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UK ‘no-deal’ Brexit chemicals plan due in autumn

The UK’s environment ministry (Defra) is working on a “large and detailed” draft of a statutory instrument to transfer the “responsibilities and operability” of Echa to a UK agency in the event of a no-deal Brexit scenario.

The draft should be laid out in Parliament this autumn, Defra’s deputy director of EU environment Gabrielle Edwards told a House of Lords select committee on 18 July.

The draft, she said, will “essentially build the UK regulatory capacity by extending the role of the Health and Safety Executive and the environment agency and ensuring we put in place arrangements to ensure there is suitable transparency and a requirement to seek external advice to replace some of the work that is done in the Echa and technical scientific committees”.

The draft regulation is one of three the government is discussing, she said. Another would give effect to an “optimistic assumption” that the UK is moving into the proposed ‘implementation period’ – not quite business as usual, but still complying with REACH.

In addition, there would need to be legislation to enable the government to support arrangements for moving into a situation where it has a negotiated settlement with the EU along the lines set out in the Brexit White Paper published on 12 July, Ms Edwards said.

IT system

Meanwhile work continues on the government’s IT system, which junior environment minister Thérèse Coffey told the committee she is confident will be in place by the time the UK leaves the EU on 29 March.

Plans include detailed delivery timelines for designing and procuring the system with ongoing reviews “to ensure they remain on track,” she said.

Defra is trying to build a system that “as far as we can will replicate what the Echa system does”. Some of the fuller functionality that is not required necessarily on day one would come on board on a “slightly slower” time scale, Ms Edwards said. “The critical thing for day one is to have that registration function in place.”

Registration transfers

In a no-deal scenario existing REACH registrations submitted by UK legal entities will become ‘non-existent’ from 30 March 2019. Under these circumstances, Ms Edwards said Defra “would anticipate” a mechanism for transfer of registrations to be in place.

Earlier this year, Cefic said the idea of allowing the transfer to downstream users of those chemicals in the EU was “theoretically possible”.

Dr Coffey told the committee there would be a transfer cost “that can vary from about £200 to £1,500 [€224 to €1,680] for existing registrations and it’s those kinds of additional costs that would impact on businesses under a no-deal scenario”. Given that there have been some 12,000 UK registrations under REACH, this could equate to £2.4m to £18m.

Stakeholders, she added, have given different views on how long they think it would take to re-register – “anything from under an hour to over a year and that’s quite alarming for the businesses involved”.

But speaking in an earlier session of the committee on 27 June, UK Chemical Industries Association REACH executive Silvia Segna said the additional cost to the UK and EU chemical industry as a whole could be £450m [€504m] just to ensure that UK-registered substances “simply stay where they are today”.

This excludes, she said, other potential costs such as time, resources and fees that companies may need to pay to appoint representatives in the EU, and the possible duplication of costs arising from the need to comply with two sets of legislation.

Neither does it include the cost – “in the range of hundreds of millions of pounds” – of all the new registrations that importers, including formulators in downstream industries, could suddenly be subject to post-Brexit that were not needed before because the raw material is registered in the EU and not in the UK.

Business advice

The government assumes businesses will be prepared for more than one scenario, Dr Coffey said. “I expect it will be a massive issue for some and for others not quite so, but this will vary by company.”

The government will need to focus more on the impact to smaller businesses, Dr Coffey added. Defra will need to tell them if Britain is heading towards a no-deal scenario and what the process of registering in the UK will be.

“We think it would be in the best interests of many companies supporting what is in the White Paper to increase their calls on their governments to consider why this would be a good outcome for them as well as the UK”.

Following the meeting, the sub-committee’s chair Lord Teverson, a Liberal Democrat, criticised Dr Coffey’s evidence: “She is expecting industry to prepare for a potential departure from REACH, but hasn’t started equipping a UK body to do the same. Given the potential cliff edge facing the industry, this simply isn’t good enough.”

She makes it clear, he added, that if the government cannot secure its desired associate membership the UK is “entirely unprepared” to regulate chemicals independently post-Brexit.

At June’s sub-committee, Cefic’s Peter Smith said such membership is possible, but whenever his organisation mentions it it seems “to get the cold shoulder in Brussels”. It is, he added “clearly a negotiating point. In Brussels, out is out at the moment. But I would not give up.”

Meanwhile, the HSE recently updated its Brexit web pages with advice on what obligations and rights UK businesses will have if the proposed implementation period does come into effect.