# Presentation: 278832

## China ROHSis Serious Business:A Compliance Roadmap  

- International Trade Administration
- U.S. Department of Commerce
- Webinar
- January 11, 2007
- Anne Davidson, Davidson Consulting Services
- Ken Rivlin, Allen & Overy LLP

## Notice

- THIS PRESENTATION IS FOR GENERAL GUIDANCE ONLY AND DOES NOT CONTAIN DEFINITIVE ADVICE

## Agenda		

**China RoHS Compliance Roadmap**
**Concluding Comments**

## China RoHS Compliance Roadmap

- Know the law
- Anticipate impacts/risks to your business
- Identify internal compliance/performance requirements
- Conduct compliance “gap analysis”
- Develop & implement compliance strategy
- Monitor regulatory developments for new requirements
- Confirm supply chain readiness
- Regularly reassess compliance strategy

## Compliance Roadmap – Basic Elements  Know the Law

**Phase I – Starting March 1, 2007, manufacturers/importers of EIPs required to: **
**self-declare hazardous materials content & label accordingly (in Chinese) **
**Include recyclability logo and, if EIP contains banned substances above maximum concentration value (MCV), label must indicate “Environmental Protection Use Period” (EPUP), product must be marked with manufacturing date, the importer/manufacturer must provide a table that indicates which banned substances exceed the MCV**
**comply with Chinese packaging legislation - principally labeling requirements**
** ****comply with Chinese design, manufacturing and sales requirements.**
**Phase II – Once “China RoHS Catalog” is published, listed EIPs must (i) comply with substance ban, (ii) be tested under the China Compulsory Certification (CCC) regime and labeled accordingly.**

## Compliance Roadmap – Basic ElementsAnticipate impacts/risks to your business

**Are you ready?  Are you sure? How do you know?**
**If not, why?  Is it you?  Your supply chain partner(s)? **
**If not, how long (and how much $/****€/¥/£****) will it take to get ready?**
**Technical systems up and running**
**Operations management and processes**
**Design – products, materials, packaging**
**Procurement**
**Account management/sales**
**Labor – knowledge base/skills/training**
**Other business systems or requirements**

## Compliance Roadmap – Basic Elements Anticipate impacts/risks to your business

**If you cannot comply, what will happen?**
- No import into China
- No sales in China
- Required re-design or part replacement
- Delay in time-to-market
- Lost revenues & profits
- Reputational and relationship costs
- Lost market share
- Excess inventory
- Other

## Compliance Roadmap – Basic Elements Anticipate impacts/risks to your business

**Legal Impacts**
- China RoHS regulatory penalties, fines
- Contractual breaches (failure to perform, environmental clause, breach of warranty ...)
- Failure to follow company internal policies
- Shareholder, business partner lawsuits
- Public disclosure obligations (Sarbanes Oxley)
**Legal Assessment & Action Necessary**
- Assess and, where possible, renegotiate contracts with suppliers, customers and distributors
- Tighten certificates of compliance, materials declarations to include new environmental requirements
- Assess and monitor compliance management systems

## Compliance Roadmap – Basic ElementsIdentify Internal Performance Requirements

**Internal implementation** –
**Assess compliance readiness**
- Technical requirements
- Examples – data management system to collect & report disclosures, compliance certificates, material declarations, IPC-1752 standard, labeling processes
- Performance Requirements
- Engineering/design
- Operations
- Testing/auditing
- Quality control – *i.e.,* ISO 9001/2000 & QC 080000
- IT
- Procurement/materials
- Knowledge base & required workforce skills
- Effective Communication

## Compliance Roadmap – Basic ElementsConduct Compliance “Gap Analysis”

**Assess current capabilities** **& ability to comply**
- Internal readiness
- Steps needed to implement compliance plan
- Leverage existing policies/processes
- Identify additional needed resources
- Establish compliance timeline
- Use “due diligence” defense as a guide
- External readiness
- Assess readiness of suppliers, distributors, customers
**Develop & implement strategy to bridge compliance gaps**

## Compliance Roadmap – Basic ElementsDevelop & Implement Compliance Strategy

**Company Leadership**
**Commitment to compliance critical**
**Clear communication**
**Modify/enforce environmental compliance policy**
**Environmental Compliance Team**
**Cross-functional (*****i.e.,***** operations, legal, IT, engineering, design, materials, quality, account management, import-export ...)**
**Educate company**
**Interface with company leadership**
**Conduct gap analysis**
**Develop compliance policies/strategy**
**Communicate/implement compliance strategy**
**Integrate strategy into standard company operations**

