Japan Revises Its Annual Notification Requirements to Provide Greater Protection for Foreign Suppliers’ Confidential Business Information
Japan/Chemical Notification and Reporting:
Early in June 2011, Japan’s Ministry of Economy, Trade, and Industry (METI) announced a revision to the process Japanese companies use to annually notify the agency about the chemical substances that they import. Under the new process, a foreign supplier can provide certain confidential business information (CBI) directly to METI rather than to the Japanese customer, and the Japanese customer would submit the remainder of the notification. This joint process is a welcome approach, and although it is not a complete solution, it is an encouraging signal that METI will adopt a practical approach to implementing the 2009 amendments to the Chemical Substances Control Law (CSCL).
The annual notification requirement was adopted as part of a series of amendments to the CSCL that the government enacted in 2009 to move the country toward a more risk-based approach to chemical regulation. For readers less familiar with the CSCL, the law is Japan’s analogue to the U.S. Toxic Substances Control Act (TSCA). Several agencies, including METI, administer the law. The CSCL generally requires Japanese manufacturers and importers to notify the agencies and receive their approval before commencing manufacture or importation of “new” chemical substances that are not otherwise excluded or exempt. The law also bans certain substances and imposes restrictions and reporting requirements on others. The annual notification requirement adopted in 2009 is distinct from the new chemical notification requirement. The annual requirement applies to substances already on the market, and it was designed to provide additional exposure-related information to the agencies so that they can identify those whose risks warrant further management through restrictions or other measures.
The annual notification requirement applies to two classes of chemical substances, “General Chemical Substances (GCS)” and “Priority Assessment Chemical Substances (PACS)” that are manufactured or imported at or above 1 metric ton during the previous fiscal year. (There is a similar notification process for so-called Monitoring Chemical Substances (MCS) that are manufactured or imported at or above 1 kg per year.) When a GCS is present in a mixture below 10%, or a PACS is present as an impurity at less than 1%, it is not counted toward the 1-ton threshold. Japanese companies that manufacture or import a reportable substance above the threshold must submit a notification form to METI between April 1 and June 30 each year. 2011 is the inaugural notification year. The prescribed form requires information about the quantity of the substance imported or manufactured, as well as information about its chemical identity and uses.
Prior to the revision METI announced, foreign suppliers, especially of mixtures, faced a tough choice. Basically, they would either need to disclose to their Japanese customers the identities and percentages of the substances in their mixtures, potentially losing CBI since many of the mixtures are proprietary, or lose the customers by not providing information necessary to fulfilling a compliance obligation. Preferring neither option, suppliers in the United States and elsewhere began lobbying METI for an alternative. METI announced the alternative earlier this month, issuing guidance that revises the annual notification process. However, the revision is not as comprehensive as what was requested since it does not protect from disclosure information concerning PACs.
METI’s revision affects annual notification of General Chemical Substances, but not PACs. METI issued a three-page guidance document explaining the revised notification process. A copy of the guidance is available here. In it, METI explains that a Japanese company could submit a joint notification with its foreign supplier when the foreign supplier claims as CBI the chemical identity or its concentration rate in a mixture. The Japanese company would initially complete as much of the notification form as possible and submit it to METI along with a cover letter explaining the situation and identifying the foreign supplier. The incomplete form would function as a placeholder while the supplier completed the final version. The supplier would then submit the final form to METI and the notification process would be considered complete.
METI’s revision is an improvement on the annual notification process. How well it works remains to be seen. Presumably, the agency will make an evaluation at the end of this first notification cycle. Readers interested in Japanese chemical regulatory control matters should check back periodically for further updates on this development and others in Japan.