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What are some of the Environmental Health and Safety (EHS) issues faced by foreign invested companies in China?

(1) The Standards are Inconsistent or Inadequate

Many foreign invested companies argue that domestic Chinese standards for Environmental Health and Safety (EHS) vary to those of international standards. For example, China has yet to set domestic standards for Non-Road Vehicles and Engine Emission. Another example is the lack of sound waste management facilities, particularly for hazardous waste.

According to the 2002 White Paper for American Business in China (White Paper), if the resulting standards vary from those of the US, the EU and Japan, the US companies producing and selling relevant equipment in China will need to develop and manufacture new technological components and implement new testing procedures to suit the new domestic standards, thereby drastically increasing their R&D and manufacturing costs. Further, if foreign enterprises have been diligently observing international or internal corporate standards for EHS, such as, in the disposal of waste products, the lack of adequate facilities in China may result in these foreign enterprises being unable to meet their regular EHS standards. In some cases, the lack of appropriate waste disposal facilities may also cause foreign enterprises to refrain from producing products with waste outputs that cannot be properly managed.

(2) The Lack of Formal Dialogue Sessions

The other problem faced by foreign invested companies is the lack of standardized procedures for formal dialogue on the development of EHS legislation in China. The White Paper reported that numerous US companies operating in China have stated that the existing communication channels with Chinese policymakers are inadequate. These dialogue session are necessary if China is committed to harmonizing its EHS policy with those of other countries. By having these dialogue sessions, the Chinese Government could draw on the experience and expertise of international enterprises operating in China, thereby ensuring that the needs of international and domestic enterprises are addressed during the legislation process. One success story is the harmonization of the Non-Road Vehicle and Engine Emission Standards between the US, the EU and Japan, which is attributed to extensive communication between multinational equipment manufacturers and government agencies.

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