China's “RoHS 2” Regulation: What Manufacturers Must Know

After years of deliberation and industry anticipation, China’s Ministry of Industry and Information Technology (“MIIT”) promulgated the “RoHS 2” regulation on January 21, 2016, with the formal (translated) title “Management Methods for the Restriction of the Use of Hazardous Substances in Electrical and Electronic Products.” See our English reference translation of RoHS 2 here.

The restriction of hazardous substances (“RoHS”) in China is of particular importance to those companies manufacturing electrical and electronic products, parts, or components in China, or importing such products into the China market. It is also important to those overseeing Chinese suppliers manufacturing such products or those involved in corporate product design/content decisions.

As we discussed in our May 2015 analysis along with the draft of this regulation, available here, the China RoHS 2 program establishes the following key requirements for manufacturers and importers of in-scope electrical and electronic products, parts, and components:

• Hazardous-substance content limits for lead, mercury, cadmium, and hexavalent chromium compounds, polybrominated biphenyls and polybrominated diphenyl ethers, and an associated “conformity assessment system” aimed at evaluating compliance with these limits; and

• Labeling and information-disclosure requirements involving product, part, component and material hazardous substance content, and product “environmental protection use periods.”

The hazardous-substance content limits have not been implemented under China RoHS 1. These remain to be implemented under RoHS 2, although as noted below, the framework is now in place for such implementation. The labeling and information-disclosure requirements have been in place for specific “electronic information products” under this program since March 2007. With the changes brought by RoHS 2, these requirements will enter into effect on July 1, 2016, as discussed further below.

Reviewing the RoHS 2 text, it is notable that changes in this text, compared to the 2015 public-comment draft of the law, are not extensive. However, for those who have not closely followed China RoHS 2 developments, I outline key changes in RoHS 2 as compared with RoHS 1 (the 2006 version of the law), below. Where relevant, I have added commentary concerning the significance of changes evident in the final RoHS 2 text.

RoHS 2 vs. RoHS 1:

• RoHS 2 expands/adjusts the scope of applicable labeling and information-disclosure requirements, mentioned above, focusing on “electrical and electronic products,” which are defined as:

“Devices and accessory products with rated working electrical voltages of no more than 1500 volts direct current and 1000 volts alternating current which function by means of current or electromagnetic fields, and generate, transmit and measure such currents and electromagnetic fields.”

See RoHS 2, Article 3(1).

• RoHS 2 excludes power generation, transmission, and distribution equipment from the definition of “electrical and electronic products,” and therefore the scope of RoHS 2. See RoHS 2, Article 3(1).

• RoHS 2 applies hazardous-substance content limits to electrical and electronic products included in a “Compliance Management Catalogue” (i.e., a to-be-developed list of electrical and electronic products, to be issued in successive batches over the duration of the regulatory program). In order to be a candidate for this Catalogue, as a threshold matter, a product would need to fall within the definition of “electrical and electronic products” mentioned above. See, e.g., RoHS 2, Article 3(5).
  • A key aspect of the term “Compliance Management Catalogue” is that electronic and electrical products eventually included in one of the batches of this Catalogue require additional management controls in the government’s perspective, because industry or other efforts to manage the electrical and electronic product’s end of life and hazardous substance content are deemed insufficient.
  • It is also worth keeping in mind the use of the phrase “based on the actual industrial development situation” in RoHS 2, Article 17. This points to the fact that the Chinese authorities will consider whether the development of the electrical and electronic products is at a level, in China, where technology makes feasible the use of substitutes for the restricted substances.

• RoHS 2 changes the “compulsory certification” terminology reflected in RoHS 1 to a potentially more flexible “conformity assessment system” reference that MIIT recommends to the Certification and Accreditation Administration (“CNCA”) and that CNCA and MIIT issue and implement, with input from other agencies. See RoHS 2, Article 18.

• RoHS 2 introduces packaging material standard conformity requirements (that had been removed in earlier drafts of the law). Practically speaking, among other things, this means that those managing China RoHS issues need to coordinate with those covering packaging material conformity issues for those products manufactured in or shipped to China. See RoHS 2, Article 12. Packaging issues are now within enforcement purview of the China RoHS implementing authorities. See RoHS 2, Article 19(3) (punitive provisions).

• RoHS 2 underscores the role of the government in awarding and promoting organizations’ and individuals’ development of electrical and electronic products that exceed RoHS 2 requirements. See RoHS 2, Article 8. The practical aspect of this is that we should expect additional government incentives and linkages to other government programs promoting domestic company advances in restriction and reduction of hazardous substances in their products.

• RoHS 2 removes the “products manufactured for export” exemption included in China RoHS 1.

• RoHS 2 does not include, as a joint signatory agency, the State Administration for Industry and Commerce (a jointly signing agency for RoHS 1, and originally proposed in the RoHS 2 drafting process). This may have domestic enforcement efficiency implications, to be determined.

• RoHS 2 does not include language, included in the earlier public-comment draft, on the development of the timetable for substance restriction implementation with respect to electrical and electronic products included in the Compliance Management Catalogue. While this may not appear on its own to be significant, it is noteworthy for affected industry members as it increases for the time being ambiguity surrounding the development of the Catalogue.

Labeling and Information Disclosure:

The labeling and information-disclosure requirements under RoHS 2, specified in a separate labeling standard, (SJ/T 11364-2014) (our English reference translation for which is available here), would become effective at the same time as China RoHS 2, per the MIIT guidance issued (available here in our English translation). Industry members should focus on these requirements (i.e., SJ/T 11364-2014) now, if they have not already. It is my experience that the authorities engage in increased compliance inspections and enforcement surrounding the approach of the effective date of a new law, as will likely be the case with RoHS 2.

The hazardous-substance content limits would not become effective under China RoHS 2 until a specified time following the promulgation of the “Compliance Management Catalogue.”

Further Insights, Including Next Steps:

MIIT released an “Explanation” document along with RoHS 2. Our English reference translation of the Explanation is available here. This document essentially comprises background information on the now lengthy history of RoHS 2 development. Key points to take away from this document include:

• The RoHS 2 development process was extremely lengthy and involved significant stakeholder outreach and inter- and intra-agency bureaucracy.

• Reasons for developing RoHS 2 included the determination that RoHS 1 covered too small a universe of electrical and electronic products, leading some companies to adopt two sets of standards for their production.

• Full implementation of the compulsory certification program in RoHS 1 would adversely affect product innovation and industrial development.

• EU and other jurisdiction RoHS practices and policies clearly influenced development of RoHS 2.

• MIIT will be issuing Frequently Asked Question (“FAQ” or “Q&A”) documents to facilitate industry understanding and compliance with RoHS 2. (We should also expect work on other RoHS 2 implementation aspects, including the first batch of the Compliance Management Catalogue and the associated Conformity Certification System regulatory measures, to proceed in earnest.)

I will be monitoring the next China RoHS developments and look forward to assessing these issues for industry colleagues.