Last reviewed 9 September 2016
In this special report, Phil Todd, Global Distribution, Safety and Hazard Communication Manager of Syngenta, discusses the issues involved when exporting chemicals from the EU/European Economic Area (EEA) to countries outside of the EU/EEA (eg the USA).
Readers will be familiar with the requirements for supplying hazardous chemicals to customers in the EU Member States and EEA countries (Norway, Iceland and Lichtenstein). This article will examine the requirements that currently apply, in respect of the UK, until exit from the EU has been negotiated and finalised, when exporting these chemicals from the EU/EEA to non-EU and non-EEA countries.
It will examine the hazard communication requirements (labels and safety data sheets (SDSs)) and will also take a look at the main export restrictions: Prior Informed Constant (PIC), drug and chemical weapons precursors.
As an exporter, the first question to address is how to label the chemicals. In principle, there are three types of labelling to consider.
Requirements of the exporting region for labels aimed at the user.
Requirements of the importing region for labels aimed at the user.
Labelling — EU
Readers are aware that chemical labelling within the EU/EEA is defined by EC Regulation 1272/2008 on classification, labelling and packaging of substances and mixtures (CLP Regulation). The CLP Regulation, with a few exceptions, applies to chemicals that are placed on the market in the EU/EEA. At first glance, the CLP labelling requirements do not appear to be triggered when a hazardous chemical is exported from the EU/EEA as it is not placed on the market in the EU/EEA. However, there are three scenarios that can potentially challenge this assessment.
The definition of “placing on the market” is based on the concept of transfer of ownership to a third party: it is not necessary for chemicals to physically move for them to be placed on the market. Third parties are also considered to be separate legal entities, even when owned by a common owner, ie different subsidiaries of the same company are considered to be third parties. Modern companies often have complex legal structures, often for tax optimisation reasons, which can mean that the exporting company and the manufacturing companies are different. In this situation, the hazardous chemical can be placed on the market in the EU/EEA before it is exported, meaning that the requirements of the CLP Regulation should be met.
Another common situation is that companies store their products in third-party warehouses prior to export. At first glance, this might appear to be thought of as “placing on the market”. However, a deeper analysis of the definition shows that storing chemicals in a third-party warehouse should not be considered to be “placing on the market” and, therefore, does not trigger the CLP labelling requirements. The reason is that for something to be “placed on the market”, the legal entity in physical possession of the chemical must be free to do what it wants with the chemical. A third-party warehouse in the EU/EEA, although in physical possession of the chemical, is not the legal owner of the chemical and is not free to do what they want with it. Of course, the warehouse needs to know how the chemical is classified in EU terms in order to be sure that they comply with EU legislation. This is easily satisfied by providing an EU format SDS.
The final tricky situation is toll manufacturing. In a classic toll manufacturing arrangement, the toll manufacturer provides the equipment and personnel, but its customer provides the raw materials and owns the product. This situation is similar to third-party warehousing in that the toll manufacturer never owns the chemical and, therefore, it is not placed on the market, even if then physically transferred to the customer’s EU/EEA location. Again, supplying an EU format SDS ensures that the toll manufacturer’s needs to understand the hazards of the chemical are met. A word of caution is needed at this point: toll manufacturing agreements are often complex and may not follow the classic model described above and each agreement should be checked to see if the toll manufacturer could be placing the chemical on the market when the product is moved to the customer’s premises.
Having established that CLP often does not directly apply to hazardous chemicals that are exported from the EU, it would be easy to conclude that CLP does not apply.
However, there is a specific regulation that covers the export of chemicals from the EU: EU Regulation 649/2012 on the export and import of hazardous chemicals. This regulation is the European implementation of the Rotterdam Convention — of which more later. It is often known as the Prior Informed Consent Regulation (PIC Regulation), but covers more than just chemicals subject to PIC.
In particular, Article 17 of this regulation also requires chemicals to be labelled according to CLP when they are exported. As far as practical, the labels should also be written in an official language of the importing country. The European Chemicals Agency (ECHA) helpfully provides a list of official and commonly used languages for a number of countries in its guidance on implementation of EU Regulation 649/2012. There is no guidance on what “as far as practical” means. It is likely that this will vary according to the destination of the chemicals and also the circumstances of the exporter: it would almost certainly be considered reasonably practical to label chemicals in French if they were destined for a French speaking country such as Tunisia, Algeria, etc. However, it is more questionable if a company would be expected to label its chemicals in Arabic or Hebrew, especially if the exporting company was small, with limited resources.
