NO DEAL BREXIT AND REACH
With the prospect of Britain leaving the European Union with no agreement other than WTO terms in place increasingly being discussed, and after months of political upheaval and disagreement from all corners of the debate, members of the MMTA are justifiably concerned over what will happen to Chemical Regulation and compliance, to allow them to continue trading in Europe in the event of a no-deal. The search for clarity, however, is not easy, and with only 5 months to go until the UK leaves the Union, concrete plans from the UK government are sorely lacking.
The MMTA contacted the Health & Safety Executive (HSE)—the UK body set to take over chemicals regulation post-Brexit—in mid-October to ask the following question on behalf of members of the association:
The question relates to the UK Government guidance notes on chemicals regulation in the event of a no-deal Brexit. As a UK based trade association, we have been approached by concerned member companies, and hope to be able to provide clarification to our membership.
If a UK company with current REACH registrations were to transfer its registrations to an EU entity – either a trading company or OR – would the HSE still recognise the UK company as being registered for REACH when pre-existing registrations are ‘grandfathered’ to the new UK Chemicals Regulation?
If it is not possible, would the UK company have to register, and pay, all over again for either the EU or the UK, whether through an OR or a trading company registered in the EU?
The following response was received on the 30th October from the UK REACH and CLP helpdesk of the Chemicals Regulation Division.
It is not yet clear whether – in a ‘no deal’ scenario – UK companies who have transferred their registrations to an EU-27/EEA entity will also have their registrations grandfathered in to the new UK REACH. There is no mention in the technical note of those who have transferred registrations to an EU-based body subsequently being excluded from the grandfathering provisions. This would imply that it could be possible for a UK-based manufacturer to transfer their EU-REACH registration to an OR and also retain a UK-REACH registration. No advantage would be gained from this as the company would simply retain access to the same countries after exit as they had before exit. However, given the lack of clarity in the notice, and the current uncertainty, we would not advise any company to transfer their registrations at the present time.
I’m sorry we cannot offer anything more concrete at the present time. This question has been raised a number of times to our helpdesk and also at stakeholder events, so hopefully there will be some updated guidance available soon.
The MMTA is disappointed that we were not able to get a definitive response on this topic which is of the utmost importance and urgency for UK members. Mitigating the risks associated with a ‘no-deal’ Brexit are important for many businesses, given the lack of clarity over what will happen in March.
The MMTA wrote again to the HSE regarding the following news report in ‘Chemical Watch’ regarding the UK REACH system:
The UK’s Department of the Environment, Food and Rural Affairs (Defra) says companies will need to submit a “full” data package in order to register their chemicals under a UK version of REACH in a no-deal Brexit scenario. The news, announced at the Health and Safety Executive’s second no-deal Brexit workshop in London last week, was met with disbelief from industry representatives.
Douglas Leech, technical director at the Chemical Business Association (CBA), raised the question of data. He pointed out that for some companies with joint registrations “all they’ve got is name, rank, serial number and tonnage and a little note that says: “See joint registration”. The data is all in the Echa system, he told delegates, adding: Are you really saying that they’ve now got to go and buy the full data package again to do a UK REACH?”
James Dancy, head of EU exit – chemicals at Defra, responded by saying that because the UK is transferring REACH into national law, any new regulatory agency will “require the same information as currently required by EU REACH”.
For sole registrants, he said, that should be “fairly simple” because they hold all that data. “Obviously the difficulty comes if you’re in a joint Sief [substance information exchange forum] or are an importer and don’t have any access to this data. We know this is a commercial agreement between every single Sief.”
He suggested that companies review their Sief agreements “and see what may be possible about allowing” that data package for UK REACH and REACH IT.
Defra and the HSE are aware of “potential cost implications” for companies trying to get hold of this, he added. From examples industry has already given, this could cost “hundreds of thousands of pounds. I’m not trying to sugarcoat this. This is a difficult area. We’ve had to move EU legislation into UK law and this is the one last difficulty that we need industry to think about and prepare for.” ……
And the MMTA’s question:
Our members are coming to us extremely concerned and in disbelief. The Briefing Paper confirms the highlighted section above (refer to page 21). Please can you confirm that the UK will accept Sief data packages purchased in good faith as acceptable after March 2019 in case of no-deal on REACH? Companies were encouraged to be part of Siefs and to share the costs of producing REACH data. Are they now to be asked to purchase the information for a 2nd time?
The following response was received from HSE on the 7th November:
In answer to your email below, in the event that the UK leaves the EU without a deal, businesses would indeed have to provide the UK Regulator, HSE, over a period of time, with the data that supports the registrations that have been grandfathered. To access the full data package, joint registrants would need to consult their SIEF agreement to ensure that they can use the data for both EU and UK REACH. Access may require re-negotiating commercial contracts, which businesses may wish to instigate as part of their contingency planning. We understand that this would place additional burdens on business. The principle of ‘no data, nor market’ is fundamental to the REACH legislation which will be carried into UK law under the EU (Withdrawal) Act. Full data packages would be required to ensure the safe management of chemicals in the UK.
