China enacts its own chemicals policy

The implications of EC chemicals legislation are far wider ranging than Europe since the European market imports huge quantities of products and consumer goods from the global basket. And the most influential market of all, China, is taking a very careful look at European regulations as well as issuing proposals for the control of the chemicals industry within its own borders. The China leather industry has continued to show rapid growth over the past ten years and, in footwear terms alone, is by far the biggest supplier in the world. Their hugely successful manufacturing base is not without its own problems. To continue to supply major markets such as the US and Europe, they must comply with restrictive legislation with regard to hazardous chemicals. There is also still an acknowledged lack of qualified personnel and advanced technology in leather processing. Due to the lack of advanced effluent treatment technology and equipment, pollution caused by some small tanneries is serious. There can be no doubt that China is now taking the subject of environmental protection very seriously. There has already been a noticeable push towards closing down beamhouse operations and producing leather from imported wet-blue. In early July, the South China Morning Post reported that the authorities in Zhejiang had decided to take responsibility for stemming pollution after a series of environmental disasters. Officials in Ping Yang county, known as the pig leather capital, have ordered a massive restructuring of the area's 1,200 tanneries in an effort to clean up the heavily polluted waterways. In the past six months, the local authorities have ordered the closure of 786 leather factories and created 122 new plants, consolidating another 370 facilities into just 64. This drastic action has also included the construction of expensive wastewater treatment plants and was necessary because an estimated 8,000 tonnes of waste a day was being dumped into the Ao River, transforming it into a foul-smelling cesspool. The pollution was so bad it was reported that farmers downstream could not grow crops, while residents constantly suffered from mysterious diseases and only a small number of children in the area were considered to be healthy. Many residents were demanding to be relocated by the local government. Ping Yang county was not the province's most contaminated region but its environmental bureau was placed on a national Top Ten blacklist of the worst cases breaching environmental regulations. However, the clean-up comes at a price. Annual production at the 1,200 plants was valued at RMB4 billion (US$483 million). They employed nearly 30,000 people and provided millions in tax revenue. On September 12, 2003, provisions on the environmental administration of new chemical substances were issued by the State Environmental Protection Administration of PR China. It was effective from October 15, 2003, but the country did not publish the necessary guidelines until December 2003 with no official translation being available at the moment. The general provisions have been formulated to help with environmental management of new chemical substances, preventing pollution, protecting human health and safeguarding the environment. They apply to both manufacture and imports of new chemical substances within China. Registration certificates From now on, there will be a system of notification and registration which requires manufacturers and importers to apply for registration certificates for the environmental management of the chemicals in accordance with the relevant provisions. This will not be applied to those chemicals which have been manufactured or imported before the effective date of the provisions. The State Environmental Protection Administration of the People's Republic of China (SEPA) will be responsible for compiling and publicising the inventory of chemical substances manufactured or imported in China. They are empowered to formulate and promulgate relevant standards and technical requirements for the environmental management of new chemical substances. Prior to manufacture or import, companies are expected to complete and submit notification forms and testing reports for the chemicals, together with a copy of the document provided by the testing organiszation, to the Chemical Registration Center of SEPA. This includes the name; the molecular structure; the method of measurement; the proposed use; the scheduled annual amount of manufacture or import; the physical properties, toxicological and eco-toxicological characteristics; the measures for accident prevention and emergency responses; and the measures for pollution prevention and elimination and for waste disposal etc. Where testing is carried out in other countries, the testing organisations involved must be accredited with the necessary qualifications by competent authorities in the countries concerned. The eco-toxicological data of new chemical substances must include those obtained through biological tests performed in China by Chinese testing organisations. Companies who provide information containing commercial and technical secrets are offered confidentiality. It is also possible to complete serial notification where chemical substances have similarities in molecular constitution, or similar or same test data, whereas the registration certificate will be individually applied to each new chemical substance. When a new chemical has been included in inventories of existing chemicals in at least four countries or regional economic areas, the notifier is only required to complete and submit the notification form and the report of eco-toxicological testing performed in China. Exemptions may be applied for when the annual amount of manufacture or import does not exceed 100kg and is only used for the purposes of scientific research; when a polymer contains a new chemical substance monomer of less than 2% (w/w); or the total amount does not exceed 1,000kg to be used specifically for research and development of technologies. In this case, the manufacturer or importer may apply for a one-year exemption from notification. No extension will be granted. Also, samples of new chemical substances may be imported for the purpose of performing eco-toxicological tests as required by the provision. Holders of registration certificates are required to fill in and submit a record form on manufacture, import or circulation of new chemicals to the environmental protection administrative department of the county where the manufacturer or importer is based within five days of each batch actually being manufactured, imported of transferred to users. Violations Anyone found in violation of the provisions or having made falsifications in their application for registration certificates will be subject to a minimum fine of RMB10,000 ($1,207) up to a maximum of RMB30,000 ($3,622). In addition to the fine, the SEPA will record and publicise the violations and refuse any notification of new chemicals for the following three years. Actions that would be in violation of the provisions include: * Refusing field inspections by the competent environmental protection administrative department or falsifying products during inspection * Having not filled in and/or submitted the record form providing information on the manufacture, import and circulation of new chemical substances as required * Having not kept the materials for notification, manufacture, import and environmental impacts of new chemical substances as required * Manufacturing or importing new chemical substances without application for/or being awarded the registration certificates European concerns Since Europe is home to the biggest and most advanced chemicals producing companies, there are a number of concerns over the new Chinese regulations. The Chinese proposals state that SEPA shall establish an Expert Committee whose main responsibility will be to evaluate the environmental impact of the new chemicals and submit written reports to SEPA. Once CRC-SEPA have received notification of a new