UK, EU chems cautious on Brexit deal, hopeful on regulatory alignment intentions

LONDON (ICIS)–The UK and EU’s chemicals trade groups CIA and Cefic said on Thursday they are “relieved that progress has been made” on the Brexit withdrawal agreement, but recommended caution as the deal has yet to be passed by parliament.

Pictured: UK’s Prime Minister Boris Johnson and European Commission President Jean-Claude Juncker, in Brussels earlier on Thursday Source: Olivier Hoslet/EPA-EFE/Shutterstock

Earlier in the day, the EU and the UK said they had reached a Brexit withdrawal agreement which could pave the way for the country to leave the 28-country bloc on 31 October.

However, the deal is yet to be approved by the UK’s House of Commons on Saturday. Prime Minister Boris Johnson’s Conservative party will need opposition and independent members of Parliament (MPs) to pass the deal.

“The chemicals sector [is] cautious but relieved that progress [has been] made on Brexit … We hope this can now be accepted by both [UK and EU] Parliaments,” said CIA and Cefic.

However, the accompanying Political Declaration (click here for full document) signed between the UK and the EU for their future relationship once the withdrawal process is complete gave the chemicals industry real prospects that regulatory alignment under Reach will continue.

The Declaration said that both parties “will explore the possibility of cooperation” between the UK and EU agencies like the European Chemicals Agency (ECHA), the regulator, which has been a recurrent demand from the industry given the high interlinks and the expenses incurred since Reach was introduced in 2007.

Only last week, the CIA had warned that a no-deal Brexit could add £500m in costs to develop a ‘UK Reach’.

“Given where we were last week, I welcome the accord now reached … This deal – with its commitment to a free trade agreement [FTA] avoiding tariffs and non-tariff barriers – represents an opportunity that we must now grab hold of,” said the CIA’s CEO Steve Elliott.

“Although we still seek reassurance that we can maintain a strong connection to the regulatory framework of our biggest and most important market. The deal will not be perfect for everyone, including ourselves.”

Despite the mention of cooperation with ECHA, the Declaration states that free movement of people – one of the four freedoms the EU Single Market entitles – will end once the UK leaves the bloc.

CIA and Cefic had advocated to keep the right of all EU nationals to live and work anywhere in the bloc, in order to hire qualified professionals – of which the UK suffers a chronic shortage – from any of the member countries.

“It [future relationship] must also ensure the sovereignty of the UK and the protection of its internal market, while respecting the result of the 2016 referendum including with regard to the development of its independent trade policy and the ending of free movement of people between the [European] Union and the UK,” the Declaration said.

In Germany, the EU’s largest chemicals producer, trade group BDI, which the chemicals trade group VCI belongs to, also warned that a no-deal Brexit is still possible, urging producers to prepare for such scenario.

“German industry is relieved that negotiators reached a deal … This new Brexit deal is better than a hard [no-deal] Brexit,” said BDI’s director general Joachim Lang.

The pound was stable on Thursday afternoon against the euro and the dollar after having risen during the week on hopes of an agreement.

Pound sterling versus euro
Click on image to enlarge. Source: Xe.com