Emerging Regulatory Requirements in the Americas

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Emerging Regulatory Requirements in the Americas

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Today’s Presenters

Travis MillerAssent ComplianceGeneral Counsel







Today’s Presenters

Melissa OwenAMBIENTELEGALFounder







Agenda

Understanding the America First Policy

Chemicals in Latin America: Trends & Challenges

Q&A

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Compliance 2017







INTRODUCTION







Assent Product SuitesOur Market Leading Platform

Ethical Sourcing

Materials Management

Supplier Information Management

InspectionsConfigurable Surveys & Declarable Substance

Lists







Understanding the America First Policy







Trade Is a Very Broad Topic

◆ The U.S. President can impact foreign relations dramatically without the approval of Congress.

◆ A focus of the campaign and the 100-day plan was the renegotiation of trade agreements and to re-invigorate U.S. manufacturing. He echoed that message during his inauguration.

◆ The proposed steps to accomplishing this are:◇ Strike down free trade agreements, or renegotiate them◇ Penalize companies who use non-U.S. labor to manufacture goods◇ Provide incentives for companies who manufacture goods in the

U.S.◇ Place tariffs on non-U.S. manufactured goods

Import/export rules affect the entire supply chain







The Trump Administration Has Laid Out an Agenda

◆ Clean up corruption and special interest collusion in Washington

◆ Protect American workers◆ Restore security and the constitutional rule of law◆ Tax relief and simplification◆ End offshoring◆ American energy investment◆ School choice◆ Repeal Obamacare◆ Affordable child and elder care◆ End illegal immigration◆ Restore community safety◆ Restore national security

Proposed action items in the contract







Which of These Impact Supply Chain Regulations?

◆ Clean up corruption and special interest collusion in Washington◆ Protect American workers◆ Restore security and the constitutional rule of law◆ Tax relief and simplification◆ End offshoring◆ American energy and infrastructure investment◆ School choice◆ Repeal Obamacare◆ Affordable child and elder care◆ End illegal immigration◆ Restore community safety◆ Restore national security







Buy AmericanThis policy is going to disrupt global trade







Country of Origin and Buy American - BackgroundOrigin story

◆ Country of origin (COO) is the country of manufacture, production or growth where an article or product comes from. There are differing rules of origin under various national laws and international treaties. Country of origin is the documentation and due diligence process required to demonstrate compliance with a number of product preference, tariff and labeling requirements.

◆ Buy America/Buy American are laws that mandate companies collect COO data. They offer a preference to products made and assembled in the U.S. These laws are filters of COO due diligence that have been applied to products, traditionally through bill of materials (BOM roll-ups of supply chain data).







Tracing the Origin of Materials is Tough

◆ The level of assessment required will be determined by the claims and benefits you want to assert.

◆ For example, a “Made in America” claim is highly labor intensive, requiring the claimant to have conducted supply chain due diligence and to be able to meet the “all or virtually all test”◇ This is very much a binary Yes/No evaluation

◆ Contrast, the “Buy American” claim that requires an analysis of the value of all components and processes◇ This is a costing analysis to be applied against claims on each

component







What About Country of Origin Labeling (COOL)?

◆ In the United States, the marking statute, Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304) requires that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked with its country of origin.◇ For example, goods originating in China must be marked

"Made in China." The marking must be legible and permanent enough for the ultimate purchaser to be made aware of the good’s origin.

◆ Paragraph 1 of Annex 311 of the NAFTA provides that the NAFTA parties shall establish "Marking Rules" to determine when a good is a good of a NAFTA country.

◆ The Marking Rules are all based on a tariff change and are largely the same in all three countries.

COOL rules are the outcome of COO analysis and due diligence







COOL Laws Can Be TrickyThese laws can be discriminatory or violate free trade agreements (FTAs)







Overview: This Is How COOL Laws Work◆ Companies in scope have to survey their supply chain to

obtain CO certificates and label/mark products accordingly.

◆ The customs authorities of the destination country will review the documents and submit questionnaires to the importer.

◆ If insufficient information is available, customs performs a “verification visit” to assess the importers program and documentation.

