LONDON (ICIS)--The UK would abide by the rules of the EU regulator the European Chemicals Agency (ECHA) post-Brexit and contribute to maintenance costs of the organisation if the regulatory environment for chemicals players can be maintained, the country's government said on Thursday.
In its latest position paper proposing the terms of its post-divorce relationship with the EU, the government stated that it wishes for UK chemicals players to remain directly under the auspices of ECHA and the Reach regulatory system.
Under its own guidance, ECHA has stated that the UK will count as a third country from the slated March 2019 withdrawal date unless a new agreement is brokered.
This potentially leaves UK companies scrambling to establish European offices or to find representatives on the continent to handle their Reach registrations, like any global organisation selling material into the EU.
The UK chemicals sector is among the sectors with the least to gain from potential regulatory reform post-Brexit, due to the complexity of EU legislation and the prominence of the union as a market for producers, according to the country’s Confederation of British Industry (CBI).
The industry has pressed the case increasingly forcefully to ministers, leading to UK Prime Minister Theresa May mentioning ECHA in a speech as an example where close post-Brexit alignment would be necessary.
The UK is seeking similar continued arrangements with the European pharmaceutical and aviation agencies.
“In some manufactured goods sectors where more complex products have the potential to pose a higher risk to consumers, patients or environmental safety, a greater level of regulatory control is applied,” the UK government said in the white paper.
“In line with the UK’s objective of ensuring that products only go through one approval mechanism to access both markets, the UK is seeking participation in [chemical, medical and aviation] EU agencies, as an active participant, albeit without voting rights, which would involve making an appropriate financial contribution."
Little restructuring has taken place at ECHA in anticipation of a UK breakaway, according to agency director Bjorn Hansen, aside from war game scenarios of a hard Brexit, where the UK would likely shift to World Trade Organization (WTO) trade rules with the EU.
“[This would mean] being ready to cut the secure line to the UK authorities so they can't access the databases, can't be involved in any of our decision-making procedures, are no longer invited to our meetings and can no longer contribute scientifically,” he told ICIS in June.
ECHA head of unit for dossiers and submissions Mercedes Vinas added this week that little detail has been provided by the UK on how associate membership would work.
The UK government has long banked on a solution being found allowing it to maintain a frictionless border with the EU post-Brexit, with little new infrastructure installed at ports in anticipation of more stringent checks on goods entering the country, as the Brexit deadline creeps closer.
In its latest white paper, the government stressed that it is also in the EU’s interest to maintain frictionless trade in goods through maintaining regulatory alignment on “only those rules necessary” to facilitate that.
The move would position the UK as a rule-taker from the EU on trade in goods, and would encompass rules on border checks, requirements on placing products in the market, along with future compliance on environmental and energy consumptions standards agreed in Brussels.
“The UK believes that manufacturers should only need to undergo one series of tests in either market, in order to place products in both markets,” the UK government said.
Less alignment has been proposed on services, in a bid to safeguard London’s position as the financial hub of Europe, with the UK proposing a new economic and regulatory system on financial services, and mutual recognition of professional qualifications.
While market analysts remain sceptical of the feasibility of the UK’s proposals on services, even the more conciliatory trade in goods proposals present problems, according to European Commission officials.
Regulatory alignment on trade could be complicated by any new trade deals that the UK may strike globally, according to Jochen Muller, acting assistant director for the Commission’s representation in Spain.
“The UK wants to make good FTAs with other countries. In five or 10 years, if the UK signs an FTA with the US and accepts that country’s agricultural products, which would include transgenics [genetically modified organisms, GMOs] which are not used in the EU, what will happen?,” he said, speaking at a Brexit conference in Madrid, Spain, this week.
Pictured: ECHA's headquarters in Helsinki
Focus article by Tom Brown