London, UK – Brexit is set to cause chaos for the UK chemical and polyurethane industry, according to a report from the House of Lords’ European Union Committee.
The report, Brexit: chemical regulation, highlights the huge problems that a disorderly exit from the EU will have on all parts of the chemicals industry. It also criticises the UK government for its failure to prepare.
According to the report, the chemical industry, and every other sector that relies on chemicals, will badly hit if the UK leaves the EU without agreement. Continuity of chemical regulation would be impossible.
The report states that government, industry and NGOs all agree that the best outcome would be for the UK to continue to participate in REACH and remain a member of the European Chemicals Agency (ECHA). Yet there is no provision under EU law and regulations for third countries to gain associate membership of ECHA, and no pathway to mutual recognition. Switzerland, for example, recognises REACH authorisations in its own system, but still has to use an EU-based companies to register chemicals with REACH.
‘Although we welcome the Government’s aim to remain part of the REACH system after Brexit, its negotiation red line on the UK’s membership of the Single Market makes that highly unlikely,’ said the committee’s chairman, Lord Teverson. ‘That means it urgently needs to be working on a Plan B, and that simply hasn’t happened, which leaves the sector facing a huge cliff-edge on the day we leave the EU.’
Multiple actions will be required if the UK has to withdraw from REACH and ECHA. The UK will need an independent, transparent and scientifically robust body to replicate ECHA. A database of chemicals will also need to be created, and populated with data.
But that is only part of the story. Government will have to find a way to enable UK businesses to maintain valid registrations before departure so they can continue to trade with Europe afterwards.
‘None of these actions is easy or quick to accomplish,’ the report says. ‘We are not convinced that the Government’s preparations are progressing quickly enough. In some respects the Government appears to lack a credible plan of action. This is highly troubling, given the cliff-edge that the sector is facing. We believe the issue of chemical regulation post-Brexit should be a higher priority for Government.’
If the UK does have to form its own chemicals registration database, the committee has ‘serious doubts’ about the Government’s ability to source the data. There is the possibility that additional safety tests on animals would be required.
‘The Minister’s proposal unilaterally to “copy and paste” registration information from companies based in the other Member States is not credible,’ the report says. ‘[It] raises serious legal concerns, including copyright and data protection. We ask the Government, as a matter of urgency, to set out an alternative, more considered approach.’
The costs to industry could be huge. Silvia Segna, REACH executive at the Chemical Industries Association, estimates the cost of transferring registrations and re-registering substances with ECHA could be £450 m ($588 m). This would apply to registrations held by UK businesses. The administrative costs for companies would also be substantial.
The UK polyurethane industry will be particularly badly affected if there is no deal on REACH.
There is no capability to manufacture diisocyanates within the UK, and the domestic capacity for polyols is extremely limited. If stocks of these materials, which are often delivered just-in-time from the EU, ran out, production would stop.
This would have a major knock-on effect on downstream businesses, such as furniture makers, insulation companies, and the automotive sector.
The report concludes that the committee is ‘deeply concerned’ that the Government has not started making preparations for equipping a UK body to take on the task of regulating chemicals post-Brexit. ‘The Government must clarify what body will take on ECHA’s role if the UK ceases to participate in REACH,’ it says, ‘and the means by which independent, expert and transparent chemical risk assessments will take place post-Brexit.’