Brexit

Background

The impact of Brexit on businesses on both sides of the Channel will be huge and touch all industrial sectors across Europe. For the past two years, the EU 27 and UK have been negotiating the Withdrawal Agreement, which establishes the terms of the UK’s exit from the European Union. The Withdrawal Agreement is central in the process, as it outlines the first steps of the UK’s withdrawal from the EU and provides the terms for a transition period until the end of 2020. However, as the negotiations have been tough  between the parties, there is a risk that the UK will now leave  the EU without any agreement. The chemical industry is concerned that a no deal Brexit would leave too little time for business to prepare and would lead to major economic disruptions.

Avoiding divergence between the EU and the UK

The European chemical industry is concerned about  Brexit for two major reasons: Its impact on the countries’ trade relations and the chemicals management system REACH. For the latter, Cefic highlights that if the UK were  outside REACH post-Brexit, this would require companies on both sides of the Channel to duplicate pre-existing registration duties for a UK-REACH. This would not only weaken the international competitiveness of both EU and UK based chemical companies but, more importantly, also risk divergence of health, safety and environmental levels of protection on both sides.

Regarding the trade aspect of the Brexit, Cefic is concerned as the European chemical industry, like many other sectors, relies on an integrated Single Market throughout Europe. In particular, as chemicals are at the beginning of the value chain and end up in thousands of final products, any disruption in the chemical supply chain will have a huge impact downstream, expanding to other industrial sectors too. As part of the manufacturing of chemical products, chemicals typically cross the Channel multiple times before becoming a final article. If the UK is no longer part of the Single Market, import duties on the chemicals crossing the Channel will add up, not to speak of delays that may occur at the border due to customs formalities.

Cefic’s position

Whatever shape the future relationship may eventually take, Cefic is first and foremost urging the negotiators to ensure that the regulatory systems of the EU-27 and the UK remain highly aligned post-Brexit. In our view, this will not only allow for continuity and consistency for companies and regulatory bodies operating on both sides of the Channel, but also ensure a framework for the continued development and implementation of high health, safety and environmental standards. To avoid the risks Brexit imposes, we urge the UK to remain part of EU agencies, including ECHA. To do that, we suggest that the UK should  be granted an associate membership in ECHA.

We are currently advising our full membership to look into the different scenarios the negotiations may bring on March 2019 when the UK leaves the European Union, including a “no deal” scenario. We consider  that a “no deal” Brexit risks serious harm to chemical companies and workers in this industry in both the U.K. and EU-27.