Brexit 'question of damage limitation' for chemicals - CIA's CEO

Author: Morgan Condon

2021/01/08

LONDON--Brexit has always been a question of damage limitation for the chemicals sector, according to the head of the UK’s chemicals trade body.

New regulations have come into play as of the 1 January after a deal was agreed at the eleventh hour, swerving the possibility of a no-deal exit at the end of 2020.

While avoiding quotas and a £1bn annual hit in tariffs is a relief to the chemicals industry, the CEO of the UK's CIA trade body said the devil is in the detail in around the rules of origin.

Steve Elliott urged chemicals producers to study the agreement.

Elliott was speaking at the ICIS Brexit webinar 'UK Chemicals stand alone in a post-Brexit world', in which he addressed what would happen to the country’s industry following its exit from the EU.

One key issue remains access to the EU’s chemicals regulatory framework Reach, which contains data of all chemicals registered in the 27-country bloc, as the UK no longer has the right to access this information.

“[UK negotiators] pushed the chemicals annex, they pushed for us to be able to access pre-end of year investment in EU Reach but received a very firm rebuttal that access is a gift of the single market and thou shalt not pass,” said Elliott.

He said that, although access to data “seems like a firm political no”, CIA would continue to explore if there is room to discuss this again at a later date.

The UK had been the second largest registrant of chemicals to Reach, after Germany, and there are concerns around the compliance of transferring previous valid Reach registrations to the EU chemicals regulator the European Chemicals Agency (ECHA) to secure ongoing access to the European market.

Another way of tackling the challenge could be through grandfathering – exempting previously registered chemicals from new legislative challenges.

“Again, tall order but in the annex language is positive and talks about future opportunities and would remove a lot of the obstacles,” said Elliott.

The final way of ensuring the health and safety standards of chemicals in UK Reach would be to duplicate the information.

“Duplication with no additional health and environment benefit, that is not why we left EU, complete waste of effort and resources. It will be about purchasing data and, how we minimise that cost,” he added.

Departing the EU has left the UK open to other free trade agreements (FTAs) on a global scale,

Compliance with an independent UK Reach could also bring with it the threat of tariffs which could bring another potential £1bn to importers.

“The suspicion remains if you are rushing towards a trade deal as a more minor player than you were, then you have given away more than you had…" said Elliott.

"Ultimately the issue is how important, significant, and attractive for UK chemicals industry going to be for foreign investment.”

Another short-term challenge could be borders and customs. While there is no immediate problems, this could be because of the significant stock building made by producers before the year end.

This could become more prevalent at the end of the month, when stocks have been depleted if border disputes and delays continue.

BENEFITS
Although access to Reach data has been removed, the UK could still be placed to be involved with Horizon Europe – the EU’s research and development (R&D) framework.

“It’s a bit of a surprise that it is there, but it is great that it is there given our industry is a big beneficiary of R&D. The big question mark is whether the UK government will commit financially to this,” said Elliott.

The UK’s chemicals sector has proved resilient throughout the pandemic, and with the focus on vaccines and hand sanitizers production, it is easy for the industry to demonstrate its value to politicians.

In parallel to the EU, sustainability has become a key issue for the UK government, with plans talked about including wind farms, battery plants, decarbonisation, hydrogen and sustainable production.

These projects are all intrinsically linked to chemistry and chemicals, and in order to flesh out what Elliott described as a “wish list”, more details will be needed to help the UK’s chemicals industry prosper and meet these objectives.

Front page picture: UK's port of Dover, the largest linking to the rest of Europe
Source: Martin Dalton/Shutterstock

 

Dover Docks Kent first day of new lockdown, Kent, Dover, England - 05 Jan 2021

 

A quiet Port of Dover on the first day of a new national lockdown

5 Jan 2021

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