ITA Assists U.S. Chemical Manufacturers with Protecting Confidential Business Information in Japan

(ITA) The International Trade Administration worked with the American Chemistry Council (ACC), the Society of Chemical Manufacturers and Affiliates (SOCMA), Baker Hughes, and five other companies to ensure that U.S. exporters of chemical substances were able to protect confidential business information (CBI) under Japan’s amended Chemical Substances Control Law (CSCL). As a result of combined government and industry efforts, potential disruption to the U.S.’s roughly $10 billion chemical export market to Japan was successfully averted and U.S. exporters are now able to protect their CBI in Japan.

Why it Matters

If U.S. exporters are unable to protect their CBI in foreign markets such as Japan, those exporters face the difficult choice of whether to risk exposing sensitive proprietary information that often gives a firm its inherent business advantage or stop exporting. In addition, if exporters cannot protect CBI, other U.S. and foreign manufacturers of component chemicals may often be unwilling to continue to supply the downstream exporter/manufacturer, causing not only export disruptions but potential disruptions to long-standing business relationships.

The Problem

Japan amended its Chemical Substances Control Law (CSCL) in 2009, creating a new risk-based management system for chemicals that required companies to notify the Japanese government of a substance’s chemical identity, quantity, and use information each Japanese fiscal year. The original guidelines stated that exporters of chemicals to Japan had to transmit reporting data through private-sector Japanese importers, putting at risk CBI since importers have relationships with many different companies, often including competitors. This revision of the law also raised concerns about Japan adhering to its WTO obligations requiring confidentiality of such information.

The Solution

From May 2010, Commerce and U.S. industry continually raised the issue with the Japanese government in the form of meetings, letters, and exchanges of proposals. Due to Commerce’s and industry’s continuing efforts, the Japanese Ministry of Economy, Trade and Industry (METI) announced the details of a new direct-reporting option in early June 2011, shortly before the close of the first annual reporting deadline. As a result, chemical exporters are now able to protect their CBI in Japan. METI also briefed U.S. industry on the CSCL requirements in Washington, DC, in August 2011.

Working closely with U.S. companies, ITA creates, expands, and defends market access for U.S. goods and services overseas through the Trade Agreements Compliance Program. We promote policy that develops a more favorable business climate for U.S. companies in global markets, employ commercial diplomacy to resolve trade barriers, and leverage our bilateral and multilateral trade agreements to ensure our trading partners live up to their commitments so that American businesses can compete on a level playing-field.