Roles Under REACh (part 2)
Contrasting the Requirements Inside and Outside the EU
There is a chemical company in southwestern Germany. As Germany is part of the European Union, REACh is part of daily business, and the company has registration obligations for all substances that are manufactured in volumes of 1 ton per annum (t/a) or more on its site. The whole amount manufactured within a calendar year needs to be covered by the registration.
A stone's throw away there is another chemical company. This company is established in Switzerland; consequently, the situation in regard to REACh (Registration, Evaluation, Authorization and Restriction of Chemicals) is different. Switzerland is on the European continent but is a member neither of the European Union nor of the European Economic Area (EEA). Therefore REACh is not directly applicable.
However, the Swiss company is also affected by REACh whenever it fosters business relationships with European suppliers or customers. For each manufactured substance for a European customer, the Swiss company has to decide whether it is willing to appoint an Only Representative to take care of the registration obligations. If the Swiss company takes care of the registration obligations via an Only Representative, the European customers will benefit from being Downstream Users, and the situation for the customers is comparable to purchasing from European sources. If the Swiss company does not want to appoint an Only Representative, its European customers have the role of an Importer under REACh.
The following two examples illustrate the situation of the German company compared with the Swiss competitor. In Example 1 the Swiss company appoints an Only Representative, whereas in Example 2 the Swiss company reaches a converse decision.
Example 1: Both a German company and a Swiss competitor manufacture substance A in the volume of 1,000 t/a. Both sell 900 t/a to European customers and 100 t/a to a customer established in the U.S. The Swiss company is willing to appoint an Only Representative. Table 1 gives an overview of the consequences for the German company and for the Swiss competitor.
Obviously, the Swiss company has to deal with fewer data requirements as it does not need to register the whole tonnage manufactured per calendar year but only the volumes that are delivered to EU customers.
Example 2: A German company manufactures exactly 10 t/a of substance B. The total amount is distributed to 10 customers. Each of the customers purchases exactly 1 ton of substance B per calendar year (see fig. 1).
The Swiss competitor decides to manufacture 20 t/a of substance B and delivers this substance to 10 EU customers and to one Non-EU customer. Each of the EU customers purchases exactly 999 kg of substance B per calendar year, whereas the Non-EU customer purchases 10.01 t/a (see fig. 2).
The German company is obliged to register substance B in the tonnage band 10 to 100 t/a. In the case of a standard registration, a Chemical Safety Report will be required. Costs for the registration have to be passed on to the customers.
The Swiss company in this case does not have any registration obligations, as it does not appoint an Only Representative. Therefore each EU customer will act as an Importer under REACh. If the EU customers purchase less than 1 t/a there is no need to register. Once again the Swiss company benefits from being outside of the EEA, and its EU customers may also benefit, as they do not have to pay registration costs. Particularly smaller companies among the EU customers will appreciate that.
We can learn from Example 1 and 2 that the Swiss company may decide on a case-by-case basis whether it is a wise strategy to take care of the registration obligation by appointment of an Only Representative or not. The same can be applied to all Non-EU Manufacturers that have business relationships with customers established within the EEA.
Synthesis And Shipping
In a further example, we will compare the REACh registration obligations for a multistep synthesis that is performed at different sites. Although this example seems complex, it reflects the real situation within globally acting enterprises.
Example 3: A European company group composed of several manufacturing sites (separate legal entities) within Germany and France intends to manufacture substance D for an EU customer that uses substance D for the synthesis of another substance (product). The German site of the European company group will import substance A from India to produce intermediate B. Intermediate B is then shipped to the French site. In France, substance B is used for the synthesis of intermediate C that afterward is transformed into the desired product D. Currently it is not determined whether substance C will be isolated (see fig. 3). However, we may expect that three or four substances have to be registered by the European company group (see table 2).
Assuming that the multistep synthesis from A to D is instead performed in Switzerland (see fig. 4) there is a registration obligation under REACh only in regard to substance D. This registration obligation may either be fulfilled by the Swiss manufacturer via an appointed Only Representative or by the European customer. As substances A, B and C do not need to be registered under REACh and therefore will not be published on the home page of the European Chemicals Agency connected with a certain registrant, the synthetic route can be kept in confidence.
Swiss companies as well as other Non-EU Manufacturers have the chance to decide on a case-by-case basis whether they will take care of registration obligations by appointment of an Only Representative. Only the volumes that are imported into the EEA have to be considered for a registration under REACh, irrespective of the total volume manufactured.
In case of multistep syntheses, Non-EU Manufacturers and their EU customers benefit from having registration obligations only for the substances that are imported into the EU, whereas previous intermediates do not need to be registered. Consequently Non-EU Manufacturers profit from being established outside the EEA.
However, the workload in regard to documentation to be done by Non-EU Manufacturers, e.g., for Substance Volume Tracking, is higher, and the appointment of an Only Representative may be costly.