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Chemical Industry and the Latest Situation with Brexit

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Chemical Industry and the Latest Situation with Brexit

Introduction

With the current political uncertainty and no clarity about how the UK will leave the EU if at all, the following are a list of key issues for consideration and some recommendations for business continuity:

Current situation:

  • UK Government has obtained an extension to Article 50 up to 31st October 2019. It has an option to leave subject to an agreement anytime between now and the end of October.
  • Following the resignation of Theresa May, the new leader/Prime Minister is likely to be appointed by the end of July. Parliament is scheduled to go into recess until September.
  • This leaves UK industry in uncertainty until mid-September at the earliest, as to whether the UK leaves the EU with a deal or enters a no deal scenario.

 

Regulatory update:

  • UK Government has published its update to the UK REACH regulation (SI) clarifying the position of Only Representatives and other issues.
  • Other requests from Industry to modify UK REACH, if accepted, will be changed by amending the SI.
  • Draft regulations have now been published on a number of other regulatory areas including pesticides, biocides, cosmetics, etc.
  • Proposals on customs tariffs have been published and the ability to register under the Economic Operator Registration and Identification (EORI) is now available.
  • Concerns have been raised that the UK will not be fully prepared to leave by the 31st October especially in the area of food safety.

 

Business issues:

  • To remain in compliance with EU REACH, an EU legal entity is required. This applies to UK Manufacturers, Importers, and UK based Only Representatives for non-EU manufacturers.
  • This will also apply to companies who hold registrations/authorisations under BPR, Cosmetic legislation, Food and feed products, Medicines, Medical Devices, In-vitro Diagnostic Products, etc.
  • If we leave without a deal UK businesses will have to cope with more “paper work” such as customs documentation, allocating the correct tariff codes, etc., when exporting to the EU after the 31st October, as EU law will no longer apply, and UK trade will be based on WTO rules
  • It is important that UK companies manufacturing, formulating, using and exporting chemicals properly map and manage their supply chains.
  • To manufacture or import chemicals into the UK, compliance with UK REACH will be required and will incur additional costs. This could include the expense of buying access to existing study data to register under UK REACH.
  • The UK market may not be large enough to justify registration under UK REACH for some non-EU manufacturers/suppliers. This could result in UK importers paying for the compliance under UK REACH or some substances lost from the UK market.
  • ECHA has extended the time for transferring REACH Registrations from UK companies to EU legal entities but recommends that companies do not wait to complete the transfers.

 

Key Points for Business:

  • There is an increased possibility that a no-deal Brexit will occur. Businesses should now prepare for such a scenario.
  • It may be necessary for UK companies that have not yet done so to find an EU legal entity that can cover all areas of EU Chemical regulatory compliance.
  • If UK companies hold EU REACH registrations for supplying into EU member states, then these should be moved to an EU legal entity where possible.
  • Alternatively, UK importers could consider importing quantities at < 1 Tpa into the UK to be exempt from UK REACH.
  • In the case of a no deal, UK companies that rely on suppliers that hold EU REACH registrations, should ask their suppliers if they will comply with UK REACH. If not then it becomes the responsibility of the importer to comply with UK REACH or a new source of the chemical that will be UK REACH compliant will need to be found.
  • UK businesses should map their supply chains in order to identify substances critical to their business that may be affected when Brexit occurs.

 

For advice on any of the points above, please contact peter.godfrey@cea-res.co.uk or sarah.henly@cea-res.co.uk.

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