INSIGHT: Brexit must not leave chemicals firms out of Reach

By Niall Swan

LONDON (ICIS)–6,364 registrations under the EU’s Reach regulation filed by UK businesses, covering 2,563 substances, will become “non-existent” after Brexit, according to the European Chemical Agency (ECHA).

The ECHA’s forecast has been confirmed by the UK’s chemical trade group Chemical Industries Association (CIA).

Currently, all EU-based businesses, including those in the UK, must register substances manufactured or imported in the 1-100 tonnage band with ECHA by the end of May 2018.

In the Reach 2012 Review, the European Commission – the EU’s executive body – stated that the total cost for all firms involved in registration to the end of the first registration period, which ended in 2010, was estimated at around €2.1bn.

It added the average cost of registration per substance by one firm stood at approximately €70,000.

This, therefore, leaves chemical firms in the UK, which account for almost 13% of the total European Economic Area (EEA) registrations, second only to Germany, in somewhat of a tricky situation when it comes to registrations.

Their options would appear to be limited to either paying the registration fees for the ten-month period that the registrations are expected to be valid for or cease producing or importing those products until the future of chemical regulations in the UK is clearer.

However, Silvia Segna, the CIA’s Reach executive, says that there is only one option available for companies in the UK.

“Reach compliance remains a legal requirement in the UK, not an option,” Segna told ICIS.

“Both DEFRA [the UK’s department for environment, food and rural affairs] and the UK Health and Safety Executive [HSE] have been very clear on the fact that UK companies still need to comply with Reach while the UK remains a member of the EU

“’No data, no market’ is one of the basic principles of Reach. If companies do not register their substances by the May 2018 deadline, they cannot manufacture or import at volumes of one tonne or more per year.”

Segna did confirm though that through the Repeal Bill presented by the UK government in September, the country intends to convert legislation such as Reach into UK law, meaning the same regulatory requirements will apply on exit day in the UK.

However, it remains unknown, at the moment, how the UK government will create, administer and maintain the new legislation.

“How the whole process will work, how it will avoid duplication of cost and protect the competitiveness of the UK chemical industry is still unknown,” she said.

The CIA has said that, ever since the EU referendum in June 2016, it has been urging the government to consider the issue of validity of existing registrations and authorisations, in the context of Article 50 negotiations, with a view to ensure – before the withdrawal date – that they do not become invalid.

“If the UK is ‘out of EU Reach’ post Brexit, the government and the EU need to ensure a process is established to avoid re-registration in the EU, and to avoid the requirement for repeat or additional registrations in the UK,” Segna said.

The CIA did admit that, although the majority of its members would prefer to remain within the Reach process, a number of smaller companies with a trade dependency outside the EU “would be interested in any alternative that brings a less-costly but equally-rigorous compliance” regime but one for “the collective CIA membership that doesn’t endanger access to the EU” market.

In September, a member of the European Parliament (MEP) Julie Girling said that a new “third-party” membership within ECHA could be the solution for UK’s chemicals post-Brexit.

“There are two ways [for UK chemicals post-Brexit],” said the MEP at the time.

“On one hand, the separatist route in which we set up a replica of ECHA, which would have a huge cost. I don’t think that’s the way forward.

“The sensible option would simply be to remain within the EU system. The big stumbling block for that is to remain within the ECJ’s [European Court of Justice] jurisdiction.”

In an interview with ICIS in September, Geert Dancet, ECHA’s executive director, said that while he would like the UK to remain within the remit of Reach, the regulator has been told to prepare for the worst-case scenario.

“I hope the UK can stay as part of the family and also contribute to our budget and our assessments, but we don’t know if that will be the outcome. What we are asked to do is to prepare for the worst-case scenario,” said Dancet at the time.

Worryingly for all involved, Brexit negotiations have thus far made very little progress, meaning that “worst-case scenario” is drawing ever closer.

The EU has repeatedly made it clear to the UK that no progress will be made on post-Brexit regulations or deals until the UK agrees to a financial settlement with the EU.

Moreover, two more issues are putting a strain in the negotiations: the rights of EU citizens living in the UK and finalise a solution to the border question between Northern Ireland and the Republic of Ireland.

The EU’s chief Brexit negotiator Michel Barnier has admitted that the bloc is preparing for a possible collapse of talks between the two groups, and last week gave the British government a two-week deadline to provide greater clarity on the financial settlement.

In a ‘no deal’ scenario, alternatively known as a hard Brexit, means that, along with it no longer having access to the free market, EU legislation will also become invalid, meaning all Reach registrations by UK firms will be null and void, a potentially disastrous prospect for the nation’s chemical industry.

The CIA is hosting an all-day conference on Brexit in London on Thursday 16 November. Click here for more information.

Pictured above: UK and EU’s chief negotiators, David Davis and Michel Barnier, at a press conference after the 6th round of Brexit negotiations.
Picture source: Xinhua News Agency/REX/Shutterstock