Caroline Raine discusses what a no-deal Brexit scenario looks like for the chemical industry, specifically considering the REACH Regulation.

Introduction: Brexit and chemical industry

The UK voted to leave the EU on 23 June 2016. We are now very close to the official leaving date of 29 March 2019. While talks are ongoing, there is very little clarity on what we can expect and how Brexit could impact the chemical industry. The Health and Safety Executive (HSE), The Department for Business, Energy & Industrial Strategy (BEIS) and the Department for Environment, Food & Rural Affairs (Defra) have all been working hard to prepare for a no-deal scenario.

No-deal Brexit scenario

The chemical industry will be among one of the largest sectors to be most severely impacted in the event of a no deal Brexit. The HSE, BEIS and Defra all have their own dedicated websites providing guidance and information on a no-deal Brexit.

If the UK leaves the EU without a deal there will be no implementation period. All of the current European legislation have been drafted in UK legislation that mirrors the European legislation with slight changes; for example, reference to the European Chemicals Agency (ECHA) will have been dropped.

The magnitude of legislation that is affected is wide ranging and covers many areas. There are several key pieces of legislation relevant to the chemical industry that will have the biggest impact.

  • Biocides Authorisation of Biocidal Substances and Products.

  • Classification, Labelling and Packaging of Substances and Chemicals (CLP).

  • Export and Import of Hazardous Chemicals from and into Europe (PIC).

  • Pesticides or Plant Protection Products (PPP).

  • Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH).

The HSE website has guidance documents on each of these key areas explaining what a no-deal scenario looks like.

In addition there are a number of guidance documents on the GOV.UK website on several major areas.

  • Workplace Rights if There’s no Brexit Deal.

  • Trading Goods Regulated Under the “New Approach” if There’s No Brexit Deal.

  • Regulating Persistent Organic Pollutants (POPs) — “Control on Persistent Organic Pollutants if There’s no Brexit deal”.

  • Regulation on Mercury — “Control on Mercury if There’s No Brexit Deal”.

  • Appointing Nominated Persons to Your Business if There’s No Brexit Deal.

  • GOV.UK: How to Prepare if the UK Leaves the EU with no Deal.

REACH

In the event of a no deal, the REACH Regulation will have the largest impact on the chemical industry, and the costs will be significant.

In fact, it is so significant that the European chemical industry has united in calling for both sides of the Brexit negotiations to secure an agreement.

In a joint statement, the Director General of the European Chemical Industry Council (Cefic) Marco Mensink and the Chief Executive of the Chemical Industries Association Steve Elliott said: “What our industry and the whole economy needs is an agreed Brexit deal … businesses are increasingly preparing for a no-deal outcome with all the implications that it has, for not just the UK, but for Europe as a whole. The deadline is fast approaching. We hope the negotiators put the finishing touches to an agreement that commands support from within the UK and across Europe.”

A no-deal scenario would have huge implications for UK businesses that are producing, registering, importing or exporting chemicals.

  • It would mean that companies registered with REACH would no longer be able to sell into the European Economic Area (EEA) market without transferring their registrations to an EEA-based organisation. Companies would therefore need to take action to preserve their EEA market access.

  • UK downstream users currently importing chemicals from an EEA country would face new registration requirements. Under the UK’s replacement for REACH, importers would have a duty to register chemicals. Similarly, UK downstream users of authorisations would no longer be able to rely on authorisation decisions addressed to companies in the remaining EEA countries.

To ensure continuity for business, the intention is to:

  • carry across existing REACH registrations held by UK-based companies directly into the UK’s replacement for REACH, legally “grandfathering” the registrations into the UK regime

  • set up a transitional light-touch notification process for UK companies importing chemicals from the EEA before the UK leaves the EU that don’t hold a REACH registration; this would reduce the risk of interruption in supply chains for companies currently relying on a registration held by an EEA-based company (this would mean that those UK companies could continue to buy those chemicals from the EEA without any break)

  • carry into the UK system all existing authorisations to continue using higher risk chemicals held by UK companies.

Businesses with existing EU REACH registrations would have them automatically grandfathered into the UK regime. Companies would then need to open an account on a new UK information technology (IT) system, providing some basic information on existing registrations. This would need to be done within 60 days of the UK leaving the EU. This IT system is being tested with a range of different users so that it is ready to support registrations of chemicals in the UK from March 2019.

Companies with grandfathered registrations would then have two years from the day the UK leaves the EU to provide the UK authority (the HSE) with the full data package that supported their original EU registration and is held on the ECHA IT system.

Businesses that imported chemicals from the EEA before the UK leaves the EU (but who did not have an EU REACH registration), would need to notify the UK authority and provide some basic data on the chemicals within 180 days of the UK leaving the EU, instead of having to undertake a full registration immediately. This would be an interim arrangement for those importers and they would need to move to full registration at a later date following a review of this approach.

Importing businesses would be responsible for identifying appropriate risk management measures and recommending them to their customers.

If a business wished to place new chemicals on both the EEA and UK markets, in a “no-deal” scenario, they would have to make two separate registrations, one to ECHA and one to the UK. The information and data package needed would be the same for both.

ECHA

ECHA has published guidance on Brexit and the event of a no-deal scenario for the chemical industry.

As part of this, it has prescribed a “Brexit window” from 12–29 March whereby UK registrations can be transferred to an EU-based only representative (OR), and has provided step-by-step instructions for using the “Brexit window”.

It has also provided a spreadsheet of all chemicals that are currently only registered by UK companies in the event of no deal. If these are not transferred to an EU-based company, they will become void and cannot be sold on the EU market.

Conclusions

It is only at the point that the UK Parliament has ratified the deal and the EU Council has obtained the European Parliament’s consent and adopted the decision to conclude the agreement, that we can be certain that the UK will not enter a “no-deal” scenario.

The Government statement is “preparations for a ‘no-deal’ scenario must therefore continue. People and businesses should not be alarmed by ‘no-deal’ planning and preparation, nor read into it any pessimism. Instead they should be reassured that we are taking a responsible approach, ensuring the UK’s exit can be as smooth as possible in all scenarios”.

Despite the fact that we do not know yet what the outcome of discussions and negations will be, it is important that businesses are ready and have clear actionable plans in place that can be implemented once we know what our futures hold. Keep monitoring discussions and be ready to act quickly.

Last reviewed 5 March 2019