However, it is worth noting that software capable of labelling in more than the EU official languages is increasingly within the reach of small companies as PC-based packages are now available at reasonable cost. The implication is that it will become increasingly difficult to argue that it was not reasonably practical to label chemicals in the language of the destination country. However, there is no known enforcement action to indicate how the regulators view “as far as practical”. In the absence of external guidance, exporters will need to make their own judgment about what is practical for their circumstances and be prepared to justify their decision.
The requirement to label exported chemicals in accordance with CLP applies unless it would conflict with the requirements of the importing country. In practice, this means that if the destination country has defined requirements for chemical labels and the chemical is not placed on the market in the EU/EEA prior to export, then CLP labelling is not required provided that the chemical is labelled according to the requirements of the importing country. With the increasing implementation of the Globally Harmonized System (GHS) worldwide, the difference between CLP labels and labels from other countries will gradually decrease and, in many cases, the two different labels will be indistinguishable, except in certain details (eg prescribed sizes, names and addresses, etc).
In addition to CLP labelling, the exporter is also required to include the production or expiry date on the label, if one is considered to be appropriate. If the expiry dates are influenced by temperature, different dates for the different climates should be listed. Again, it is left to the exporter to decide what “if appropriate” means in each case.
Finally, the exporter is required to provide a REACH compliant SDS to the importer, again in the official language of the destination as far as practical.
Just as for labelling, the increasing sophistication of SDS authoring software means that it is becoming more practical for a small company to produce SDSs in languages not commonly met in Europe without incurring excessive expense. In contrast to chemicals supplied to EU customers, the regulation appears to require the SDS to physically travel with each shipment.
Labelling — transport
The good news is that there are relatively few surprises when considering the transport labels/markings that are required for exporting hazardous chemicals outside of the EU/EEA. The main international modes of transport such as air and sea have effectively harmonised their requirements such that a chemical labelled/marked for one mode of transport will often be labelled/marked correctly for another mode of transport. The big difference is that, under EU/EEA land transport, the Proper Shipping Name (PSN) is not generally required, but is required for the sea and air modes. Essentially, this means that a multimodal journey will generally be possible without interruptions due to changes in labelling/marking, etc.
The same is generally true once the product has been delivered to its destination and the recipient (such as distributor) then wants to ship it further to another destination. Although the modal regulations are generally harmonised, a few pockets of disharmony remain. The main causes are as follows.
Where national regulations have extra requirements or the requirements deviate from the UN Recommendations. The US domestic transport regulations, commonly known as 49CFR, are a good example of this situation. These regulations contain extra provisions for combustible liquids (GHS flammable liquid Category 4) and optional different definitions of Environmentally Hazardous Substances (EHS) (UN 3077/3082).
Where national regulations implement a different version of the UN Recommendation on the Transport of Dangerous Goods (the “Orange Book”) from the international modes of transport. A good example of this situation is the national rules in Brazil, which officially are based on the 12th edition of the Orange Book while the current international modes of transport are based on the 18th edition.
As an exporter of hazardous chemicals from the EU/EEA, these subtleties should not have a direct effect. Where an international journey is completed by a national part, there are usually mutual recognition clauses that allow the journey to be completed without changing labels/markings, etc. In theory, this means these subtleties are the issue for the customer to deal with. In reality, there may be commercial pressures for the original supplier to help by, for example, including national transport labelling on the original pack as well as the labelling/marking required by the international transport modes.
Labelling — importing countries requirements
This article is focused on EU/EEA and international requirements. However, a company exporting from the EU/EEA should also consider any potential requirements of the importing country. The biggest problem here is the large number of potential requirements. Typically, these cover customs requirements, national variations of international agreements and national restrictions. Often, these are not widely known outside of the country. Even if known, they are often very difficult to interpret for an “outsider”. An additional complication is that it is often very difficult to judge if a requirement is being accurately described: often business requests are disguised as legal requirements of the importing country.
