Major Players' views on REACH

An introduction to REACH

REACH is a new European Community Regulation onchemicals and their safe use. It stands for Registration, Evaluation, Authorisation and Restriction ofChemical substances. It is a new regulatoryframework proposed by the EC on October 29, 2003.

REACH, as stated earlier, stands for Registration, Evaluation,Authorisation and Restriction of Chemicalsubstances. Each of these terms can beexplained as under:

Registration: Companies in the EU making or importing more than one tonof a chemical substance per year register it in a central database. Producers/importerswould have to collect and submit information on each chemicals properties, uses and safe handling. Testing may be required.

Evaluation: Public authorities would look in more detail atregistration dossiers and at substances of concern.

Authorization and Restriction of Chemical substances: Use-specific permission would benecessary for chemicals that cause cancer, mutations or problems with reproduction, or those which accumulate in bodies and the environment. The European Commission and the European Chemicals Agency would have the power to restrictthe use of certain dangerous substances in the EU.

The aims of REACH

• To improve the protection of human health and the environment.
• To increase the competitiveness of the EU chemicals industry.
• To prevent fragmentation of the internal market
• To increase transparency
• To achieve integration with global efforts
• To conform with EU international obligations under the WTO.
• To promote non-animal testing

How will REACH impact companies inside and outside the EU?

In some ways, this question is very difficult to answer, asthe shape and scope of the legislation is still not final. But one thing iscertain the scenario would be complicated.

EU producers/importers would have to keep track of thesubstance volume produced/imported.

A company would not be allowed to market or import asubstance that is not registered.

Users would have to track their utilization of chemicals.While it is not specific as to how strict the legislation would be aboutreporting procedures, many companies (especially from developing countries) probably lack the process disciplines and systems for the likely record-keeping.

Major players views on REACH:

Eminent people from the industry share their views on REACHwith www.fibre2fashion.com:

BASF India Limited:

Mr. Ravindra Shetiya (ProductStewardship-Performance Chemicals, South Asia)

Effects of REACH on the textile industry

The new European chemical regulation REACH hasbeen effective since June 2007. Registration requirements are applicable fromJune 2008 for the manufacturing and import of chemical products in thecountries of the European Union. One of the objectives of REACH is to make sure that manufacturers,importers and users assume an active role in the safe handling of chemicals andarticles.

Effects on manufacturing of textiles and Exim

In general, articles such as garments and textiles are not affected by REACH. However, there are a few exceptions that need to be paid attention to. Therefore, each importer of garments and textiles into the European Union has to consider the following issues. If the amount of a substance in such articles reaches 1 ton per importer per year:

• For any intended or foreseeable release of substances from garments and textiles (e.g. release of fragrance), the importer has to register these substances.
• If garments and textiles contain substances of very high concern or SVHCs (***see the explanation of SVHC below), the importer has to notify of these substances.

BASFs role under REACH

BASF is aware of the changes that REACH will bring. This prompted us to start preparing for REACH at an early stage. BASF will pre-register all the relevant substances in its product ranges that are subject to REACH. This will assure that all BASF Performance Chemicals can continue to be supplied in the medium term. In addition, BASF provides a safety data sheet for each chemical product it sells. This information is for the safe use of our products.

Recommendations for the textile industry

BASFs recommended performance chemicals for textiles are in compliance with the regulations of REACH. Given that appropriate application and consideration of BASFs recommendations have been followed, these chemicals will not add SVHCs to garments and textiles.

BASF will support its customers with its eco-friendly products, textile expertise and knowledge on REACH.

***SVHC includes:

CMR : Carcinogenic, Mutagenic and reprotoxic

vPvB : very persistent, very bioaccumulative

PBT : Persistent, bioaccumulative, toxic

Endocrine disruptors: Influencing the hormonal system

Clariant Chemicals (India) Limited:

Dr. D M Wakankar (Vice President, Corporate Product Safety)

Effects of REACH on non-European chemical companies

REACH would affect non-European companies directly if:

• They have established affiliates in the EU manufacturing or using downstream substances or substances in preparations
• They are exporting substances or substances in preparations into the EU
• If they are importing substances or substances in preparations from the EU

REACH would affect non European companies indirectly if:

• They are buying chemicals from distributors sourcing in the EU
• Through direct or indirect impact of REACH on international trade and legislation

