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Newsletter | December 2013
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ENVIRONMENT |
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Update on K-REACH and CCA |
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As noted in our previous issue, the Act on Registration, Evaluation, Authorization and Restriction of Chemical Substances (K-REACH) and Chemicals Control Act (CCA) were recently enacted. Below are some of the key updates on K-REACH and CCA.
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Update on Future Plans Concerning K-REACH and CCA
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Recently, various articles have been published on the impact of K-REACH. According to these reports, the enforcement of K-REACH would curtail research activities and raise trade secret leak concerns, as well as costing the industry up to KRW 112 million per chemical substance in order to comply. The president of the Federation of Korean Industries also announced at a recent meeting that K-REACH could become an obstacle to investment and job creation, while the American Chamber of Commerce in Korea (AMCHAM) sent a letter to the Ministry of Trade, Industry and Energy, and the Ministry of Environment (MOE) voicing their concerns about K-REACH.
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In order to address the above concerns, the MOE has taken the position that the industry members’ and other stakeholders’ views will be broadly considered and reflected during the legislative process for the lower statutes governing the implementation of K-REACH. To prepare the bills for the lower statutes of K-REACH and CCA, both set to take effect on January 1, 2015, the MOE is planning to form “Consultative Bodies for the Safe Control of Chemicals” for each legislation where the relevant Ministries, the industry, private organizations, and specialists will participate and discuss the relevant issues under each legislation.
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Following such discussions, the MOE expects to complete the first draft of the lower statutes to K-REACH by the end of this year. It also anticipates that enactment procedures such as the holding of public hearings will take place in the third quarter of 2014, followed by the promulgation of the laws possibly in the third quarter.
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Discussions Concerning ‘Lower Volume Exemption’ under K-REACH
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Among the various concerns regarding K-REACH, the industry is particularly interested in eliminating the ‘low volume exemption’ with respect to K-REACH. A ‘low volume exemption’ refers to an exemption from the reporting/registration requirements under K-REACH permitted only when a small volume of a chemical substance is manufactured, imported or sold.
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Companies must report and register the use and volume of a chemical substance to the Minister of Environment prior to its manufacture or importation under K-REACH. In the initial K-REACH bill introduced to the National Assembly in September 2012, the reporting requirement for both preexisting and new chemical substances only applied to cases where the manufactured or imported volume was at least one ton annually. |
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However, as there was a growing consensus for stricter regulations of chemical substances due to several high profile accidents involving various chemical substances, a new bill was proposed by the National Assembly in April 2013 removing the “one ton or more” qualification with respect to new chemical substances. The promulgated act requires all new chemical substances and preexisting chemical substances whose annual volume equals one or more tons to be reported.
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According to media coverage, both multinational and domestic companies that produce semi-conductors, automobiles, smartphones, etc. would consider moving their R&D centers to overseas if the low volume exemption is eliminated. As this Act also requires the seller to impose the duty to report on the sellers, the fate of the low volume exemption may have effects throughout the relevant industries. |
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As the presidential and ministerial decrees of this Act have not yet been specified, the issue regarding low volume exemption clause for new chemical substances, is expected to continue generating much debate. Therefore, it is crucial to understand the impact that K-REACH and the elimination of the low volume exemption would have on your company, and to state your views as needed throughout the legislative process.
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