◆ Importers need to:◇ Have supplier documentation available/have conducted

an audit◇ Have a program and system together that demonstrates

adequate due diligence has been performed







COOL Requirements Are Frequently AuditedWhat is an audit looking for?

The America First Policy goes here







◆ These are laws that give a preference or place a requirement on companies to purchase from U.S. manufacturers of goods.

◆ The most recent passage of this type of law was the 2016 Buy American Act.◇ The Buy American Act imposes a two-part test on defense

contractors:▪ The end-product must be manufactured in the United

States, and▪ More than 50 percent of the cost of all the component

parts must also be manufactured in the United States.◇ If a product meets this two-part test, then a product can be

considered a "domestic end product" under the Buy American Act.

Buy America/Buy American LawsBuy American Is Not Just a Slogan







A Buy American Policy has a lot of moving parts

◆ There is no single "Buy American" requirement. There are many that cover multiple different procurement activities, including:◇ Buy American Act (41 U.S.C. §§ 8301-8305)◇ Trade Agreements Act (19 U.S.C. §§ 2501-2581)◇ Buy America Act (49 U.S.C. 5323(j) and 23 U.S.C. §

313)◇ Recovery Act (Pub. L. No. 111-5, § 1605)◇ Berry Amendment (10 U.S.C. § 2533a)◇ Made in America (FTC Act)◇ Many more







Implementing the America First Policy

◆ Companies in scope have to survey their supply chain to obtain CO certificates.

◆ These CO certificates must be matched against products to assess the percentage of a given product that could qualify for “domestic end product” designation.

◆ This implies a company must:◇ Survey its entire in-scope supply chain◇ Place a value against the sourced parts◇ Attach the survey results to the parts in a BoM◇ Calculate the percentage of American-made

product, then claim (1) domestic end product, (2) foreign product, or (3) exemption

Complying with the Buy American Act







Implementing the America First Policy◆ Exceptions that allow the purchase of a foreign end product are listed at FAR

25.103 and DFARS 225.103, which include:◇ Public Interest: The head of the agency determines that a domestic preference would be

inconsistent with the public interest. This exception applies when an agency has an agreement with a foreign government that provides a blanket exception to the Buy American Act (example NAFTA - listed in DFARs 225.872).

◇ Non-availability: The statute does not apply with respect to articles, materials or supplies not mined, produced or manufactured in the U.S. in sufficient and reasonably-available commercial quantities and of a satisfactory quality. FAR 25.104 and DFARS 225.104 list articles determined to be non-available.

◇ Unreasonable Costs: The unreasonable cost exception is implemented through the use of an evaluation factor applied to low foreign offers. The Contracting Officer may determine unreasonable cost in accordance with FAR 25.105 / Subpart 25.5 and DFARS 225.105 / Subpart 225.5.

◇ Resale: The contracting officer may purchase foreign end products specifically for commissary resale.

◇ Information Technology that is a commercial item.

Exceptions under the Buy American Act







Chemicals in Latin America: Trends & Challenges







International and Regional Drivers

⬥ SAICM

⬥ International Treaties

⬥ Regional Common Markets

⬥ Regional Action Plans







SAICM & Latin America

In 2006, the Strategic Approach to International Chemicals Management (SAICM) was adopted by the International Conference on Chemicals Management (ICCM) as a policy framework to foster the sound management of chemicals. The goal is to ensure that by 2020, chemicals are produced and used in ways that minimize significant adverse impacts on the environment and human health.

The most recent meeting, the fourth session of the ICCM known also as SAICM4 or ICCM4, took place from September 28th to October 2nd, 2015.

SAICM4 is a catalyst for chemical regulation in Latin America.







