UK Expected to Diverge from ECHA and EU REACH

A UK Member of Parliament has confirmed that the United Kingdom will not seek associate membership of the European Chemicals Agency (ECHA) after leaving the EU customs union next year, meaning the country will operate under its own regulatory framework post-Brexit. Rebecca Pow, Member of Parliament and Political Secretary at the Department for Environment, Food and Rural Affairs (DEFRA), confirmed in a letter to the head of the Environmental Audit Committee (EAC) that Brexit negotiators did not wish to broker associate membership of ECHA. In a letter dated 22 May distributed to members by the United Kingdom Lubricants Association (UKLA) on Thursday, 4 June, Pow stated: "We are not seeking associate membership of the European Chemicals Agency (ECHA) or participation in EU REACH." Pow added: "While the transition to UK REACH requires some adjustment, we believe the benefits of controlling our own laws outweigh the costs." The Confederation of British Industry (CBI) noted that the chemicals sector, due to tight regulation and the UK market's heavy dependence on the EU as a customer, will be among the sectors least advantaged by any divergence from EU standards. Sixty percent of UK chemical exports flow to the EU bloc. Lobbyists and industry had pressured for strict regulatory alignment post-Brexit, and former Prime Minister Theresa May had cited REACH as one of the regulatory frameworks the UK hoped to maintain. It was hoped that special regulations for chemicals, along with aviation and pharmaceuticals, could be adopted by the end of 2019.

The anomaly of the United Kingdom transforming from an EU member to a third country raises hopes that new regulation could be implemented.

The Chemical Business Association, a UK distributor trade body, confirmed it recently received notification of the new plan and stated that feedback was requested by the EAC. This feedback is expected to be completed in the coming days. The Chemical Industries Association (CIA) argued that the best outcome for the sector would be to remain within EU reach while the UK includes special regulations for the chemicals sector in its free trade agreement proposals with the EU. A group spokesman said: "While ECHA and the remainder of REACH represent the most effective way to minimise business disruption, it is clear that in the coming period England and the EU will have two separate legal frameworks for regulating chemicals." "What is critical for our sector is encouraging that any future agreement recognises the economic and environmental logic of closely aligning with the REACH chemicals regulation, and in this regard, the UK's Free Trade Agreement proposal recommends a sectoral chemicals annex supported by data and information-sharing mechanisms and a Memorandum of Understanding," he added.

POINTS OF DIVERGENCE

* EU and UK market players will need to register under UK REACH to make sales. * Registration fees are the same as EU REACH. * Many new organisations are expected to go through the registration process. * The window for registration is two years, but can be extended. Separating from EU REACH and establishing a local analogue system means UK firms wishing to continue selling products to the region will have to transfer their registrations to a single representative in the EU. EU and UK players planning to sell to the UK will also be required to restart the registration process in the country. Additionally, while it means EU players must register under a new system, chemical purchasers such as automotive manufacturers, which are prevented from directly participating in the REACH process, will find themselves classified as importers subject to direct registration rules.

Registration costs are currently expected to be the same as EU REACH, but will provide players access to a much smaller market.

UK lawmakers have so far rejected proposals by the European Commission to extend the Brexit transition period due to the coronavirus pandemic. Therefore, the UK will break away from EU law on 1 January 2021, following this year—the most economically turbulent year of the century—and amid the likely prospect of a second surge in infection rates during winter months. Ministers from the ruling Conservative Party have speculated that the final separation from the EU occurring amid a pandemic, when normal business operations are already below normal levels, might reduce the need to move to tighter customs borders both across the Channel and at the Ireland/Northern Ireland border. CBA Chairman Darren Budd characterised the dual challenges of coronavirus and Brexit for the sector in an April assessment as a "perfect storm," stating: "We are living in unprecedented times—and times filled with commercial, financial and health dangers." The consequences of the decision to abandon hopes of associate membership are manifold, and alongside this, product tariffs for goods entering and exiting the UK to the EU will likely increase. The transition will surface issues such as rules of origin that UK firms have not had to deal with for a generation, and potentially fracture some of the complex interconnected supply chains between the country and mainland Europe. After years when many companies have reacted sharply to Brexit, the sector's hopes for at least some form of regulation have suddenly become more complex alongside the dramatic year we are experiencing.