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After Brexit, Chemical Companies Urged to Review Contracts

Chemical manufacturers located outside the European Economic Area, but exporting to it, should review contractual relationships in their supply chain to determine whether they have any U.K. operations responsible for complying with European Union regulations, a Steptoe & Johnson LLP attorney said June 24.

Chemical and pesticide manufacturers should determine wherever a U.K. entity discharges its EU regulatory obligations, Darren Abrahams, a partner in Steptoe & Johnson’s Brussels’ office, told Bloomberg BNA. He discussed near term actions chemical manufacturers may want to undertake in light of the U.K.’s June 23 vote to leave the European Union.

If the worst case scenario happens and the U.K. not only exits the European Union but also doesn’t join the European Economic Area (EEA), which consists of the 28 EU member states along with Iceland, Liechtenstein and Norway, companies with U.K. operations that discharge regulatory obligations for REACH and the Biocidal Products Regulation may have to end contracts, arrange new ones and take other actions, Abrahams said.

No chemical or pesticide can be sold in the European Economic Area unless it complies with the EU’s REACH (registration, evaluation, authorization and restriction of chemicals) regulation or its biocides regulation.

Chemical and pesticide manufacturers that are based outside the European Economic Area but export their products to the EEA comply with both chemical laws by designating EEA-based entities, Abrahams said. Those EEA-based companies discharge the regulatory obligations, he said.