Industry Braces for K-REACH
By Jeongmae Choi
On Jan. 1, 2015, South Koreas Act on the Registration and Evaluation of Chemical Substances comes into force. Not only the chemical industry, but Koreas large petroleum, automobile, semiconductor and other industries – lubricants, too – are subject to the new law, which imposes reporting, hazard assessment and registration requirements on manufacturers and importers.
Although ARECS would be a more precise acronym, the law is commonly known as Korea REACH or K-REACH because it was modeled on the European Unions Registration, Evaluation, Authorization and Restriction of Chemicals, in force since 2007. As in Europe, the driving idea is no data, no market.
South Korea is the fifth largest chemical market in the world following China, the United States, Japan and Germany, according to the European Chemical Industry Council. About 43,000 kinds of chemical substances are circulating in the country and some 400 new chemicals enter the market annually, says the South Korea Ministry of Environment, the agency enforcing the new law.
Suppliers will have to report to the Ministry their yearly production or imports of volumes greater than one metric ton of all new and existing chemicals, substances and mixtures. As well, registration will be required for all new chemicals, plus for whatever existing chemicals and substances which the Ministry decides to make subject to hazard evaluation. All filings must be made in Korean, and in lieu of having an importer do it, non-Korean suppliers can appoint an only representative to fulfill the reporting, registration and notification requirements.
Cost Pressures
Like chemical regulations elsewhere, South Koreas law in most cases will not ban substances called in for scrutiny. But by creating new hurdles for documentation and testing, it can drive up the costs of continuing to do business in South Korea.
Choi Younsok, who is responsible for regulatory compliance at Seoul-based joint venture S-Oil Total Lubricants, doesnt relish the prospect. Though we have experience with Euro REACH, the new regulations of K-REACH are surely a big burden to us. Because of the regulations, we are facing the demand of developing higher class products or alternative products which can avoid or circumvent these new regulations. Accordingly, more investment in new facilities is needed. Also, there is the pressure of cost increases in developing those new/alternative products.
Compared with chemical regulations in other markets, K-REACH is much advanced and radical. But I think the regulations can help us enter into other markets through their regulation barriers, Choi added.
Kim Hakgon, who works for the small lubricant and grease manufacturer EHS Lubetech, also voiced concern: Its certain that the new chemical legislation will bring lots of paper work and heavy financial burdens to meet the report and registration requirements. We are concerned that the new regulations might weaken our business activities.
Everyone who wants market access to Korea has to evaluate the costs of complying with this law, advised James E. Eggenschwiler, director of global trade at The Redstone Group in Dublin, Ohio, a firm specializing in international trade and chemical control laws. Much of the chemicals industry has grown accustomed to chemical safety regulations, he said, but each one still creates additional work, and the impacts vary from market to market.
This is something that international firms are running into on a fairly consistent basis, Eggenschwiler said. The thing is that there are a variety of systems out there that have important differences. South Koreas law is modeled a little more on the European Unions REACH than others, such as TSCA [Toxic Substances Control Act] in the United States. But one of the main differences from REACH is that South Korea basically decided to grandfather chemicals that were already in the market before a certain date.
Making the List
On Oct. 31, South Korean officials issued a much-awaited draft list of the first 518 existing chemicals that should be registered. More will be added over the coming years, swelling the list to an expected 2,000 items in all. Registration of any substance must be accomplished within three years of its appearance on the list.
The Oct. 31 draft – due to take its final form by June – includes several chemicals used by the lubricants industry, such as the lube oil dewaxing agent MEK (methyl ethyl ketone); diphenylamine, an antioxidant; chlorine; boric acid; glutaraldehyde and other biocides that go into metalworking fluids; lead salts of tall oil fatty acids; building-block chemicals such as ethylene oxide and methylamine, and others.
Under K-REACH, businesses dealing with listed chemicals are obliged to report and register the substances with the government, notify users of any risks, and communicate safety information up and down the supply chain. The government will conduct hazard examinations, risk evaluations and designations of hazardous substances.
