Japan News: EU’s REACH extending to Japan

May 7, 2007 – Another set of regulations from the European Union regarding safety of thousands of chemicals is having a major impact on manufacturers in Japan and Asia, with many likely choosing to stop using unregistered chemicals altogether, and chemical makers having to rethink their businesses, notes an analysis in the Nikkei Business Daily.

The EU’s REACH policy (Registration, Evaluation and Authorization of Chemicals), which goes into effect next June, requires registration and safety & toxicity benchmarks for about 30,000 chemicals shipped into Europe for use in manufacturing. Criteria include, for example, whether any animal tests are involved in the chemicals’ production.

Leading Japanese appliance makers including Matsushita Electric Industrial Co. and Toshiba Corp. are already asking suppliers to list all their chemicals and indicate whether they will register them with the new EU regulations — and will dump those suppliers who don’t comply, the paper notes.

On the other hand, meeting the list of regulations is costly for chemical suppliers who will need to add rounds of tests and assessments for their tons/year of output. This will add as much as tens of millions of yen (~US $100K+) per chemical compound, for just one round of tests (e.g. toxicity testing), and in small amounts of just 1-10 tons, according to the paper. “Registering several hundred chemicals will cost billions of yen,” an unnamed mid-size chemical maker told the Nikkei Business Daily.

And while unregistered chemicals from outside the EU will be allowed, it’s unfeasible and risky to change supplies to different regions, which may or may not adhere to the stricter policies. And not registering with REACH will almost certainly mean being locked out of some markets altogether. “We are under pressure to decide which products we should depend on for earnings,” said an exec at Mitsui Chemicals Inc., cited by the paper.

In addition to monetary costs, REACH also raises concerns over IP. Formulation techniques “can be approximated even without matching the exact production technique,” said a concerned official at a chemical maker. “There are no clear rules on the protection of intellectual property rights,” added another unnamed industry source.

Ultimately Japanese chemicals firms need to understand that the goal behind REACH is to give competitive advantage for European chemical makers, the paper contends. REACH early-adopters now include giants such as Germany’s BASF and well as DuPont in the US, so Japan’s smaller chemicals firms need to act fast, the paper notes. Japan shipped >$9 billion worth of chemicals to the EU in fiscal 2004 (and 5x that amount in manufactured goods), and the new REACH regulations could have a chilling effect on the local industry.


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