No-deal Brexit risks remain high despite EU Council backing - Germany's VCI

Source: ICIS News

2018/11/26

LONDON (ICIS)--The EU Council's backing of the UK to exit the 28-country bloc is only the first step to reaching an accord, with the fate of the chemicals sector still hanging in the balance, according to Germany-based industry trade body VCI.

EU heads of state and government on Sunday endorsed the text of the proposed route for the UK to leave the bloc but significant obstacles remain, including a vote in the country’s House of Commons, expected before the Christmas break, and in the European Parliament at the beginning of 2019.

If the deal runs aground in either vote, then the most likely outcome will be a breakaway from the EU without a deal and, potentially, without a transition period following the country’s 29 March 2019 departure date, according to VCI director-general Utz Tillmann.

“There is no all-clear. If ratification fails, there will be a hard Brexit without the transition period that industry needs so urgently,” he said.

While the deal was backed by the Council with little debate, the passage of the text is expected to be particularly fraught through the House of Commons, with several Members of Parliament (MPs) for the reigning Conservative Party threatening a rebellion.

Jeremy Corbyn, leader of the key opposition Labour party, stated on Sunday that he intends to oppose the deal in Parliament.

With a little over four months left before the UK’s scheduled departure date from the EU, there is little time for the terms of the Brexit arrangements to be renegotiated in Europe and voted on in Brussels and London, leading business leaders to back the current text.

“There is now a straight choice between this deal and a no-deal Brexit, which offers only higher risk, costs and disruption,” said Miles Celic, CEO of financial services advocacy group The CityUK.

Despite some clarity emerging on fundamentals of the post-Brexit arrangement, which are understood to include the curtailment of free movement between the UK and the EU, one of the bloc’s core principles, the leaked text is a sketch of what the final deal will need to be.

“A 20-page vision needs to become a 2000-page agreement that secures trade and jobs before the spectre of no deal can be put to rest,” said Josh Hardie, deputy director general of the Confederation of British Industry (CBI).

The inclusion of the European Chemicals Agency (ECHA) in the text as one of the bodies that the UK government is keen to cooperate with post-Brexit is a welcome sign that regulatory harmony may be maintained across the region for the sector, Tillmann added.

“We need a comprehensive partnership, investment and trade agreement, and this will be a good agreement for our industry only if customs barriers are avoided and the same standards in product and chemical safety are kept up,” he said.

However, how that regulatory harmony will be maintained remains to be seen, with little clarity at present as to whether the UK will be able to maintain access to the dossier of chemicals registration data amassed by ECHA through the Reach system, and how it will replicate this data if not.

Senior civil servants working on the form of a post-Brexit chemicals regulatory landscape have expressed hopes of being able to download the ECHA database, but this is seen by legal analysts as unlikely in light of copyright and intellectual property concerns.

Click here to view related stories and content on the Brexit topic page