Ireland's chems wary but ready to take advantage of Brexit - trade group

05 June 2018 11:12 Source:ICIS News

LONDON (ICIS)--Ireland is ready to take advantage of Brexit as it hopes to entice chemical and pharmachem companies to the island once the UK leaves the EU, according to the director of BioPharmaChem Ireland.

Matt Moran, director of the trade group that represents the pharmaceutical, chemical and biopharmaceutical manufacturing sectors in Ireland, added however that Irish firms are preparing for the worst possible outcome, a hard Brexit.

“Brexit is an opportunity and a threat. The threat is obviously depending on what happens with the customs union. If we see tariffs emerging or if we see customs delays emerging, that’s clearly going to be a problem,” said Moran.

He admitted that BioPharmaChem Ireland is advising all of its members to assume the worst case scenario, which, in his opinion wold be “a cliff, a hard Brexit, where everything breaks down”.

He added: “Whether that happens or not, you just don’t know. But if you’re being conservative, you need to assume the worst [and] make provisions for how you can handle those regulatory requirements, which will be a big issue for pharma and chemicals companies.”

On the opportunities arising from Brexit, Moran said that some companies, who are either already located in the UK or who had been looking to invest there, will instead be looking at re-locating pieces of their regulatory operations in other EU countries.

“Ireland would be a logical place to do it, given the fact we speak the same language and obviously have close links generally,” he said.

At 12.5%, Ireland also has one of the lowest corporate tax rates in the EU.

The country is the closest geographically with the UK, and will be home to the only UK-EU land border post Brexit.

The two countries also share a common travel area, allowing citizens to travel freely.

In an interview with ICIS in December, Labour MP Angela Smith said that Ireland has the capacity to completely break Brexit.

“The challenges thrown by the border [between Northern Ireland and Ireland] are immense, and we need to establish some border arrangement, but these issues are just impossible to resolve without causing real tensions in terms of the Good Friday agreement,” she said at the time.

It is for specifically that reason that companies in Ireland are not truly capable of fully preparing for the outcomes of Brexit, as the result of negotiations is still unclear.

“Basically, it’s uncertain at the moment what the effect will be,” said BioPharmaChem’s Moran, pictured.

“We could see it causing some disruption, but this industry normally manages to work its way around it.”

Ireland’s chemicals industry was worth €67.8bn in exports in 2017, mostly in the pharmaceutical sphere, with all of the top ten pharma companies in the world having operations there.

“Overall, the industry, which is made up of organic chemicals, pharmaceuticals, cosmetics, detergents and more, is performing very strongly at the moment, there’s a lot of capital investment going in. In the last ten years, we’ve seen about €1bn a year going into capital investment,” said Moran.

Another possible reason for companies to relocate to Ireland would be to remain under the regulatory umbrella of the European Chemical Agency’s (ECHA) Reach legislation, with another Labour MP, Geraint Davies, telling ICIS that about 20% of companies were considering relocating to Ireland so they know “where they are” and can continue playing by the same rules.

However, in March, Prime Minister Theresa May confirmed that the UK would look to remain a member of ECHA after Brexit in a bid to less the red tape that firms in the country will face one it leaves the EU.

This is a move that, despite the potential for more companies relocating to the UK, Moran welcomes.

“The UK-based industry, certainly the chemicals industry, wants to stay aligned to Reach and we certainly support that position.”

The deadline for Reach registrations passed on 31 May, with the total number of dossier submissions for different materials coming in below original forecasts.

21,550 substances were registered over the three milestones of the programme, below the 30,000 projected by ECHA, with some SMEs citing that it was simply too expensive.

Irish companies, however, had no such difficulty in fulfilling the latest regulatory step, according to Moran.

“Reach has been business as usual for us. The Health and Safety Authority [H&SA] is the key implementing body for Reach in Ireland and we’ve a very close working relationship with them,” he said.

"Companies here are generally on the ball in that regard.”

Pictured above: Global pharmaceutical major Pfizer's offices in Ireland
Pictures sources: Cork Examiner/REX/Shutterstock and BioPharmaChem Ireland

Interview article by Niall Swan

By Niall Swan