ILMA Compoundings January 2017 - 10

volumes will not be covered by the registration.
Another risk posed by this approach is that the agreeable
manufacturer can poach a participant's importing customers
if confidentiality is not maintained. Some manufacturers offer
a trustee arrangement in which formulators and other downstream customers can provide data in a confidential environment that shields visibility of the data from the manufacturer.
This is rare. More frequently, the agreement to extend coverage
by the manufacturer is accompanied by contact information for
staff at the manufacturer, or staff at the European Only Representative, without mention of data protection from the eyes of
the manufacturer. Since the Only Representative owes a primary
contractual duty to the manufacturer, access by the manufacturer is unhindered absent a contractual commitment otherwise to
downstream customers.
A third risk is that the manufacturer might later withdraw its
coverage. This might seem outrageous, but many circumstances can
play into a decision to stop the practice entirely, or to at least limit
the program to certain qualifying participants. I have yet to en-

counter a manufacturer who offers perpetual coverage. A reduction
in the coverage commitment could be precipitated by a change in
the Only Representative, overall expense of the coverage (registration tonnage band creep can be an issue) or simply a change in
management philosophy. Regardless of the reason, anyone who follows this alternative must evaluate the risk and have a backup plan.
Finally, be mindful that participants become captive to the
supplying manufacturer. Change in source manufacturers requires
transition to their EU REACH coverage program, if available, prior purchasing of their material for products to be sold in Europe.
If this occurs, reporting information concerning EU importers can
become complicated. Where multiple manufacturing sources are
utilized in the same year, careful tracking of volumes associated
with each supply chain will be necessary.

Eggenschwiler is an international trade attorney and
director of Global Trade for the Redstone Group LLC.
He can be reached at 614-923-7472 or jeggenschwiler@
redstonegrp.com.

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JANUARY 2017

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ILMA Compoundings January 2017

Table of Contents for the Digital Edition of ILMA Compoundings January 2017