Friday

22nd Jun 2018

Analysis

Avoiding a Brexit chemical reaction

  • Under pressure from the far east, the multi-billion pound UK chemicals industry wants to stay under the Reach directive (Photo: kenmainr)

The EU's Registration, Evaluation, Authorisation and Restriction of Chemicals (Reach) directive was hardly popular with companies when it first became law in 2007.

Despite their own concerted lobbying effort, the consensus in the chemicals industry was that the bill was 'too green' and that the environmental lobby had outmanoeuvred them with commission officials and MEPs.

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  • Be careful what you ask for - the UK chemical industry at first hoped for a lighter-touch regulation after Brexit (Photo: Wikimedia)

That has prompted some to question whether the chemicals sector will lobby ministers for a more light-touch regime after the UK leaves the bloc in March 2019.

Despite reservations and gripes about the burden imposed by the Reach regime, the signs are that, on chemicals at least, the UK will align itself with the rest of Europe.

By May 2018, the deadline for registering chemicals under Reach, UK companies will have spent around £250 million (€280m) on compliance. That, coupled with the size of the chemicals industry – which, worth £50 billion (€56m) per year, is the UK's second largest manufacturer, with 60 percent of its chemical exports going to the EU-27 – has prompted industry leaders to seek continuity rather than change.

"It would be better for us to continue to use the services that the European Chemicals Agency (ECA) offers. That is the only way that there won't be any additional costs. Staying in Reach and the single market is the only way we can avoid additional costs," Steve Elliott, chief executive of the Chemicals Industries Association, told EUobserver

"The worst outcome is that we get excluded from our main market," he adds.

An amendment to the EU Withdrawal Bill, currently making its way through the UK Parliament, by Mary Creagh, the Labour chair of the environmental audit committee, seeks to ensure that the UK can continue to participate in Reach.

Should the UK leave Reach and fail to agree regulatory equivalence, the industry estimates that the minimal cost of re-registration would be £335 million (€378m).

"The day after the vote there were some of our members who thought this was an opportunity to take a more light-touch approach," Elliott told EUobserver.

"That voice has quietened a lot because there's a recognition around the world, especially in the far east, that Reach is becoming the international standard. The opportunity lies in how we implement and enforce in a more pragmatic and proportionate way."

For the moment, there's no sign that UK ministers want to lower or scrap environmental standards.

Nor does Elliott. "The EU is very worried about us taking a Singapore-style approach, but it just wouldn't do us any favours to do that," he said.

The UK Department for the Environment Farming and Rural Affairs (Defra) has promised to "ensure a smooth transition for the chemical industry as we leave the EU".

"We are not going to be part of the single market and Reach is a single-market mechanism," said Defra in its submission to a UK parliament enquiry in April.

"We can expect a tremendous volume of litigation as companies challenge government and other agencies in the courts to obtain clarity on their legal rights," Law Society vice-president Christina Blacklaws said this month.

Bill in the tens of millions of pounds

If Reach will remain in UK law, for the foreseeable future, the question of who and what will oversee the sector is less clear.

The government has only a couple of weeks before they have to release impact assessment papers. Defra officials concede that the cost of duplicating the work of the Helsinki-based European Chemicals Agency's work could run into the tens of millions of pounds.

"We have to make a choice," said Andrew Bryce, who represents the UK environmental law association. "Is there is possibility of being an associate member of Reach, and if not, what are we going to do about it?" A shadow system or do we put in place our own agency?"

Yet despite the uncertainty, Elliott said that Brexit has prompted government ministers to take notice of the needs of the chemicals sector.

"Cars and planes get more press headlines, but Theresa May's Chatham House speech explicitly mentioned chemical industries because we underpin so many of those other sectors," he said.

"There's a saying that you don't waste a good crisis, and there is definitely a better understanding of our industry than in the past 10-15 years".

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