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supplier issues

Global Environmental Regulations

Description:  Environmental regulations in Europe and Asia can have significant legal, regulatory and commercial implications for automotive suppliers selling directly or indirectly into overseas markets, often increasing the cost of compliance for the industry. 

Status: 

European Union (EU) End of Life Vehicles (ELV) Directive: EU authorities will review progress toward attainment of ELV targets during 2008.  The directive’s total recovery target is 95 percent by January 1, 2015.  ELV is the primary law in the EU covering original equipment (OE) automotive products and vehicles. 

WEEE (Waste of Electrical and Electronic Equipment):  This EU directive mandates that producers are financially responsible for the collection and treatment of waste electrical equipment. The EU is in the process of revising and clarifying the WEEE Directive.   Proposals are expected to be announced during 2008.  The ELV Directive is the primary law covering the recycling and reuse of automotive products sold in the EU.  WEEE, however, still has an impact on production of automotive products and sale of aftermarket products in the EU.

REACH (Registration, Evaluation, Authorization of Chemicals):  Obligations under REACH apply to chemical companies and businesses which use chemicals in their products and sell to the EU. The European Chemicals Agency is being set up to manage REACH.  Major components include preliminary registration, data sharing, registration, and authorization.  Activity is expected in 2008 in each of these areas.

EU RoHS: The European Union directive on the Restriction of Use of Certain Hazardous Substances (RoHS) went into effect on July 1, 2006. RoHS is now mandatory in 27 EU countries. The RoHS directive restricts the use of cadmium, lead, mercury, hexavalent chromium, and the polybrominated flame-retardants PBBs and PBDEs.  The EU is in the process of reviewing and revising the RoHS directive and has been accepting comments from stakeholders since spring 2007. The review will consider expanding the list of substances, the exemption and enforcement process and other aspects of the law. The review process and publication of the results is expected during 2008. 
China RoHS (China’s Administrative Measures on the Control of Pollution Caused by Electronic Information Products):  This regulation, referred to by some as “China RoHS,” took effect March 1, 2007. Although China RoHS has its roots in the EU’s RoHS directive, China’s regulation differs in several important areas, including a different scope of products; unique certification testing and labeling requirements; and the lack of an exemption process. China’s regulation will be implemented in two phases. The first phase, which took effect March 2007, requires the disclosure of the six EU RoHS substances contained in electronic information products (EIP) as defined by China’s Ministry of Information Industries.
In the second phase, China will publish a “Priority Products Catalogue” specifying the products covered, substances restricted, and timelines for each restriction. The products that are included in the Catalogue will need to undergo testing and certification in a Chinese laboratory for compliance.  The Catalogue with the first restrictions is not expected to be published until the second half of 2008. 
RoHS in other Countries: Japan, Korea, Argentina, Australia, Canada (only Nova Scotia considering), Malaysia, Russia, Taiwan, Thailand have adopted or are considering national regulation based in part on EU RoHS.  Details and enforcement vary from country to country.
EuP (Energy Using Products): The EuP “Framework” Directive, implemented in August 2007, requires products meet environmental targets beginning with the design stage, running through the manufacturing process, and ending with the waste collection cycle.  The purpose of the directive is to enforce energy efficiency targets, but it could affect other areas such as resource selection, water consumption, waste generation, and noise emissions.  The Commission will name implementing measures covering specific products during 2008 and 2009.  Products most likely to be affected are consumer electronics, lighting, air conditioning and heating units, and telecommunications equipment.  Transportation is excluded, but automotive aftermarket products may still be affected.

Impact on Industry:  Cost of global regulatory compliance is growing for suppliers and their customers.  MEMA does not have quantitative estimates of the cost of compliance to the domestic motor vehicle parts supplier automotive industry.  Cost of compliance could be mitigated to some degree by harmonization of environmental regulations, especially between the United States and the EU.  Progress in achieving this goal, however, has been slow.  MEMA urges automotive and heavy duty suppliers to research regulatory requirements in markets where their products are sold and to contact MEMA with specific concerns.    

2008 Anticipated Action: MEMA will work independently with member companies and in coalition with the National Association of Manufacturers (NAM) on monitoring developments and transmitting the industry’s views to the appropriate authorities in the United States and abroad.

MEMA Staff Contact:          
Leigh Merino
Director, Regulatory Affairs
Phone:  202-312-9249
Email:  lmerino@mema.org