Every December, we publish a blog post summarizing the year’s most important regulatory updates. And each year, the task of choosing the most important regulatory stories of the year becomes more difficult.
Of course, there are staples: new REACH, RoHS and Proposition 65 substances; more onus to perform human rights due diligence; stringent updates to existing legislation; and a gamut of complex trade issues.
However, this year’s updates feel more urgent. The “what if” of compliance and enforcement has become the “when.” And more companies than ever understand this.
The proof is plain from our perspective: As the global leader in supply chain data management, Assent is one of the fastest-growing companies in the world — which Deloitte pointed out when it ranked us at 313 on the Technology Fast 500™ and 48 on the Technology Fast 50™ lists. That’s because those responsible for acquiring supply chain data and responding to information requests know they need help.
Truth be told, there are dozens of pressing supply chain issues that deserve a second look this year. For the sake of brevity, here are ten of the most pressing issues of 2019 that are likely to impact you in 2020.
1. EU MDR: Meeting the May Deadline
Coming into force in May 2020, the European Union (EU) Medical Device Regulation (MDR) is coming up fast. Companies are scrambling to do two things: acquire up-to-date, accurate substance concentrations; and find a notified body in good standing to provide certification.
New legislation also includes requirements for in-vitro devices. While a small handful of labs have been approved to provide the EU MDR certification, as of yet, only two can evaluate in-vitro documentation. Medical device suppliers are receiving a large volume of Section 10.4 requests, which will only increase in volume and urgency going forward. Watch the Assent blog to keep track of this ongoing story as more notified bodies are brought into the fold.
Manage new data requirements in the medical devices industry with our guide “Building an Effective EU Medical Device Regulation Program.”
2. Phthalate Restrictions Broaden the Scope of the RoHS Directive
Since the Restriction of Hazardous Substances (RoHS) Directive was implemented in August 2004, it has undergone a number of updates to include substances commonly used in the electronics industry. This year, it expanded to include four substances from the phthalate family that are widely used in the electronics industry and known to have potentially harmful effects. This change has affected a number of companies, as the substances are often used to soften plastics in the manufacture of flexible tubing, buttons and coatings — all common in electronics.
3. EU Waste Framework: SCIP Database Nears Implementation
Going into force on January 5, 2021, the EU Waste Framework Directive (WFD) is vital to making the circular economy strategy, including the recycle, reuse and repair of end-of-life products, safer for waste and refurbishment workers. The most intensive compliance operation for companies selling into the EU will be data exchange with a newly-created Substances of Concern In articles, as such or in complex Products (SCIP) database.
Companies in scope of the legislation will need to collect a broad range of substance and article information on their products for submission to the database, with a deadline of January 5, 2021. This is a massive obligation, and those in scope will need to immediately begin acquiring data and familiarizing themselves with these new market entrance requirements, while concurrently reviewing submissions standards to ensure they’re ready on time.
4. 29 New REACH Authorisations
In October, the ECHA added 11 substances to the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation Authorisation List, further recommending 18 more for inclusion to the European Commission. Many of these additional substances are likely alternatives to the original 11, so any product teams forced into redesign should evaluate these additional 18 as well. In just a year, this recommendation would bring the total number of substances on the Authorisation List from 43 to 72, and will further complicate the impacts and obligations for submission under the new SCIP database.
5. U.S. Customs & Border Protection Targeting Forced Labor
In September, due to evidence of forced labor, U.S. Customs & Border Protection (CBP) issued five Withhold Release Orders (WROs) against manufacturers importing a range of products, including garments sold in China and rough cut diamonds from Zimbabwe. Given that it’s unprecedented for a U.S. agency to issue five large-scale WROs in this manner, the CBP clearly intended to send American importers the message that it won’t hesitate to halt shipments if it suspects wrongdoing.
6. Canada & UK Latest to Combat Human Trafficking & Slavery in Supply Chains
Disclosure-based human trafficking and slavery legislative efforts continue to grow, and federal governments, including Canada and the UK, are participating by asking vendors for evidence of human rights due diligence.
In Canada, the new requirements are part of a six-year, $75 million CAD federal strategy to combat modern slavery in supply chains, and work with external organizations to share tools and best practices.
While the UK already passed the world’s most comprehensive disclosure-based legislation, in September the Cabinet Office published a new policy outlining due diligence requirements for government departments, executive agencies and non-departmental public bodies. Given the rapid growth of the modern slavery risk landscape, businesses selling into the region have little impetus to ignore their obligations.
7. U.S.-China Trade War Sends Ripple Effect Throughout Global Supply Chains
The U.S.-China trade war heated up in 2019, and tariff risk has compounded across manufacturing industries. While the U.S. CBP, as well as other federal agencies, have the jurisdiction to apply heavy financial penalties to companies importing from China, they’ve collected roughly $7.5 billion USD in new tariffs a month (approximately $90 billion USD in tariffs a year). They’ve also discovered other issues, such as instances of forced labor.
Since taking a more broad approach to evaluating country-of-origin documentation, agencies are discovering other issues, including false country of origin data and goods re-routed from North Korea, where child and forced labor are common. Companies can respond to this risk by performing due diligence on the Harmonized Tariff Schedule (HTS) codes of any imported products and leveraging supply chain due diligence to gain a deeper understanding of supplier practices.
Read more about how Assent can acquire supplier information for any regulatory data type listed here in our guide, “Building Value Into Your Supply Chain Data Management Program.”
8. Cobalt: From Conflict to Responsible Minerals
Conflict minerals legislation generally concerns the ethical sourcing of four minerals — tin, tungsten, tantalum and gold (3TGs) — commonly sourced from the Democratic Republic of the Congo (DRC). However, in 2019 companies began taking responsibility for all materials sourced from conflict-affected regions, not only those identified in Section 1502 of the Dodd–Frank Wall Street Reform and Consumer Protection Act. The first mineral commonly targeted for additional oversight has been cobalt, and the Responsible Minerals Initiative (RMI) has responded to demand for a streamlined due diligence solution by publishing the Cobalt Reporting Template (CRT) 2.0.
9. New Proposition 65 Substances & Labelling Requirements
As of today, a combination of 843 in and out-of-court Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) settlements have been reached in 2019, for a total of $25,958,758 USD in representation fees and non-contingent civil penalties. This demonstrates compliance with the legislation is still a work in progress. Requirements expanded again this year, and six new substances have been added to the list. Meanwhile, short-form label usage may be changing, which could significantly impact labeling and disclosure practices. Stay tuned for any updates related to Proposition 65.
10. Supply Chain Disruption in the Automotive Industry
It’s been a year of uncertainty for automobile companies: the demand for electric vehicles — and therefore, new parts — has put strain on assembly lines; it was discovered that a manufacturer sold non-compliant parts into a vast number of vehicles on the road today; and cobalt and rare earth metals sourcing issues have introduced data challenges that go well beyond the scope of the IMDS solution.
For these issues, and any related to your supply chain, effective data management is key to mitigating upstream reputational, operational and financial risks. In order to build a proactive, cost-effective strategy, more companies are choosing Assent to automate data exchange, receive targeted regulatory and due diligence training, and centralize data from one interface.
For more information about how Assent can help your company in 2020 and beyond, contact our experts.