorganic HPV Challenge Program

27. April 7, 2009©ChemADVISOR, Inc. 2009 TSCA Inventory Reset  EPA believes that many of the approximately 83,000 chemicals listed on the current Inventory are no longer in commerce in the United States.  Based on this belief, EPA has proposed to reset the Inventory by removing those chemicals that are no longer being manufactured or imported.

28. April 7, 2009©ChemADVISOR, Inc. 2009 TSCA Inventory Reset (continued)  Under EPA’s proposal, the public version of the Inventory would be posted online.  Companies would then certify the chemicals that they have manufactured or imported within a specified timeframe.  Companies would certify their chemicals online using a secured website.  Following the reset, a new chemical notice would be required if a company decided to manufacture or import a chemical that was removed from the Inventory.

29. April 7, 2009©ChemADVISOR, Inc. 2009 IHPV Challenge Program  Inorganic chemical substances are defined as chemical substances that do not contain carbon, or contain carbon only in the form of:  carbonato (=CO3),  cyano (-CN),  cyanato (-OCN),  isocyano (-NC), or  isocyanato (-NCO) groups, or  the chalcogen analogues of such groups.

30. April 7, 2009©ChemADVISOR, Inc. 2009 IHPV Challenge Program (continued)  The proposed Inorganic High Production Volume (IHPV) Challenge Program is modeled after the HPV Challenge Program, which focused on organic chemicals.  The IHPV Challenge Program will challenge the chemical industry to gather or develop and submit to EPA the data needed: 1. to characterize the physical-chemical properties, toxicity, and environmental fate of IHPV chemicals, and 2. to enable assessment and initiation of needed follow-up actions.

31. Potential impacts on Brazilian exporters to the U.S.  Near-Term:  Requests from U.S. importers for data on organic HPV chemicals, organic MPV chemicals, and inorganic HPV chemicals  Restrictions on some organic HPV chemicals  Removal of chemicals from the TSCA Inventory followed by new chemical notice requirements for U.S. importers  Opportunities for improved relationships with U.S. importers April 7, 2009©ChemADVISOR, Inc. 2009

32. Potential impacts on Brazilian exporters to the U.S. (continued)  Longer-Term:  Restrictions on some organic MPV chemicals and inorganic HPV chemicals  Declining markets for restricted chemicals resulting from customer de-selection  Increasing numbers of requests for substitutes for restricted chemicals  Opportunities for sales of more environmentally- friendly and safer chemicals April 7, 2009©ChemADVISOR, Inc. 2009

33. Do Similar Regulations Exist in Canada? April 7, 2009©ChemADVISOR, Inc. 2009

34. Potential Impacts on Brazilian Exports of Chemicals to Canada No but Canada has the Chemical Management Plan April 7, 2009©ChemADVISOR, Inc. 2009

35. Canada – CMP - The Challenge Program – Overview  February 2007 – “Challenge to Industry” launched by Minister of Health and Minister of Environment  Involves approximately 200 substances identified as “high priority” by DSL categorization  Substances still in commerce in Canada  Why high priority?  Bioaccumulate, are persistent and inherently toxic to aquatic organisms AND/OR  Pose a high hazard (great potential for exposure) to human health April 7, 2009©ChemADVISOR, Inc. 2009

36. Canada – The Challenge Program  “ Batches” of 15-20 substances released every quarter  Release of each batch includes:  Substance profiles,  Mandatory surveys (CEPA 1999 Section 71 Notices),  Voluntary questionnaires  Industry responsibilities:  Industry to provide specified information  Industry to comment on substance profiles April 7, 2009©ChemADVISOR, Inc. 2009

37. Canada – The Challenge Program  Government will review surveys to determine further action  Example – “Batch 1” Substances Final Screening Assessments  9 substances determined “toxic” and recommended for addition to Schedule 1 and/or addition to virtual elimination list  6 substances determined not “toxic” and no further action is currently required April 7, 2009©ChemADVISOR, Inc. 2009

38. Canada – The Challenge Program  Example – “Batch 2” Substances Draft Screening Assessments  12 substances proposed as “toxic” with proposal to add to Schedule 1 and/or addition to virtual elimination list  5 substances proposed as not “toxic”  3 proposed no further action  2 proposed to issue Significant New Activity provisions April 7, 2009©ChemADVISOR, Inc. 2009

39. REACH Impact in Canadian Chemical Industry  “The following information was obtained during a conversation with Mr. Gordon Lloyd, VP Technical Affairs, Canada’s Chemical Producers and I was given permission to include in this presentation.”  A large number of Canadian chemical companies are at the multinational level, therefore, any and all of the REACH issues were handle through the sister or parent companies in Europe. Furthermore, the impact is low and some of the REACH issues that the U.S., Mexico, and Chile may have, were not as evident in Canada.  There was no input requested by the EU from the NAFTA chemical industry block regarding Polymers.  Canada believes that in the near future NAFTA will encounter exporting bottom-necks. There will be a significant problem with the supply of materials to Europe, and a higher impact for small size companies April 7, 2009©ChemADVISOR, Inc. 2009

40. REACH Impact in Canadian Chemical Industry (continued)  Canada does not agree with REACH’s requirements of more scientific testing for chemicals. The current CMP’s chemical safety assessments meets all of the REACH requirements  REACH is incredibly expensive for the Canadians companies in regards to:  Pre-registration  Pre-SIEF and SIEF Representation  OR representation  General REACH consulting  There is a need for more training, especially, in the areas of industry responsibility of downstream users and the regulatory requirements imposed by REACH. Now, the chemical companies are re-acting and it is creating a problem during pre-registration April 7, 2009©ChemADVISOR, Inc. 2009

41. Do Similar Regulations Exist in Mexico? April 7, 2009©ChemADVISOR, Inc. 2009

42. No, but Mexico is a Member of the Security and Prosperity Partnership of North America (SPP) April 7, 2009©ChemADVISOR, Inc. 2009

43. REACH Impacts on the Mexican Chemical Industry  “The following information was obtained during a conversation with Mr. Ruben Garcia, REACH Coordinator, National Association of the Chemical Industry (ANIQ), Mexico and I was given permission to include in this presentation.”  ANIQ confirmed that his office is currently working in evaluating the economical, logistical, and operational impact of REACH in the Mexican chemical industry.  ANIQ knows that several Mexican companies have used their parent or sister companies in Europe to pre-register and be their OR legal entities. April 7, 2009©ChemADVISOR, Inc. 2009

44. REACH Impacts on the Mexican Chemical Industry  ANIQ developed an online survey for all members to provide REACH feedback information regarding: Monies spent in pre- registration and consulting fees, business lost, type of chemical companies mostly affected, specific problems dealing with Europe, and others. However, the response to ANIQ’s survey has been delayed due to privacy issues among members. April 7, 2009©ChemADVISOR, Inc. 2009

45. REACH Impacts on the Mexican Chemical Industry  ANIQ stated that most of the feedback regarding the impacts of GHS and REACH within NAFTA are been discussed in the meetings of the Commission for Environmental Cooperation or CEC. www.cec.orgwww.cec.org  ANIQ will be attending the March 31 – April 3, 2009, CEC San Antonio, TX conference to discussed with the Canadian and US counterparts issues regarding REACH and GHS. April 7, 2009©ChemADVISOR, Inc. 2009

46. April 7, 2009©ChemADVISOR, Inc. 2009 Thank you. Obrigado. Gracias.