## Compliance Roadmap – Basic ElementsConfirm Supply Chain Readiness

**Effective business partner relationships:**
**Communicate firm compliance requirements**
**Determine business partner compliance readiness**
**Cooperation to achieve compliance requirements**
- Accurate, timely information
- Materials declarations, certificates of compliance
- Audits, testing
- Other
**Performance history**
**Assist suppliers achieve compliance readiness**
**If necessary -- identify alternative suppliers**
**Compliance extends across supply chain**
**Customers**
**Suppliers**
**Shipping & sales**

## Compliance Roadmap – Basic ElementsMonitor Regulatory Developments

**Products/parts/components included in Catalogue (not yet published)**
**More to come from MII re:**
**The Catalog**
**CCC certification**
**Details regarding design, testing and China imports/sales**
**Engage with legal advisors & trade associations**
**Stay up-to-date**
**Participate in lobbying efforts**
**Build network of knowledgeable “friends”**

## Compliance Roadmap – Basic ElementsRegularly Reassess Compliance Strategy

**Continued management support**
**Compliance becomes part of ordinary course of doing business**
**Incorporate legal, regulatory changes **
**Maintain due diligence records and procedures**
- Audits
- Quality controls
- Open door communications
- Up-the-ladder reporting
**Identify weaknesses & move quickly to correct**
**Continued supply chain partner commitment/engagement**

## Final Thoughts

- Critical to monitor international legislative developments & and your competitors’/suppliers’/customers’/distributors’ compliance efforts/positions
- Assess and if necessary amend your compliance strategy, assuring consistency/coordination across borders/business units
- Identify, anticipate and seek to mitigate risks
- (Re)consider your contractual position(s) relative to customers, suppliers and distributors
- Continue to seek/maintain “buy-in” and leadership from senior management
- Establish/maintain strong communication channels with supply chain partners (COC’s, other data sharing)
- Understand specific requirements and be prepared to address them (labeling, testing, etc.)
- Documentation is key:  best practices, “due diligence defense”

## Helpful Links

- US Mission to EU Environmental page:  http://www.buyusa.gov/europeanunion/weee.html
- European Union Resources & Documents: _[http://www.buyusa.gov/europeanunion/eu_docs.html](http://www.buyusa.gov/europeanunion/eu_docs.html)_
- US Commerce Department WEEE/RoHS Documents: _[http://www.buyusa.gov/europeanunion/commerce_docs.html](http://www.buyusa.gov/europeanunion/commerce_docs.html)_
- US Commerce Department Status of WEEE implementation by country: _[http://www.buyusa.gov/europeanunion/commerce_docs.html](http://www.buyusa.gov/europeanunion/commerce_docs.html)_
- UK National Weights & Measures Lab RoHS Page _[http://www.rohs.gov.uk/content.aspx?id=9](http://www.rohs.gov.uk/content.aspx?id=9)_
- Includes RoHS Enforcement Guidance Document
- SEMI EHS Home Page
- 	_[http://wps2a.semi.org/wps/portal/_pagr/113/_pa.113/272?dFormat=application/msword&docName=P006479](http://wps2a.semi.org/wps/portal/_pagr/113/_pa.113/272?dFormat=application/msword&docName=P006479)_
- AeA Europe: **http://www.aeanet.org/AeACouncils/Europe_Main.asp**
- AeA China Working Group Home Page
- 	**http://www.aeanet.org/GovernmentAffairs/gabl_ChinaRoHSpage0905.asp**
- China Ministry of Information and Industry (MII) (in Chinese) **http://www.mii.gov.cn/art/2006/03/02/art_521_7344.html**
- INEMI: Ten Steps to RoHS Compliance ***http://thor.inemi.org/webdownload/newsroom/Articles/Lead-Free_Watch_Series/Feb05.pdf***** **
- Design Chain Associates   **http://www.designchainassociates.com/**
- CA DTSC RoHS Law Information **http://www.dtsc.ca.gov/HazardousWaste/EWaste/upload/Restriction_on_Electronic_Devices_01-05-06.pdf**
- Spitalfields LLP WEEE and RoHS Website **http://www.euenvironmentalcompliance.com**