Full Implementation of the Chemical Substance Evaluation Act

As the Chemical Substance Registration and Evaluation Act (hereinafter “CSREA”) takes full effect in 2015, not only are new chemical substances that are newly imported to the Korean  markets subject to hazard examinations, such examinations will also become mandatory for existing chemical substances which are manufactured and imported at more than one ton a year.  As a result, it is expected that there will be a significant impact across industries using chemical substances, including the electronics industry, automotive industry, shipbuilding industry and steel industry.

Repeal of Low Volume Exemptions

Under the current Toxic Chemical Substance Control Act, low volume chemical substances which are used under 100kg a year are exempt from the registration requirements, but such exemptions are not stipulated under the CSREA.  Rather, under the subordinate laws, new low volume chemical substances which are used under 0.1 ton a year will be eligible for simplified registration, where materials that are required to be submitted are minimized and the registration notification period is shortened.  In reflecting the industry’s concerns, chemical substances used for the purposes of R&D will be exempt from the registration requirements, as is the case under the current Toxic Chemical Substance Control Act.

Registration Costs and Period

The industry estimates that it would cost approximately KRW 70 million per registration to complete the registration process.  In comparison, it should be noted that one European chemical company spent approximately KRW 70 billion to meet the EU’s heightened registration requirements for chemical substances (EU-REACH).  Given that it is estimated to take six to nine months to complete the registration process, the electronics industry whose product life cycle is short would inevitably be dealt a heavy blow.

Protection of Trade Secrets

As the CSREA requires manufacturers, importers, sub-users and sellers of chemical or mixed substances to mutually disclose information regarding the name and amount of chemical substances traded, concerns arise that such disclosure may provide insights into the technology and business status and eventually reveal the trade secrets of the company.  In hopes of addressing the industry’s concerns on trade secrets, the Ministry of Environment is prepared to promulgate rules in the Enforcement Decree of the CSREA so that mandatory disclosure is mainly limited to information necessary for safety control, such as hazard and restricted usage of chemical substances.

Necessity of Reflecting the Industry’s Opinions

The Ministry of Environment announced that measures are being contemplated to provide some flexibility in the implementation of the CSREA, for example, by excluding certain chemical substances from the list of substances subject to the registration requirements by considering usage and the likelihood of exposure, or exempting chemical substances designated by the Presidential Decree from the requirements to submit certain registration materials.  The Ministry of Environment also deliberates on setting forth rules in the Decree of the Ministry of Environment so that a determination and notification regarding whether registration is successfully complete can be made within 30 days of receipt of the application for registration.  Further, in consideration of similar legislation such as the Unfair Competition Prevention and Trade Secret Protection Act, the Ministry of Environment is planning to take measures to minimize concerns regarding trade secrets, for example, by requiring a company that is providing information to disclose the information regarding the amount of chemical substances handled, but not the amount per manufacturing process or  place of business.  The Ministry of Environment expects that a draft proposal for the subordinate laws will be prepared by November and a final proposal will be prepared by December.  In the course of such preparation, the Ministry of Environment will strengthen communication by setting up a private-government committee for safety control of chemical substances, which consists of industry participants, experts from the private sector and relevant ministries, to engage in discussions together on the subordinate laws and other issues.  Therefore, efforts will need to be made in gathering opinions from each industry group and properly reflecting such opinions before the CSREA takes effect.