China: China 'Reach' laws impose registration requirements on all chemical substances produced in or imported into China

Last Updated: 10 November 2010

By Moritz Heidbuechel, Tina Zhang, Rachael Matthews and Dr Dietmar O. Riech

Revised new rules in China impose onerous registration requirements for all new chemical substances produced in or imported into the People's Republic of China ("China"). These revised regulations, titled "Measures for Environmental Management of New Chemical Substances", require almost all businesses dealing with chemical substances in China to comply with the registration and reporting requirements, and are significantly more burdensome than the previous rules. They became effective on 15 October 2010 and have substantial consequences for businesses and their trade with China, particularly if they fail to comply. In deference to the registration system for chemicals now operating in the European Union ("EU"), the new Chinese rules are often referred to as "China REACH".

This newsletter should help you to understand the main points of the new legislation and assist you in assessing whether the registration requirements will impact your business.

What needs to be notified?

China REACH requires the notification of all new chemical substances that will be researched, produced in, imported into or processed in China. This mainly pertains to substances that are raw materials or intermediates; finished products such as pharmaceuticals, pesticides, veterinary medicines, cosmetics, foodstuffs and food additives, are explicitly exempted from notification. However, where new chemical substances are intentionally released through the normal use of a finished product, the chemicals in these products are also subject to the requirements under China REACH. An example of "intentional release" may be the toner in laser printer cartridges, the perfume in scented air fresheners, or the paint or aerosol in spray paint cans.

Notification is only necessary when the substance concerned is a "new chemical substance". A "new" substance will be one that is not already listed in the Inventory of Existing Chemical Substances in China ("IECSC"), which is kept by Chemical Registration Centre ("CRC") of the Ministry of Environmental Protection ("MEP"). The IECSC may be searched online via CRC's official homepage at http://www.crc-mep.org.cn/iecscweb/. This official web-database contains a considerable number of chemical substances; however, it is not comprehensive and contains far fewer entries than the EU EINECS or REACH databases. It also does not contain confidential substances or substances that have not yet been assigned a CAS number. A comprehensive search may be performed for a nominal fee by contacting CRC, which will issue a confirmation where the requested substance is already listed in the IECSC.

No notification is necessary for substances already included in the IECSC.

Who needs to notify?

Generally speaking, every producer, importer, researcher and processor has the obligation to notify new substances. In deviation from the original requirements, new chemical substances in bonded areas or export processing zones are now also covered by China REACH. Even if your operations in China were limited to export processing zones and were previously exempted from notification, such exemptions will no longer apply and you may be subject to notification requirements.

The new rules also only allow entities registered within China to notify chemicals. Foreign producers and traders will no longer be able to make necessary notifications directly, but will instead either have to use an importer or agent to conduct the necessary notification formalities. This enlarges the risk that confidential information will be disclosed, so special care should be taken to mitigate such risks.

An agent may be a subsidiary of the foreign producer or an independent third party. However, to be eligible, the agent must fulfil certain requirements which, among others, include:

  • It needs to have a definitive place on establishment within China;
  • The registered capital needs to be at least RMB 3,000,000 (approx. EUR 325,000 or USD 450,000);
  • The company needs to employ staff experienced in the notification of new chemical substances; and
  • The company may not have a record of violation of China REACH during the three years prior to registration.

An importer, on the other hand, only needs to fulfil the last of these requirements, i.e. "no bad record" under China REACH.

Unlike the EU REACH system, China REACH does not allow the possibility of appointing an "only representative". Where a foreign producer sells through a number of importers or directly, each of these entities will be required to complete a separate registration. Coordination is advisable in such circumstances.

The new Chinese system also does not require registrants of the same chemical substance to submit a joint registration. While this may result in further work for each company, it eliminates the difficulties faced with the EU system with respect to confidentiality, compliance with competition rules and the establishment of complicated consortium structures for the preparation of the joint registration. However, while they are not required, joint notifications are permitted in China, meaning that two ore more notifications may submitted at the same time or consecutively, where those applications rely on the same set of testing data. In this case, the applicants will have to agree on the distribution of costs for the application and the related scientific data, as well as other points governing their relationship (e.g. data ownership and rights of use, responsibilities, joint commissioning of testing).

How is notification handled?

There are various kinds of notification, depending mainly on the tonnage of a new substance to be imported or produced. Unlike under the previous regime (or EU REACH), there is no longer any complete exemption from notification. Even tiny amounts of a new chemical substance to be produced or imported into China need to be notified.

The "scientific research notification" is the simplest form of notification. It only applies where the annual volume is below 0.1 metric tons and the substance is procured for scientific research or for the purpose of conducting eco-toxicological tests on the respective new chemical substance as required under China REACH.

A "simplified notification" process is available for new chemical substances that

  • are only used as intermediates or for export where the volume does not exceed one metric ton per year;
  • have a volume of less than one metric ton per year and are used for scientific research, but do not qualify for the scientific research notification;
  • are polymers with a monomer concentration of less than 2% or a low concern polymer; or
  • are used for research and development in an amount of not more than 10 metric tons every two years.