National Strategies Look to Existing Models

⬥ Countries in the region developing their first framework laws on chemical management look to successful international examples

⬥ Canada’s Chemical Management Plan inspired the original Brazilian Draft National Industrial Chemical Policy

⬥ EU REACH is cited as inspiration, although countries in the region at times lack the resources to fully implement such a plan







International Treaty Commitments Shape the Target Chemicals⬥ Latin American countries have historically addressed

chemicals on an ad hoc basis

⬥ The target chemicals are selected based on treaty commitments:⬦ persistent organic pollutants, hazardous pesticides,

ozone depleting substances and mercury taken from the …■ Minamata Convention on Mercury■ Stockholm Convention on Persistent Organic

Pollutants■ Montreal Protocol on Ozone Depleting Substances

⬥ The treaties also provide access to implementation funds like the Global Environment Facility (GEF) under the Stockholm Convention







Regional Common Markets

⬥ Regional Common Markets also influence chemical agendas for their members

⬥ Mercosul (Common Market of the South)⬦ Member states: Argentina, Brazil, Paraguay, Uruguay⬦ Associate states: Chile, Bolivia, Colombia, Ecuador, Peru

⬥ Mercosul’s environmental working group (Sub-Group No. 6) has prioritized four issues in chemical management: GHS, mercury, pesticides and contaminated sites

⬥ Not surprisingly, those are the focus for members such as Brazil and Argentina







Regional Action Plans ⬥ Regional action plan

⬦ The XX Meeting of the Forum of Ministers of Environment of Latin America and the Caribbean (March 28th-31st, 2016) approved "Decision 8. Chemicals & Waste” to establish an inter-governmental network on chemicals and wastes

⬦ Focus on highly hazardous pesticides, lead in paint, harmful chemicals in products, hazardous substances in electric and electronic products, environmentally persistent pharmaceutical pollutants and mercury.

⬥ Still derivative of SAICM goals

⬥ Needs funding ⬦ Meeting called for more funding from the GEF







Trends & Challenges

⬥ GHS Adoption

⬥ Framework National Chemical Laws

⬥ PRTR & Chemicals

⬥ Technical Barriers to Trade







How do these trends and challenges play out in countries across the region?







GHS Adoption

⬥ GHS is the United Nations' Globally Harmonized System for Classification and Labeling of Chemical Products

⬥ Countries across the region have committed to adopting GHS⬦ Differing stages of implementation

■ Mandatory GHS: Argentina, Brazil, Mexico (October 9th, 2018)■ Voluntary: Chile■ Proposed: Colombia, Costa Rica

⬥ GHS becoming riddled with localizations■ Chile: Adopts Asian model (GHS applies to workplace, transport of hazardous goods and

even labeling of consumer goods)■ Mexico: Different treatment for aerosols than U.S. or Canada

⬥ Implementation details vary by country







Framework National Chemical Laws

⬥ Countries across the region lack comprehensive national chemical laws and regulate on a substance-by-substance basis

⬥ Most agree on the need for a more holistic approach

⬥ Differing stages of development⬦ Brazil – Draft National Industrial Chemical Law (Regional

Leader)⬦ Mexico – National Inventory and Voluntary Industry

Agreements⬦ Chile – National Policy on Chemical Safety ⬦ Colombia – Draft Industrial Chemical Regulation







PRTR Chemicals

⬥ Pollutant Release and Transfer Registries (PRTR) provide a way for the government to track the use and release of industrial chemicals ⬦ Countries with PRTR: Mexico, Chile⬦ Countries with PRTR-equivalents: Brazil and the RAPP

⬥ PRTR may be the bridge between a first national inventory and a subsequent list of priority substances for regulation

⬥ PRTR generally include a public-right-to-know component that may pose a risk to companies⬦ Proprietary information⬦ Misuse by activists







Technical Barriers to Trade

⬥ Protectionist policies in Latin America are no longer acceptable⬦ Argentina and the Non-Automatic Import Licenses

⬥ Consumer and environmental protection become the arguments for neo-protectionist schemes to protect sensitive industrial sectors⬦ Argentina and Chemicals in Textiles⬦ Mexico and Chemicals in Shoes

⬥ Local test methods, local laboratories and local product certifications are a bigger challenge than stringent chemical limits







Final Thoughts

⬥ Countries across the region are moving to enact national chemical laws and regulations that follow international models, but there is important local variation

⬥ The rate of new regulations and legislation is exponential

⬥ Many of the countries provide industry a meaningful opportunity to participate in the regulatory and legislative development process

⬥ The keys are to stay ahead of the curve and, wherever possible, help enact rather than just react







Q&A Discussion

Questions?







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Emerging Regulatory Requirements in the Americas