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EU Agency Plans to Increase Compliance Checks of REACH Registration Dossiers

The European Chemicals Agency (ECHA or the “Agency”) has announced plans to increase the percentage of registration dossiers checked for compliance with REACH (Regulation 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals). Increased compliance checks are one part of a so-called “joint action plan” between ECHA and the European Commission to improve compliance and efficiency across REACH. Hong Kong-headquartered companies manufacturing in or importing into the EU may see increased enforcement action as a result of this renewed focus on the carrying out of compliance checks under ECHA’s new targets. The joint action plan will, it is intended, be finalised during June 2019.

ECHA plans to check a greater number of registration dossiers for compliance with REACH information requirements, to support the Agency’s priority of improving compliance and efficiency. Current law requires ECHA to select at least 5% of registration dossiers for compliance checks. ECHA proposes quadrupling this number to approximately 20% of dossiers, which would correspond to approximately 30% of all substances and up to 40% of substances over 100 tonnes. Changing the required rate of compliance checks would require a new regulation from the European Commission.

In spite of efforts to improve compliance and efficiency, concerns regarding dossier compliance have proliferated in the ten-plus years since REACH entered into force in 2007. In that time, ECHA has checked over 2,700 registered dossiers for compliance. From these checks, ECHA has identified problems with over two-thirds of the registered dossiers. Hong Kong companies selling chemicals subject to REACH registration should take care to ensure adequate documentation and sufficient justification of any waivers of data requirements, both of which, when not observed, are often reasons for non-compliance.

Responding to these on-going compliance challenges, a joint action plan developed by ECHA and the Commission is set to be finalised in June 2019. The action plan seeks to address the Commission’s 2017 review of REACH (which called for improved efficiency), as well as an October 2018 report by the German Federal Institute for Risk Assessment, which identified data gaps and high rates of non-compliance.

The action plan will cover four primary objectives: (i) addressing all substances; (ii) clarifying REACH’s legal provisions; (iii) accelerating decision-making; and (iv) strengthening the enforcement of decisions on the evaluation of substances. As part of the plan, ECHA will group all substances over 100 tonnes in regulatory pools based on the substance’s priority level for risk management by the end of 2020. Furthermore, the Agency plans to screen all registered substances by 2027, with the goal of making available sufficient data on all substances on the European market in quantities over one tonne per annum.

The joint ECHA/Commission action plan, and particularly its objective of increased compliance checks, has important implications for all producers, including those hailing from Hong Kong and mainland China whose EU operations are subject to the REACH registration requirements. It will be recalled that companies are required to register chemical substances with ECHA before placing them on the European markets. Companies established outside the EU and wishing to sell within its internal market, such as Hong Kong- or mainland China-based manufacturers exporting to the EU, cannot directly register their substances under REACH. The ECHA guidance for non-EU companies provides that importers or affiliates established in the EU, or the only representative of a non-EU manufacturer established in the EU, bears the responsibility of fulfilling REACH requirements.

Whether registered by an importer/affiliate or by an only representative, the chemicals dossier of a Hong Kong company is now more likely to be subject to a compliance review under ECHA’s newly proposed review targets. Compliance reviews result either in no action, in which case the registrant is not notified, or in a request for additional information. The latter case results in a legally binding decision on the registrant.

A greater number of compliance checks means that registrants are more likely to receive a compliance check decision. ECHA advises companies to prepare for this possibility by providing regular updates to registration dossiers and by being proactive in gathering accurate, relevant information.

Hong Kong companies should note that ECHA may initiate a compliance check on a dossier at any time to verify that the information it contains is compliant with REACH requirements. Following a finding that a dossier is non-compliant, ECHA does not automatically suspend market access for the shipments in question. Rather, the importer or only representative of the Hong Kong or mainland China exporter could be subject to an enforcement action by the national authorities of the Member State in which it is located.

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