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The Brexit Secretary David Davis has described
Brexit as ‘an operation of such technical
complexity that it makes a moon landing look
simple’. As the European Union (Withdrawal)
Bill has now entered Parliament, the legislative
countdown to Planet Brexit is under way.
Much of the chemical sector, one of the most highly regulated sectors of the economy, is nervous about this relatively unplanned journey to a distant galaxy.

During the past forty years, the industry’s
regulatory framework has become a
kaleidoscope of directives and regulations
originating from the European Union (EU).
However, the Government is determined
that EU law must cease to apply and will be
transposed into domestic law on exit day. The
repeal bill now before Parliament means we
are about to start to face the legislative and
regulatory realities of the Brexit decision.
For the chemical industry, the devil really is in
the detail. At this stage, it is only possible to
address some of the main issues because we
just don’t have enough information to discuss
the complexities that will arise during the
withdrawal process.

As the CBA, we have recently surveyed our
member companies on the headline issues
– the Single Market, Customs Union and the
transposition into UK law of key aspects of the
industry’s regulatory framework – REACH, CLP,
and the Biocides regulations.
I should say, at the outset, that CBA’s objective
during the referendum process and during its
aftermath has been to accurately reflect the
impact of Brexit on the
UK chemical supply chain. CBA’s position is
non-political and our sole aim is to protect the
interests of our member companies.

SINGLE MARKET
The chemical sector is one of the very few truly
global industries and it is crucial to preserve
its ability to trade across national borders on a
tariff-free basis.
Some 81% of respondents to CBA’s Brexit
Survey said continued membership of the
Single Market was ‘Important’ or ‘Very
Important’ to their businesses. This included
all the large companies responding to
the Survey (accounting for virtually all
this category of companies holding CBA
membership).
Less predictably, perhaps, smaller companies
– many of which are UK-centric, buying and
supplying chemicals only in the UK – also
wish to retain membership of the Single
Market.

This applies even to smaller firms currently
selling less than 20% of their product portfolio
to EU customers. These businesses are clearly
unwilling to jeopardise future access to
profitable markets.

CBA member companies are concerned that
the loss of access to the Single Market and
the benefits it involves in addition to the
possibility of new tariff (or non-tariff) barriers
will significantly undermine the industry’s
competitiveness.

Tariff-free access to EU markets is crucial
to a chemical sector that is massively
interdependent, with high levels of trade
and commercial dependency throughout the
global chemical supply chain.
Should Brexit negotiations not result in this
preferred outcome, the UK chemical supply
chain would require a significant transitional
period to adjust to any new trading
environment.

CUSTOMS UNION
Similarly, 82% of companies responding
to CBA’s Brexit Survey favoured continued
membership of the Customs Union (or some
arrangement delivering the same benefits).
Without exception, large companies
responding to the survey, favoured remaining
within the Customs Union as did more than
60% of smaller companies, despite their
reliance on third-party logistics services
providers.
As with the Single Market, CBA members are
seeking a significant transitional period for the
industry and its logistics services systems to
adjust to any new regime.
REGULATORY FRAMEWORK
Respondents to CBA’s Brexit Survey
highlighted three key elements of the
industry’s regulatory regime as important
to their businesses: REACH (82%), CLP (89%),
and Biocides (31%). Compliance with these
regulations by UK companies has already
represented an investment of many millions of
pounds by the industry.
Brexit creates a number of institutional,
functional, and legislative challenges
regarding the industry’s regulatory framework
all of which have potential to increase the
industry’s costs significantly.
In institutional terms, the UK will have to
either create its own version of the European
Chemicals Agency (ECHA) or negotiate for
a transitional or long-term relationship
with ECHA to allow that body to continue to
manage the key functions of REACH.
In functional terms, the UK needs to create or
secure continued access to a number of expert
committees that are central to the operation