The Post-Brexit Future of the U.K. Chemical Industry

May 23rd, 2017

Following Brexit, the number of issues has been left uncovered by the U.K. legislation and governmental regulatory processes. Environmental Audit Committee (EAC)—the U.K. bureau responsible for scrutinizing and advising the parliament on environmental protection—has recently drawn attention to the urge of establishing state policies on industries with environmental impact, in particular chemical one.

As of today, chemicals play a vital role for the country’s trade and economic state, selling over US$19 billion of chemical products on the European arena on annual basis. Given the importance of the chemical industry to the U.K. economy, leaving the sector unmonitored possesses great risks on a high-scale level. One of the recent EAC reports pointed out the uncertainty around the EU REACH criteria, which the U.K. companies currently spend approximately US$322 to comply with. The submission deadline for EU REACH ends in May of 2018, yet there have been no official statements on behalf of the U.K. government on whether the registrations will remain legally binding given the U.K. leave from the EU.

While the “Great Repeal Bill”—the legal paper that spells out the process of the country’s transition from the EU legislature to the U.K. one— vaguely mentions REACH in the blueprint, the EAC claims there is no lawful and compelling way to apply it in practice. The lack of clarity also prompts major chemical producers and distributors to consider relocating elsewhere in the EU. Among them is the Crewe-based Chemical Business Association, which is one of the key chemical supply chains in the country. Such a move would cost the U.K. thousands job opportunities and foregone foreign direct investments.

For chemical manufacturers and distributors, the registration within REACH means not only certification and green light to the EU market, but also access to the European chemical R&D platform. Concluding from the EAC report, most of the respondents wish to maintain close cooperation with the EU REACH and comply with its criteria and standards.