Simplified notifications will generally only require the submission of eco-toxicological testing results of the substance, but the specific requirements will depend on the actual substance. However, please note that all eco-toxicological testing required under China REACH will generally have to be performed by authorized institutions within China. Eco-toxicological testing performed for the purposes of registration under the EU REACH system will generally not be accepted, even if this results in additional animal testing.

Where the requirements for the above forms of notification are not met, a regular notification will be necessary. Like its EU REACH counterpart, the documentation requirements for a regular notification under China REACH increase with the annual tonnage, divided into the following four categories:

Grade Annual Tonnage
1 1 to below 10 metric tons
2 10 to below 100 metric tons
3 100 to below 1,000 metric tons
4 1,000 metric tons or above

Specific documentation and procedural requirements are set out in the Notification and Registration Guidelines for New Chemical Substances published by the MEP in September 2010. Generally, a notification will have to be accompanied by the following documentation:

  • Classification and labelling samples;
  • Safety data sheet;
  • Physical and chemical, toxicological, and eco-toxicological testing reports; and
  • Risk assessment report.

All of the above must be submitted in the Chinese language. The classification of chemical substances contained in all documentation has to be in line with the Globally Harmonized System for classification and labelling ("GHS"), as implemented in China.

While testing results obtained outside China are generally acceptable, eco-toxicological testing must include testing on Chinese species within the territory of China. Companies which have already registered substances under EU REACH may be able to re-use much of the information submitted for that registration. Care must, however, be taken when using such information as many consortium agreements and letters of access restrict the use of this information to the EU registration. A company may find that it therefore does not have the ownership or license rights necessary to re-use this information and may face significant contractual penalties, not to mention the revocation of rights if it does reuse the information without permission.

What does it cost me?

Except for the enquiry fee mentioned above, the CRC is currently not charging any fees for accepting notifications. Notifications therefore do not carry the fee burden associated with them in the EU.

However, it should be noted that the Chinese administrative law permits CRC to levy fees on its services, so this situation may change in the future. In addition, testing fees or the fees for engaging an agent to prepare the notification may still be rather costly. These can be reduced by using data already available wherever possible.

How do I protect my confidential information?

Where the notification contains confidential information, the notifying party may request that such information be kept confidential. This request may be granted by CRC if it is supported by sufficient justification, which will have to be submitted with the notification documents. Information regarding hazards to human health or environmental safety may not be kept confidential.

To protect a confidential chemical formula, a generic chemical name may be assigned to a new chemical substance by masking structurally descriptive parts of the substance. For example, hydrogenated palm-oil fatty acids may be given the generic name hydrogenated fatty acids. In any case, the name should still reveal the chemical identity of the substance to the maximum extent possible.

Where a specific use needs to be kept confidential it may be replaced by a use category.

Certain information will be publicly available and published on the MEP-CRC website. This includes the information provided on the certificate to be issued by CRC, see below.

In addition, you should ensure that any testing institutions or agents used are bound by valid and enforceable confidentiality agreements.

What happens after notification?

Upon completion of notification procedures, the CRC will review the submitted documents and classify the new chemical substance as "general" or "hazardous". After a period of 50 to 90 days starting from the receipt of a complete submission, the CRC will issue a classification certificate. The exact timeframe depends on the kind of notification.

The certificate will include the classification of the substance, the name of the certificate holder, the name of the substance, the purpose for which it was registered and the quality grade and quantity of the notification. If the applicant (e.g. a producer or importer) is a domestic entity, it will be the certificate holder; if the applicant is a foreign entity, the compulsory agent will be the certificate holder and the name of the foreign applicant will also be listed on such certificate.

Even after the certificate has been issued, the certificate holder is under an obligation to comply with certain ongoing reporting requirements. In the case of simplified notification, an annual report needs to be submitted by 31 January of the following year, including information concerning the actual importation of production tonnage. In case of new chemical substances which are classified as "hazardous", additional reports need to be submitted covering the implementation of risk control measures, environmental exposure and the release of the substance, as well as observed actual impacts of the substance on the environment and human health. Original documents relating to actual import and production will have to be kept on record by the certificate holder for a period of 10 years.

In the case of a regular notification, a "first activity report" will have to be filed within 30 days of the first production or import of the substance. For hazardous new chemical substances, a report must be filed each time a new processor or user is involved. Re-notification may be necessary where the registered purpose or the registered quantity of the substance change. To our understanding, in such cases a complete application will have to be submitted, whereby existing documentation may be re-used.

What are the consequences of non-compliance?

New chemical substances may not be produced in or imported into China prior to the notification and issuance of a respective certificate under China REACH. Failure to comply with the obligations imposed under China REACH can mean that authorities refuse to allow the import of new chemical substances, or even prohibit the construction of production facilities for new chemical substances. In addition, fines of up to RMB 30,000 (approximately EUR 3,250 or USD 4,500) may be imposed on the violating entity, plus black-listing for future applications under China REACH. Further liabilities may arise where the violations result in personal injury of human health or property.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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