The tried and tested technique of “show me where it says that in the legislation” is often ineffective as it can result in a reference to legislation written in a language that the exporter cannot read. How can an exporter tackle these issues? There are two broad approaches that an exporter can take.
Obtain the expertise themselves. This can be done by employing staff in the importing country or by retaining a suitable consultant. This option is most likely to be chosen when a company wishes to retain control of the commercial chain, often by selling the product themselves in the importing country. In this option, the company will be both the exporter from the EU/EEA and the importer into the importing country.
Avoid the problem using the sales conditions. In this option, the agreed conditions of sales mean that the transfer of ownership takes place after the export from the EU/EEA. This legally means that the customer is responsible for meeting the requirements of the importing country. This is an attractive option for small companies who may not have the resources to employ consultants or local staff. It can also be attractive where the value of the business to a country does not justify the cost of gaining the knowledge required to satisfy local requirements. However, this option may not be as clean as it seems: providing good customer service may result in the exporting company providing support to the importing country.
Unfortunately, it is still possible for a company to fall foul of a country’s laws even if it has tried hard to be fully compliant. One problem that can occur is that some countries do not account for requirements imposed by exporting countries. This can lead to confusing situations where complying with exporting countries’ requirements can lead to allegations of non-compliance with importing countries requirements. Exactly this situation was experienced by a number of companies in the early days of CLP implementation when exporting crop protection active substances to the USA. The design of the supply chain meant that the substances were placed on the market in the EU/EEA prior to export. Therefore, CLP labels were applied to the packages at the manufacturing location prior to export.
In the USA, the labelling requirements for active substances that will be used to manufacture crop protection products (mixtures) are governed by the same rules that govern the final product. These are defined in the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). FIFRA has its own classification criteria that are different to the GHS criteria. However, it uses the signal words “Danger” and “Caution” that are used in GHS. The problem is that the criterion for their use also differs from the GHS. This led to the situation where the substance required the signal word “Caution” under CLP but “Danger” under FIFRA. The packages were correctly labelled with both signal words. However, during import into the USA, the Environmental Protection Agency (EPA) inspectors from the well-known EPA District 5, based in Chicago, decided that the presence of the CLP signal word “Caution” contravened the FIFRA requirements that products must not be misbranded. In essence, this prohibits anything that might appear to contradict or weaken the labelling messages on the labels. The EPA inspectors decided that the CLP “Caution” gave the impression that the FIFRA “Danger” was excessive or unjustified. They imposed five-figure financial penalties that the importing companies had to agree to pay before their goods would be released. It took several years of work by the trade association before the EPA head office in Washington issued guidance to its regional inspectors that this situation should not be considered to be misbranding. The companies affected never received a refund for penalties.
Having established the labelling and SDS requirements for hazardous chemicals that are exported from the EU/EEA, the next question to be addressed is whether there are any requirements to obtain permission to export the chemical. In general, if it is legal to sell the chemical in the destination country, then it is legal to export it from the EU/EEA. However, there are certain restrictions that an exporter needs to be aware of. These come from various international agreements that the EU/EEA and/or the Member States have agreed to.
Export notifications — PIC
The first possible source of export restriction is EU Regulation 649/2012 that has been mentioned previously. This regulation implements the Rotterdam Convention in the EU.
The Rotterdam Convention is an international agreement that aims to control the export of certain chemicals. The overall objective is to ensure that countries can make an informed decision about permitting certain chemicals to be imported into their country. It has its roots in increasing concerns that some chemicals, banned or severely restricted in the developed world, were being sold in developing markets that did not have the capabilities to safely handle the chemicals and whose governments were often unaware that these chemicals were being imported. In the mid-1980s, the UN Food and Agriculture Organisation (FAO) launched a voluntary code of conduct on the distribution of pesticides: a code that is supported by the crop protection industry. At a similar time, the United Nations Environment Programme (UNEP) published voluntary guidelines concerning the exchange of information during the international trade of chemicals. In 1989, these two organisations introduced the concept of PIC into these instruments.
In 1992, the Rio Earth Summit called for the voluntary PIC procedure to be turned into a legally binding instrument. This was achieved in 1998 when the Rotterdam Convention was signed by 72 countries. It has since been adopted by over 170 countries and became legally binding on these countries in 2004.