Let me stress that these are contingency provisions for ‘no deal’. A scenario in which the UK leaves the EU without agreement (a ‘no deal’ scenario) remains unlikely given the mutual interests of the UK and the EU in securing a negotiated outcome. Negotiations are progressing well and both we and the EU continue to work hard to seek a positive deal. We are confident of a successful future partnership between the EU and UK, and do not want or expect a ‘no deal’.
In answer to your earlier question, I can confirm that grandfathering would apply to all registrations that exist at the time of exit, and all registrations held by UK entities at any point within the two years prior to 29th March 2019. This means that if a UK registration was transferred to an EEA-based entity in the run-up to Exit, it would still be carried over into the UK system.
Reports from various sources have tried to imagine the impact of ‘no-deal’ on Chemical Regulation, the House of Commons published a Briefing Paper in September and looks at the scenario of REACH in the event of a no-deal. From section 4:
What if there’s no deal?
If there is no deal reached with the EU on some form of associate membership of the ECHA the UK will become a third party to REACH on exit day (29 March 2019) and there will be no transition period. In this case, the ECHA has stated that UK-registrations will become immediately invalid. Defra Minister, Dr Thérèse Coffey, accepted this in oral evidence to the Lords EU Energy and Environment Sub-Committee in July 2018. Two broad issues arise for a no deal scenario:
- How UK companies will be able to export chemicals to the EU if registrations are invalid in the EU market.
- How chemicals will be regulated in the UK without REACH in place (i.e. the manufacturing, importing and marketing of chemicals).
Comment from Industry
Industry representatives from both chemical industries and industries that use chemicals have raised concerns about the potential impact on trade if UK REACH registrations become invalid in a no deal scenario, pointing to the complex supply chains that exist in the chemicals sector and key manufacturing sectors that rely on chemicals. For example, Roz Bulleid of the manufacturers’ organisation EEF, told the Lords EU Energy and Environment Sub-Committee in June 2018 that a no deal scenario “could be really disastrous” for some of EEF’s members if the registrations and authorisations for chemicals they relied on became invalid. Paul Everitt, Chief Executive of ADS, trade body for the aerospace, defence, security and space industries, warned in December 2017 that if UK-based REACH registrations became invalid when the UK leaves the EU, this would result in significant disruption in the transport and downstream use of thousands of chemical products used on a daily basis for production and maintenance across the global aerospace and defence industries. Without clarity on what the landscape for chemicals regulation will look like post-Brexit, it is difficult to make an assessment of the impact ,and the consequences are unknown in terms of supply chain disruption. Chemical industry companies are also concerned about the cost of having to re-register under REACH through an only representative, having already spent significant sums complying with REACH over the years.
The report continues with the ‘UK REACH’ option including the costs and administration involved in setting this up.
Chemical Watch, has its own take on what will happen in the event of a ‘no-deal’ scenario. They reported about possible consequences of a disorderly exit. There is a fear from some NGOs that the UK could become a ‘chemical dumping ground’. (Although the UK government seems quite committed to replicating the exact rules of the EU no matter the consequences at this point!)
Greener UK, a coalition of 13 environmental organisations including the WWF, Greenpeace and Friends of the Earth, said the UK “abruptly leaving” Echa in a no-deal situation could threaten the environment as well as business, the latter due to the cost of re-registering substances.
The UK will face significant burdens replicating REACH. The cost and administrative burden to re-produce something that is already well-established and advanced was expressed strongly by MMTA members in their submission to the UK’s Environmental Audit Committee, with the danger of making UK industry uncompetitive in a global market. The alternatives to not creating a UK REACH risk the UK becoming a dumping ground of lower environmental standards.
Protection of citizens’ health and safety again becomes an issue. Some argue that the management of risk rather than the intrinsic hazard approach to protecting people is not appropriate for many substances. At the moment the EU Commission and the European Court of Justice uphold environmental laws and protections, and again in the event of a ‘no-deal’ there will be no-one responsible to hold the UK government and public authorities to account, The UK plan is to create a ‘green watchdog’ to fill this gap before exit day—one of many infrastructure projects to be brought into reality over the coming months.
Below is the UK position:
In July, the UK reiterated its desire for associate membership of Echa, in a new Brexit white paper that sets out the government’s vision for a future economic partnership with the EU.
However, the environment ministry (Defra) is working on a “large and detailed” draft of a statutory instrument to transfer the “responsibilities and operability” of Echa to a UK agency in the event of a no-deal Brexit scenario.
The draft should be laid out in Parliament this autumn.
A Defra spokesperson told Chemical Watch the government “will ensure an effective regulatory framework is in place for any scenario, including the possibility of no deal.”
“This means that the requirements and standards established in the REACH Regulation will continue to apply in the UK,” the spokesperson said.
The European Chemicals Industry Council (Cefic) and the UK Chemical Industries Association (CIA) have estimated that failure to secure a new UK/EU trade agreement after Brexit, could cost the chemicals industry an extra €1.5bn a year.
REACH has never been a popular piece of legislation, a burden to small businesses and extremely complex and costly to comply with, but most of the work has been done and the costs paid.
The best result the UK chemical industry can hope for after Brexit is to stay in REACH, and the worst, an exact replica of REACH that needs to be paid for again. Certainly not a cutting of ‘red-tape’ or a bonfire of the regulations in this case!
Tamara Alliot, MMTA
The full paper can be found here: https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8403