Eggenschwiler said there is much similarity amoung the lists of substances that are regulated by chemical safety laws in different countries. The impact of the South Korean law, he said, will depend less on the list of chemicals than the specifics of rules that have yet to be written.
Apparently there has been tension between the regulators and industry and also with legislators, he told LubesnGreases last month. There are still a lot of gaps in the rule-making that have a lot of people sitting on the edge of their seats.
The Laws Scope
While the original Act was said to be stringent, it has been somewhat softened in the implementation process, and in consultation with relevant ministries and industries. For example, research and development substances were originally subject to the requirements of reporting and registration but finally exempted. Registration of new chemical substances amounting to less than 1 t/y has been simplified, too.
Even so, the issue is the new regulations [impose] new expenses to acquire data and information on chemical substances. Industries have to pay the cost whether they buy the data and information or they individually generate data. Big companies can do the work, but small companies have no clue, said Lim Jongchan, executive director of the Korea Lubricating Oil Industries Association in Seoul. We are skeptical if they are able to pay all the costs of keeping business alive.
Its important to note that K-REACH does not apply to chemicals that are already subject to the countrys Toxic Chemicals Control Act of 1991 (i.e., radioactive substances, pharmaceutical products and quasi-drugs, narcotics, cosmetics and raw materials for cosmetics, pesticides and their active ingredients, foods, gunpowder, military supplies and other regulated materials). Other exemptions cover R&D substances; non-isolated intermediates; chemical substances imported together with machines or equipment for trial operation; and substances contained in a product that function without releasing during use.
That still leaves K-REACH with two huge categories of materials: new and existing chemicals. By law, existing chemical substances are those which the Ministry of Environment published as being in commercial use prior to Feb. 2, 1991, or cleared for commercial use on that date under the Toxic Chemicals Control Act. New chemical substances are all others.
Under K-REACH, manufacturers, importers and sellers of all new chemical substances, irrespective of tonnage, or existing chemical substances more than 1 t/y, have the duty of reporting. Reports, made biannually and including the prior two years data, must include the volume manufactured, imported or sold, chemical information and uses of the substance.
If a substance also requires registration, this must be done by the manufacturer or importer prior to manufacture and importation. Registrants have to submit chemical identity information, physico-chemical properties, health hazards, environmental risks, etc. In cases where the volume is more than 100 t/y, the risk information must include exposure scenarios describing handling measures, exposure control, management processes, etc. This tonnage band will be stepped down gradually to 10 t/y by 2020.
Next Steps
Upon receiving a registration and dossier on a chemical substance, the government will conduct a hazard examination and notify the registrant of the result. Many are expected to be found general substances, but if a substance is found to pose a hazard, the Ministry of Environment will designate it a toxic chemical substance, and may make the finding public. Starting first with volumes greater than 100 t/y (and funneling down to 10 t/y by 2020), the Ministry also will perform risk evaluations.
Depending on the hazard and risk findings, a toxic material will receive one of the following designations from the Ministry:
1) Authorized substances are deemed to pose a risk and thus need authorization. Examples may be chemicals that cause or are likely to cause cancer, mutation, reproductive capacity disorder or endocrine system disorder. Persistent and bioaccumulative substances also can be designated as authorized substances, and be subject to approval prior to manufacture, import and use.
2) Restricted substances are those that pose high risk when used in specific applications. These will be prohibited from manufacture, import, sale, storage, transportation or use involving such applications.
3) Prohibited substances, which pose high risks in all applications, can be prohibited from manufacture, import, sale, storage, transportation or use.
Many details are still being hammered out, such as the actual computerized filing system, data sharing rules for companies making the same substance, and qualifications for only representatives. As for enforcement, regulated chemical substances manufactured or imported without registration can be blocked from production or sale and recalled. Violators face prison sentences up to seven years or fines up to 200 million won ($183,600).
The English text of Korea REACH is available for download from the Korea Ministry of Government Legislation website:
https://www.law.go.kr/engLsSc.do?menuId=0&subMenu=5&query=Act%20on%20the%20Registration%20and%20Evaluation%2C%20etc.%20of%20Chemical%20Substances#liBgcolor0
Tim Sullivan contributed to this article.