The basic principle is that before certain banned or severely restricted chemicals are exported, the importing country is informed and is given the opportunity to refuse the import. As with all international agreements, there is a secretariat that administers the convention and runs the process for adding or removing chemicals from the convention.
As is often the case, the EU implementation of the Rotterdam Convention goes beyond the convention on which it is based. The major way in which the so-called EU PIC exceeds the international PIC is in the number of chemicals that are covered. The Rotterdam Convention currently covers 47 chemicals, of which 33 are pesticides and 14 are industrial chemicals. In contrast, the interactive database of affected chemicals, hosted by ECHA, contains 1243 entries. One explanation for the significant difference is that the ECHA database lists the specific substances while some of the entries in the Rotterdam Convention describe groups of chemicals. Hence, the entry in the Rotterdam Convention for “mercury compounds, including inorganic mercury compounds, alkyl mercury compounds and alkyloxyalkyl and aryl mercury compounds” corresponds to 158 specific substances in the ECHA database.
However, there is a second group of chemicals that are included in EU PIC that have either never been proposed for inclusion in the Rotterdam Convention or have been proposed and rejected. An examination of some of these examples gives a glimpse of the political considerations that go on behind the scenes. The often controversial herbicide Paraquat is listed in EU PIC and the ECHA database says that the grounds are that Paraquat is banned. However, immediately below this entry is a long extract of the conditions for authorisation of products containing Paraquat in the EU. The twist in the story is that Paraquat was authorised for sale in the EU but the authorisation was subsequently annulled by the European Court of Justice on the grounds that the commission had not correctly followed its own procedures. The notifying companies then took a commercial decision not to reapply for authorisation on the familiar grounds that the costs of authorisation were not commercially supported. Hence, the true legal status of Paraquat is that although it is not authorised to be used in the EU, this is because authorisation has not been applied for.
The ECHA website, however, gives the impression that there has been a proactive decision not to permit its use. Sweden has proposed that Paraquat should be included in the Rotterdam Convention but the application was rejected on the grounds that the criteria for inclusion had not been met. This means that Paraquat producers in non-EU countries are free to export without restriction but EU producers must go through the PIC procedure.
A similar picture exists for other pesticides that have not been authorised, but the reasons are that the companies withdrew from the authorisation process because the costs of providing extra data requested during the authorisation process were not commercially viable. The PIC website states explicitly that non-authorisation due to data gaps is not grounds for PIC listing; however, the EU does exactly that. It is also important to note that these chemicals are authorised in countries that are considered to have high standards, eg USA.
The reader must judge whether this is the EU/EEA unfairly penalising its own industry or whether it is leading the world on control of hazardous chemicals and setting a higher standard than an international convention. The reader may also speculate whether the EU/EEA will extend this approach to chemicals that have either failed to be registered under REACH or have had the registration cancelled due to data gaps in the registration.
EU PIC — how it works
The process for notifying an export of a chemical subject to EU PIC is run by ECHA. It is completely electronic using a system called ePIC and is described in a comprehensive guidance document.
The exporter describes the export in ePIC. A Reference Identification Number (RIN) is issued at this stage, but cannot be used by the notifier. The notification is then sent to the relevant Designated National Authority (DNA). This step must be started at least 35 days before the intended export date to allow enough time for the process to run.
The DNA checks that the notification is correct. The DNA checks:
that the notification has been fully completed
if the destination country has waived its right to be notified. This applies only to certain chemicals listed in Part 1 of Annex I of the regulation
if the chemical requires the destination country to give explicit consent, has this already been given? If not, the DNA is supposed to request consent from the importing country. In many cases, consent to import from one Member State can be used to cover export from another Member State
for chemicals listed in Part 3 of Annex I, if the destination country has already published an import decision in the PIC circular, published by the PIC secretariat, does this export comply with the conditions of the decision?
Once satisfied that the notification is complete, the notification is forwarded to ECHA at least 25 days before the intended export date.
ECHA also carries out similar checks. If this is the first notification for the chemical for the year, ECHA sends the notification to the destination country. According to its newsletter, ECHA provides information about possible alternatives but it would be interesting to know how useful or accurate this information is. For chemicals that do not require explicit consent, the RIN issued in the first step is activated. This allows the exporter to export the chemical to the destination country, typically until the end of the calendar year. If explicit consent is required, ECHA waits until it is informed by the DNA that consent has been received before activating the RIN.