REACH would not affect non-European companies if

• They are not exporting any chemical substance or substance on preparations into or importing from the EU
• They are not exporting articles containing dangerous substances into or exporting from EU

Possible impact on exports from the EU

A) Negative impact:

• Exported substances may no longer be available to importers outside the EU due to unfavorable / unbearable registration costs
• Cost of manufacturing may increase up to 20%, especially for low volume chemicals (Cefic)
• Uncertainty about registration may last over 11 years transition period until 2018

B) Positive impact

• Registered substances are REACH approved = hazard and risk properties are well-known
• Manufacturers will not easily phase out registered substances = certain security of future supply
• Non- or less regulated countries outside the EU may sooner or later follow similar legislation

Possible impact on imports into EU

Generally the situation with imports into the EU is much more complicated than with exports from the EU because:

• A non-EU importer has no obligations to register
• A non-EU exporter cannot register from outside the EU
• A non-EU exporter cannot export into the EU without registration

Consequences

Any substance or substance in preparation exported into the EU must be registered in the EU.

Balance of trade of EU with rest of the world

Costs of REACH

A) Registration costs per product

B) Cost of maintaining confidentiality

C) Cost of changes

Benefits

The benefits for developing countries would be only in sustained business, which will otherwise be totally lost.

Atul Ltd

Dr. GVG Rao & Dr. MU Rahman (GM-R&D)

The impact of REACH on Indian Companies

REACH is one of the biggest reforms related to safety, health and the environment. Registration, Evaluation and Authorization of Chemicals (REACH) primarily aims at protection of human health and the environment from the potential risk of the use of chemicals.

The underlying principles that direct REACH are:

a)       Making chemical companies responsible for what they produce and sell. Safety data of all such chemicals should be made available.

b)       Studying and identifying the chemicals of very high concern to human health and environment.

c)       Widening the scope of safety data availability

d)       Improving the competitiveness of the European chemicals industry. It is estimated that the health benefit may lead to saving of upto 283 billion Euros across Europe, based on medical costs and lost productivity.

The primary onus of registration lies with the companies who import these chemicals in Europe. The cost at which the chemicals are registered along with safety data and the testing requirements will add to the cost of the production. Industries exporting to EU will have to ensure and support the safety of the chemicals with adequate data from accredited laboratories. The chemicals being exported to EU have to pre-register committing the quantities. The quantities have been classified into categories of <1Te, 1-10 Te, 10-100 Te, 100-1000Te and >1000Te. The safety data requirements and the allowed time for pre-registration for each of these categories are different, with safety requirements being more stringent as the quantities increase, proportionally raising the cost of testing of chemicals in each category. For example, if ATUL Colors decides to register 75 colors being exported to EU as a finished product, it would have to pay 7500 Euros for this as registration fees if falling in the range of 10-100 Te,. This, however, is insignificant when compared to the overall costs of compliance, including testing, administrative activities and other indirect costs, not estimating the legal consequences of non-compliance.

For all the firms that it would directly affect, it would present a major cost burden and for many small-scale manufacturers, it would be difficult to deal directly with parties in Europe. This would have a direct impact on the bottom line, rendering many of such units unviable. The fact that there is significant reduction in fees for Small Scale Manufacturers (SSM) for registration may not be able to offset the incurred cost of the material. As a far reaching effect, this is the most stringent and costly regulation to originate from the EU, and has a potential to have a significant impact on the Dyes and Textiles industry, especially small manufacturers. In countries like India and China, non- profitability of SSMs might lead to unemployment.

There is a mention that Existing substances available between January 1, 1971, and September 18, 1981, were compiled into the European Inventory of Existing Commercial Chemical Substances (EINECS), which contains 100,016 entries. These can be produced and sold without meeting the comprehensive and stringent data requirements for new substances. However, this still does not rule out the cost of registering the chemicals to be exported to Europe. When manufacturing is done by two or more companies, the cost can be shared by exporting under one umbrella.

It is also felt that registrants under the REACH system would be predominantly European importers, who would have the ownership of the data. The exporters would have to ensure complete sharing of the data so as to reduce the cost burden arising out of the testing and analysis of products. The position regarding the trade secrets under REACH is also not clear. Care would have to be taken to leave a provision for these so as to safeguard the interest of the exporter.

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