ILMA Compoundings - April 2019 - 23

REACH-type approach. This was announced just prior to
Brazil's publication of its draft law.
NEW PATH FOR MERCOSUR?
Now that the two visibly competitive leaders of the trade
group have announced their intent, the stage seems set for
the new requirement approach to grow among the other
MERCOSUR members. Uruguay, being the second-wealthiest economy on the continent, might also subscribe, but
Paraguay and Bolivia might be slower adopters since their
respective economies are less robust.
In the wings are such countries as Chile, Peru, Ecuador
and Colombia - the latter three of which are members of
the Andean Community trade group. All have significant
economies and share a common interest in fostering their
own economic growth. Each carries Associated State status
in MERCOSUR, and each has expressed interest in considering a stronger approach to chemical control.
One opportunity that does not seem to be rumored, as
yet, is the potential for the new law proffered by Brazil and
Argentina to be implemented at a level higher than any
individual country - such as the MERCOSUR trade group
level. After all, MERCOSUR is a Customs Union that is
somewhat analogous to the EU. The infrastructure and
other mechanics might not be as developed, but the idea
of MERCOSUR sponsoring a common regulatory model
with Member State support and enforcement does not
require a significant stretch to imagine. This could become
an attraction for Associated States to fully join, or perhaps
alternatively influence a different path in the Andean Community trade group (which is also a Customs Union). In any
event, the opportunity for this recent development between
Brazil and Argentina could reshape the future of South
America in terms of chemical controls and management.
THE FUNCTION OF DESIGN
The methods of control employed in a particular variety of
these laws are inevitably the product of several overarching
priorities. For instance, those countries that value the availability of new technologies will provide easier entry for those
technologies. Countries who favor more local protectionism
of their existing industries will tend to impose barriers to
competing import technologies (new chemicals), with little
or no requirements placed on substances currently in use.
Other design features similarly play a part, and the prospective list is limited only by the number of priorities driving
the consideration.
Applying these "function of design" notions to Brazil's
draft law, we could identify a few potential objectives, even
at this early glimpse. For instance, its starting point of
simply documenting the substances currently placed on its
market suggests a bent toward maintaining the status quo.

Countries that value the
availability of new
technologies will provide easier
entry for those technologies.
Countries who favor more local
protectionism of their existing
industries will tend to impose
barriers to competing import
technologies (new chemicals), with
little or no requirements placed on
substances currently in use."
Whether intended or not, this favors chemicals typically
produced locally as well as those historically imported.
Brazil's intent to require more robust data to accompany
required registration of "new" chemicals might impact some
local new chemical technology development, but it will
more likely slow the introduction of foreign products that
might favorably compete against local chemical producers.
In addition, the new service industry that will necessarily
be developed to support the newly introduced chemical
registration and evaluation requirements will be supported
in larger part by the introduction of new chemicals offered
by foreign suppliers. In contrast, the lesser responsibility
imposed on local producers would be felt only to the extent
that select risk profiles associated with more robust secondary registration requirements would impact local producers
of current staple chemicals.
This stands in distinct contrast to the European and
Korean models, for instance. Both of those jurisdictions,
with the recent amendments now effective in Korea,
equalized the registration requirement to cover all "existing"
chemicals - which better equalizes the burden on the
market as a whole, with less differentiation on new chemical
technology. That might be an unintended distinction, but
it probably tracks with the fact that Korean manufacturers
tend to innovate as much as anyone, so the jurisdictions
view risk with a more egalitarian perspective.
Eggenschwiler, an ILMA consultant, is an international
trade attorney and director of global trade for the
Redstone Group LLC. He can be reached at 614-9237472 or jeggenschwiler@redstonegrp.com.

ILMA Compoundings - April 2019

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