Once in possession of an active RIN, the exporter can then export the chemical, making sure that it is labelled as required and that an SDS travels with the shipment. The exporter should ensure that the RIN is quoted on their export declarations so that the customs authorities know that the export is permitted.
On occasion, destination countries may not respond to a request to give explicit consent. In these situations, ECHA reminds the destination country and waits another 30 days. If no response is received, the DNA may waive the requirement for explicit consent if:
there is no evidence that the chemical is banned or severely restricted in the destination country
there is evidence that the chemical, licensed or otherwise, is permitted in the destination country
the intended use is not one that triggers the requirement for explicit consent and there is evidence that the chemical has been used or imported into the destination country in the last five years.
Chemicals that are exported for research and development purposes are exempt from EU PIC for quantities of up to 10kg per year. However, exporters still need to request an RIN using ePIC in order to facilitate the export of the chemical from the EU.
So far this article has considered the labelling obligations that apply to all hazardous chemicals exported from the EU and notification requirements that apply to a broad range of hazardous chemicals when they are exported. The final subject is the additional requirements that apply to a select group of hazardous chemicals that are already tightly regulated within the EU: drugs and chemical weapons precursors.
Export notifications — drug precursor chemicals
The term “drug precursor” may conjure up images of very exotic chemicals; however, some common chemicals such as acetone and toluene are also covered. The aim of the control is to prevent the diversion of chemicals that can be involved in drug manufacture from reputable customers to criminal organisations. Unlike PIC, the need for export notification and authorisation is determined by the chemical and its destination, eg toluene destined for Australia needs export notification and authorisation but exporting toluene to South Africa triggers no requirements. Unlike PIC, drug precursor notification is managed by the Member States; there is no operational involvement of the EU institutions. In the UK, the Home Office is the body to contact.
If a company handles any of the chemicals identified as drugs precursors, it may already require a licence to do so and should be familiar with the controls for domestic use. Some of the bulk chemicals that are regulated as drugs precursors do not trigger any registration or licensing requirements when handled within the EU. However, if the company wishes to export, then extra controls apply. Typically, the company needs to apply for a domestic licence to handle the chemicals and then it will need to apply to its national regulator for authorisation to export the chemicals. This process can take up to 15 days and, like many other authorisation processes, is supported by an electronic system for application for authorisation and communication of the results. The UK Home Office website contains detailed guidance on the process.
Export notifications — chemical weapons precursors
These are chemicals that can be used in the manufacture of chemical weapons. The regulated chemicals can be ones that are only used as chemical weapons (known as schedule 1 chemicals) and those that can be used to manufacture chemical weapons as well as other legitimate uses (known as schedule 2 or schedule 3 chemicals), eg thionyl chloride. Companies that handle any of these chemicals will already be required to complete annual notifications and may even have been subject to an inspection under the Chemical Weapons Convention. For exporters, the good news is that there are no additional requirements if exporting schedule 2 or 3 chemicals to a country that is a party to the Chemical Weapons Convention. Exports to countries that are not a party to the Chemical Weapons Convention are more tightly controlled.
Exports of schedule 2 chemicals are prohibited unless present in mixtures at low concentrations.
Exports of schedule 3 chemicals are only permitted if an End User Certificate is received from a government department of the destination country.
In the UK, the competent authority, since July, is part of the Department for Business, Energy and Industrial Strategy whose website contains further details for any companies handling chemicals weapons precursors.
Exporting hazardous chemicals from the EU/EEA does not automatically mean that EU/EEA Regulations do not apply. Most exporters will need to apply labels defined by the importing country or, in their absence, label the chemical as if it is being sold within the EU/EEA. In some situations, they will need to apply both “European” labels and labels from the destination countries.
A small number of exporters may then need to go through the PIC process before they are able to export. Finally, an even smaller number of exporters may need to go through the export control processes of either the drugs or chemical weapons precursor scheme.
All of this means that exporting hazardous chemicals from the EU/EEA needs competence in understanding and applying complicated regulations.