21 April 2017
Bans on Hazardous Substances Could Be Extended to Imported Goods
Hong Kong sellers to the EU market may already know that Annex XIV of the notoriously complex REACH Regulation contains a list of substances which have already been classified as ‘substances of very high concern’ (SVHC) because they are known to be mutagenic, carcinogenic, bioaccumulative, persistent, toxic, toxic for reproduction, or carry “an equivalent level of concern.” After the expiry of a transitional (‘sunset’) period, substances in that Annex can only be used with the express authorisation of the European Commission for a specific use, requested by individual companies.
Currently, these provisions apply only to SVHCs sold, made or used within the EU and not to those imported into the EU from third countries, including Hong Kong or mainland China. Nonetheless, imported goods containing SVHCs may pose a risk to the environment or to human health, and may place EU-produced goods that must comply with this aspect of REACH at a competitive disadvantage.
A legal analysis has concluded that an extension of the requirements of the REACH Regulation applicable to SVHCs, to goods that are imported into the EU, would be acceptable under WTO law. The study was undertaken on behalf of the German Environment Agency. The legal analysis examined whether the extension of these REACH rules to imported goods would violate the WTO’s Technical Barriers to Trade Agreement (TBT), in particular with respect to its Article 2.1, on national and most favoured nation treatment, or Article 2.2, prohibiting unnecessary trade restrictions.
Article 2.1 requires that imported products be treated no less favourably than “like” domestic ones. The analysis asserted that as REACH rules would apply equally to both EU-produced and imported goods, there would be no discrimination or violation of Article 2.1.
Article 2.2 prohibits the use of technical regulations that are more restrictive than necessary to pursue a legitimate objective. The study notes that the protection of health is considered such an objective, and that the risks posed by SVHCs are of the sort covered by WTO rules. It further observes that other measures that would be as effective cannot be identified.
Additionally, although the risks from SVHCs may be subject to some scientific uncertainty, the report demonstrates that the WTO rules could be interpreted according to a precautionary principle, as is widely used in the interpretation of other international treaties.
Annex XIV of REACH currently lists 31 unique substances/entries that are or will be banned in the EU (subject to any mentioned exemptions or company-specific authorisations). The substances include lead chromate and four commonly used phthalates. If the bans were to apply to imported goods containing the substances, Hong Kong companies exporting such goods to the EU could see their trade disrupted and would need to look for alternatives.
In another development, on 27 February 2017, the European Chemicals Agency (ECHA) published its 2016 annual evaluation report. The report, which covers evaluation activities and other measures to improve data quality, reveals that over 90% of chemical registration dossiers assessed by 2016, as part of ECHA’s ongoing compliance checks, had gaps in data.
Specifically, the report shows that in 168 out of the 184 registered dossiers inspected by ECHA, crucial information was missing. Each of these dossiers relates to a particular substance of potential concern and is supposed to contain a complete bank of important information on its toxicity.
The checks carried out by ECHA all targeted substances used in high quantities in the EU and registered under the 2010 and 2013 waves of the EU REACH Regulation. In order to be assessed, at least 100 tonnes of the substance had to be either produced or imported into the EU per year.
The data which was most commonly lacking related to the substances’ pre-natal developmental toxicity, mutagenicity/genotoxicity, reproduction toxicity and long-term aquatic toxicity.
To encourage registrants to update their dossiers before compliance checks took place, ECHA sent letters to the registrants of 270 substances, flagging the deficiencies in their dossiers. According to the report, 40% of these contacted registrants updated their information on hazards and tonnage without the need for further action in 2016.
ECHA invited Member State authorities to consider whether national enforcement actions should be brought against 33 registrants who failed to adequately update dossiers with missing information within a set time frame. NGOs and Member States have previously expressed concern over the persistence of data gaps in manufacturers’, importers’ and so-called Only Representatives’ registration dossiers, as part of a consultation on the regulatory fitness of REACH. Hong Kong traders will recall that Only Representatives are appointed by non-EU manufacturers of exported substances or mixtures, who are not permitted to themselves register, nor wish to rely on their importers to do so.