substance, they are required to respond within 15 days, having checked the information supplied to them, to inform the applicant in writing whether or not the data supplied to them conforms with the provisions. They are then required to pass on accepted notification details to the Expert Committee within five days of acceptance. The Committee then has 60 days in which to consider the environmental impact and submit a written evaluation to SEPA. SEPA then have a further 30 days in which to decide whether or not to approve the application for registration. There is concern as to whether the infrastructure with respect to the Expert Committee is actually in place and if, in reality, it does not exist yet then it will not be possible to complete the registration procedure. Another cause for concern is the requirement for biological tests to be carried out in China. Article 8 states: The eco-toxicological data of new chemical substances shall include those obtained through biological tests performed in China by the application of China's test organisms. Four laboratories have been referred to by the Chinese authorities in this context but there is uncertainty over whether these have been formally accredited for testing chemicals under the new legislation. Also, according to current knowledge of the Chinese market, it is considered that the number of laboratories available to carry out the work is far too low to cope with all necessary tests. It is the eco-toxicological testing requirements which pose the greatest problem. The tests which have to be performed with local test organisms are not specified and there is no guidance offered on how to conduct the studies or interpret the results. A biodegradability test has been specified for ecotoxicity testing by a certified Chinese test laboratory. It is understood that similar tests according to internationally agreed standards (OECD) will not be accepted by SEPA. This would lead to a duplication of testing should substances require registration in more than one country. There are also doubts as to how the test results will be interpreted by the Chinese authorities. This lack of transparency is not conducive to making companies wish to launch their new technologies on the Chinese market. It was only in mid-June 2004, that SEPA published their Testing Methods for Chemicals, currently available only in Chinese. Only two of the four Chinese laboratories have stated that they are capable of carrying out the necessary testing. One of these was unable to explain how the studies will be conducted and the other could not provide a copy of the laboratory accreditation, as required by the legislation. As a result of the new legislation, no new chemical substances have been imported into or manufactured in China since October 15, 2003. Several companies have submitted notifications since that time but no decisions have yet been made. Therefore, the 90-day procedure envisaged by the provisions has been infringed. The legislation seems to have been taken for health and environmental reasons without any obvious trade objective. Indeed, the Chinese provisions affect local industry by depriving it of chemicals that are needed for economic development. In fact, the legislation presents greater difficulties of compliance for overseas companies exporting to or manufacturing in China because they are more likely to introduce new and innovative chemicals to the Chinese market. Since the legislation only applies to substances that are newly-imported or manufactured since October 15, 2003, domestic Chinese manufacturers are much less affected and the legislation might be seen to constitute a trade barrier. Since the legislation is applicable to both domestically manufactured chemicals and to imports of new chemical substances, it does not, as such constitute an infringement of the GATT non-discrimination principle. However, as the legislation is regarded as a technical regulation it is notifiable under the Technical Barriers to Trade Agreement. It is not known if, in fact, China has notified the WTO of this legislation. All countries have the right to introduce chemicals legislation setting the level of health and safety that they feel is appropriate. The Chinese requirements for notification of new substances are not in themselves overly burdensome or excessive. European concerns are that China has introduced the legislation without putting the necessary infrastructures in place. The current inability of the Chinese legislators to perform within the stipulated timescale, along with the lack of official translations and the penalty for transgressions being a three year stop on new notifications, is causing great anxiety. However, the Chinese environmental authorities are said to be making great efforts to overcome the problems and it is not uncommon for new legislation the world over to get off to a shaky start. Satra seminars Doing their bit for global understanding, Satra scheduled three days of seminars on restricted substances at their offices in Dongguan from October 11-13. Legislation is increasingly dictating what can and cannot be used in consumer products and, with China dominating the footwear industry, they cannot afford to be lagging behind when it comes to excluding the use of those products which are deemed to be hazardous since they risk their products being banned by major markets such as the US and Europe. According to Satra chemist John Hubbard, many of the attendees were manufacturers who sell into the European market, either directly or to a major retailer or brand and, therefore, the legislation about restricted chemicals will apply to the final product. It is also the case that many major retailers such as Adidas and Reebok have specifications which exceed EU or any specific national legislation and their suppliers will need to be able to understand these in order to demonstrate compliance to their customers. Chinese manufacturers will be able to obtain a better understanding of restricted substances concerning products intended for a European market. The seminars, which were also aimed at western resource companies importing Chinese products for US and European Union markets, explained chemical substances commonly found in consumer products such as clothing and footwear but which are either restricted or banned completely. 'This is an important area of awareness for manufacturers and importers as restricted substances legislation is growing around the world', says Hubbard. The seminars were presented in English and Chinese and explained the legislation and testing methods for a range of restricted substances such as chromium VI, pentachlorophenol (PCP), azo dyestuffs (aromatic amines), formaldehyde, di-octyl phthalates (DOPs), latex, organotins and transition metals antimony, arsenic, lead, cadmium, selenium, barium, chromium and mercury. The day was divided into four sections: details on the restricted substances where they are found, why they are used and why they are restricted; a short session on analytical techniques; demonstrating compliance which looks at how restricted substances specifications are developed and how companies can ensure that they meet the requirements and includes auditing, understanding laboratory reports and certificates of compliance; eco-labeling and review. Sessions 1 and 3 provided the lion's share of the day. Another international organisation, BLC Leather Technology Centre has been operating in China for several years and enjoys good and growing relationships with companies producing leather and leather products. Members use BLC to assess their products through testing and fault diagnosis, as well as working towards continuous improvement through access to advice, training and consulting. In addition, BLC services in China include comprehensive factory design and specification. BLC has formed a relationship with Fang Yuan Testing in Zhe Jiang Province, part of which is to offer a routine testing service against international standards, which is especially valuable where Chinese organisations want to demonstrate product consistency.