Brexit British referendum financial concept with EU and UK flag on badges 3D illustration with copyspace.

The House of Commons Environmental Audit Committee has published the results of its inquiry into the future of chemicals regulation post-Brexit. Peter Newport, Chief Executive of the Chemical Business Association (CBA) considers the Committee’s findings.

Immediately after the referendum result, it all seemed so simple. The Brexit Secretary, David Davis, said, “Britain must be back in control. And that means EU law must cease to apply. EU law will be transposed into domestic law on exit day.”

At the time, there were murmurings from industry organisations that things might not be that simple or straightforward. Since then, these murmurings have increased in volume. The House of Commons Environmental Audit Committee (EAC) has now echoed many of the industry’s concerns – particularly about REACH and Brexit.

Its findings clearly show that it recognises the industry’s concerns and its report calls on the Government to take urgent action to resolve a number of key uncertainties in relation to the regulatory framework for chemicals post-Brexit.

In the words of the Committee’s Chair, Mary Creagh MP, “It is disappointing the Government has not provided the certainty that UK businesses urgently needs on their plans for the future chemical regulation in the UK. The timing of Brexit means that companies face significant costs to comply with EU regulations before we leave, with no guarantee that that investment will be useful to them in the future.“

The CBA made a written submission and was invited to give oral evidence to the Committee.

We had three major concerns.

Firstly, transposing REACH into UK law presents the Government with a series of institutional, functional, and legislative challenges. It would be difficult to transpose the legislation without amendment or some form of opt-in – to the registration process and access to the REACH infrastructure, such as the European Chemicals Agency and its technical committees.

Secondly, many distributor companies importing from outside the EU could effectively be excluded from the European market by the current terms of the REACH legislation. They would not be ‘non-EU manufacturers’ as they import and distribute, rather than manufacture. As such, they could not appoint an Only Representative as the only other way to comply with the existing REACH provisions.

Thirdly, the status of products already registered under REACH in 2010 and 2013 needs urgent clarification (as well as substances scheduled for registration in 2018).

CBA welcomed the Committee’s report containing its five findings – three of which almost exactly mirrored our concerns.

The EAC’s key findings were:

The chemicals regulation framework established by the EU through REACH is difficult to transpose directly into UK law.

The EAC added ‘writing EU regulations into UK law can not be done simply by having a line in the Great Repeal Bill deeming REACH to apply in the UK. REACH was written from the perspective of participants being within the EU, with much of it also relating to Member State co-operation and mutual obligations, oversight and controls, and freedom of movement of products.’

Companies face significant uncertainty over the validity of current REACH registrations after the UK leaves the EU: Government must clarify its position as a matter of urgency.

The Committee was also concerned about the next REACH deadline. ‘Companies face significant costs relating to the REACH registration deadline in May 2018, yet it is unclear whether these registrations will remain valid once the UK leaves the EU in 2019. This uncertainty may already be having an impact on long-term investment decisions by companies.’ The report adds that ‘UK companies will spend an estimated £250 million to comply with the REACH registration deadline in May 2018, yet have received no guarantees over whether these registrations will remain valid after the UK leaves the EU.’

In deciding the future of the UK’s relationship with the EU’s single market for chemicals, the Government should take a pragmatic approach – and, as a minimum, remain involved in the REACH registration process for chemicals.

To reinforce this point, the EAC added that ‘Involvement in registration would allow UK companies to share testing data with EU companies, sharing costs and allowing them to enter the market without double registration, even if the UK adopts higher standards of chemicals protection.’

Establishing a stand-alone UK system of chemicals regulation is likely to be expensive for both the taxpayer and for industry.

The Government did not provide the EAC with details of their scenario planning, ‘although they did admit that the cost of taking on the roles currently provided by the European Chemicals Agency could be in the tens of millions of pounds.’

The experiences of the United States as it introduces an improved system of chemicals regulation could be useful for the Government when planning the UK’s approach.

Commenting on the emerging situation in the United States, the EAC’s report said, ‘the US is in the process of updating its chemicals regulations. Federal agencies are currently developing their new approach to the assessment and regulation of chemicals, and the experiences of the US in developing its own system may prove useful to the UK.’

What captured the attention of the Committee’s members was the outcome of CBA research that one in five of our member companies were already investigating moving part or all of their operations to a member state of the EU following the

Brexit decision. In business terms, this represents little more than prudent business planning. However, the EAC were clearly concerned about the consequent loss of jobs and tax revenue should these plans take effect.

Mary Creagh concluded by calling for an end to this uncertainty. “The Government has admitted that it will be difficult to transpose regulations such as REACH into UK law, yet it has not yet offered a vision for the replacement.”

“It needs to ensure it understands the complexity and importance of current regulations in enabling the UK chemicals industry to provide not only value to the economy but their expertise and high standards in protecting public health and the environment,” she added.

Despite the scope of the impending Brexit negotiations, on behalf of our member companies, the industry must make sure that REACH and related issues remain at the top of the Government’s negotiating agenda.