Experts in the US, EU, Switzerland, China, and Japan expressed concerns over Korea’s Act on the Registration and Evaluation of Chemicals in the World Trade Organization (WTO). Under the circumstances, the probability of an international trade dispute is increasing about the direction of the act the Korean government is working on.
“The problem of the act is emerging not just among local companies but also worldwide,” said an industry expert, adding that much attention is being paid to how the Korean government will redirect the law.
The reason for their concerns is because not only Korean companies but their foreign counterparts doing business in Korea could take a serious hit from the implementation of the law. The countries are considering the act to be much more stringent than the European Union’s Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) act.
Although the government has announced that it would moderate the act by revising the enforcement ordinances, industry insiders are pointing out that this is likely to be a stop-gap measure, and the government has to increase efforts to prevent the act from causing an international trade dispute.
Great Burden on Production Activities and Intellectual Property Rights Management
“If the Act on the Registration and Evaluation of Chemicals is put in force as it is, our R&D and product development will suffer at least some delay and our intellectual property rights will be infringed upon,” said a high-ranking executive at a multinational chemical company. “The regulations on chemicals that are in force now in various countries are affecting our business activities,” an electronics company added, continuing, “The problem is that the Act on the Registration and Evaluation of Chemicals is the strongest of them all.” In fact, a large Korean corporation in the US had to stop the operation of its manufacturing facilities for six weeks until mid-October in order to cope with these chemical-related laws.
At present, foreign chambers of commerce and industry in Korea are liaising with their governments by the minute to discuss the issue, urging them to step in aggressively by way of routes such as the WTO. The countries have expressed concerns in the WTO since 2011 and the most recent official one was that by the United States in June this year.
The most poisonous clauses in the act for them include the obligatory registration of limited-quantity materials, the removal of the clauses exempting the registration of chemicals for R&D purposes and the compulsory provision of chemical substance information. The same matters have been pointed out by local companies, too. According to the Ministry of Trade, Industry and Energy, the testing and analysis costs for the registration of the limited-quantity materials reach 13 trillion won for eight years if the act is implemented as it is.
Korean Government Planning to Moderate the Act
With the concerns rising both at home and abroad, the government and the ruling Saenuri Party is planning to simplify the procedure for the registration of the materials and exempt the registration of the chemicals for R&D use. The idea is to insert the clauses into the enforcement ordinance to dispel their worries.
Nevertheless, industry participants are claiming that the act itself, not the ordinance, should be revised. However, the government has not accepted the request. “We welcome the news that the government and the ruling party agreed to simplify the procedure and put in a clause for the exemption,” said the Korean Chamber of Commerce and Industry, continuing, “Still, what we need for smooth production activities is a larger-scale exemption.”