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Fees for Registration of Chemicals under the REACH Rules: ECHA Clarifies the Ability to Obtain a Fee Reduction for SMEs

The European Chemicals Agency (ECHA) has confirmed that small and medium-sized enterprises (SMEs) registering their substances under REACH will benefit from a reduced registration fee, as long as they are able to provide proof of their SME size, including at ECHA’s request. The announcement was made on 25 September 2017, and companies that have to register their substances with ECHA by the upcoming last deadline of end-May 2018 under the REACH rules can make use of the clarifications presented therein.

Hong Kong traders will recall that the REACH Regulation requires most substances on their own, in mixtures, or in certain articles that release substances intentionally, to be registered with ECHA. Not all substances need to be registered (though the exemptions are limited), and the upcoming final registration deadline of 31 May 2018 applies to substances that are manufactured in or imported into the EU at a volume of 1 tonne or more per year, per manufacturing or importing entity. Non-EU manufacturers of the substances (or mixtures or articles) such as those hailing from Hong Kong or mainland China, must rely on their importers to carry out the registration, or else appoint an Only Representative (a person or company established in the EU) to carry out the registration on their behalf.

Hong Kong companies should be aware that, where a registration is submitted by an Only Representative, the size of the non-EU manufacturer is decisive for the fee and must be entered into the relevant field in REACH-IT, not the size of the only representative. REACH-IT is ECHA’s central IT system for securely submitting, processing and managing data and dossiers.

When registering substances under REACH, SME manufacturers and importers benefit from significant registration fee reductions which can reach up to 95%. SMEs must claim the reduction upon submitting their dossier through the REACH-IT communication tool. As of June 2016, all SME registrants have to upload documentary evidence supporting their status as an SME and their entitlement to a fee reduction through REACH-IT before submitting their registration. For companies that had been registering before June 2016, ECHA requested evidence at the time of verifying their status.

ECHA will check the eligibility for the fee reduction in order to ensure “equal and fair treatment for all registrants”. ECHA is currently in the process of checking the SME size of companies which submitted their dossiers in the period between 2013 and 2015.

Participants who do not submit the documentary evidence requested by ECHA will be considered non-eligible for the fee reduction. ECHA will then invoice registrants the difference between the SME fee already paid and the fee for a large enterprise. In addition, the company will have to pay an administrative charge (which can be substantial).

If registrants have submitted an incorrect size category of their company by mistake, they may take proactive steps to correct their size category by declaring the correct size to ECHA’s Helpdesk and by updating their REACH-IT accounts accordingly. If companies correct their size category before ECHA starts its verification procedure, then they will not have to pay any administrative charges, but only the fee up to the correct level. If, however, the companies correct their mistake by the verification deadline imposed by ECHA, they will still have to pay half of the administrative charge.

ECHA’s verification process is significant, as past years’ verifications have shown that a high proportion of applicant companies did not in reality qualify for SME fee reductions. Up to 2013, 32% of dossiers included claims of SME fee reduction, but only 18% actually qualified for reductions following ECHA’s verification.

A study carried out by Risk & Policy Analysts (RPA) UK, in association with Market Equity, in August 2017, found that SMEs are still struggling with their registration duties, mainly given the high costs of registration. The key finding in the study was that most SMEs (95% of respondents) are aware of their duties, but a large number struggle with registration-related fees, especially as far as costs for letters of access and participating in the substance information exchange forums (SIEFs) are concerned. The result is that smaller companies may resort to rationalising their substance portfolios and turning to alternative solutions, such as lowering their production and import volumes so that they remain below the one tonne per year threshold that triggers registration obligations.

ECHA stated on 3 October 2017 that it was looking into solutions to improve the situation for struggling SMEs, which it is discussing with the European Commission and various industry stakeholders taking part in the Directors’ Contract Group. The Group was set up back in 2010 to monitor the level of preparation of companies and deal with issues concerning REACH registration.

Content provided by Picture: HKTDC Research
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