Brexit – What You Need to Know
On June 23, 2016, more than 30 million people voted in a referendum to decide whether the UK should remain in, or depart from, the EU. The “Leave Campaign” won the referendum by 52 percent to 48 percent, and since then “Brexit” has become an important matter globally with a wide range of stakeholders.
Brexit has attracted unparalleled levels of attention from the global chemicals industry due to its significant implications for business operations. Brexit is expected to have widespread consequences for managing compliance with EU chemical laws (e.g., REACH, BPR), and it is also anticipated that the UK will implement its own jurisdiction-specific robust regulatory framework for industrial chemicals, biocides, and pesticides. As the diverging regulation of chemicals in the EU and UK approaches, companies with interests in the UK and EU-27 need to understand Brexit implications, comprehend related regulatory issues and nuances, and act quickly to minimize adverse business impacts.
From offices in Manchester, UK, and Brussels, Belgium, The Acta Group (Acta®) provides local expertise and boots-on-the-ground representation to assist clients in gaining and maintaining compliance in both jurisdictions.
Acta Memoranda and Articles
- FAQs Regarding Brexit—What Chemical Companies Need To Know
- Brexit — An Overview of Transformative Developments and Their Potential Impact on European Chemical Laws
- Brexit: REACHing compliance goals under evolving circumstances
- Brexit: An examination of key developments and their potential influence on European chemical law
Informational Third-Party Links
- Using Chemicals After Brexit – UK.gov
- UK Withdrawal from the EU – ECHA website
- ‘Comply with UK REACH’: what you need to know about the IT system for UK REACH – UK DEFRA
Brexit Articles from Recent Acta Global Regulatory Updates
UK Government Publishes Draft Post-Brexit POPs Legislation: The UK government has published a draft Statutory Instrument to develop a UK-specific version of the EU’s Persistent Organic Pollutants (POP) Regulation. The Explanatory Memorandum to the Statutory Instrument provides that the Statutory Instrument “makes the necessary corrections” to ensure that the EU’s POPs Regulation functions in the UK following Brexit. The Explanatory Memorandum states that this incudes transferring legislative and administrative functions, currently “conferred by EU legislation” upon the EC and ECHA, “to be exercisable instead by public authorities in the UK, so that they can be exercised at national level after the UK leaves the EU.”
The Explanatory Memorandum indicates that, following the UK’s withdrawal from the EU, the amendments made by the Statutory Instrument to the EU’s POPs Regulation will “enable the UK to implement the Stockholm Convention by regulating the production, placing on the market, and use of POPs.” The Explanatory Memorandum provides that the Statutory Instrument will also enable UK authorities to “regulate stockpiles and manage waste where POPs are present, and set out monitoring and reporting requirements.” Furthermore, the Memorandum indicates that the amendments made by the Statutory Instrument will “create a power which will enable UK to put in place the necessary measures to ensure the control and traceability of waste contaminated by relevant pollutants.”
As the EU’s POPs Regulation “would not be effective in UK law due to the deficiencies arising from the withdrawal of the UK from the EU,” the Statutory Instrument makes “minor and technical amendments” to EU law to “ensure the legislation is operable after EU Exit.” The changes include amending references to the EU, EU institutions, and EU administrative processes to UK equivalents, updating legal references to refer to relevant UK law, and placing an “obligation on the Secretary of State to publish reports previously sent to the Commission.”
ECHA Urges Companies To Prepare For “No Deal” Brexit: On September 12, 2019, ECHA issued a press release entitled “Act and prepare for ‘no deal Brexit’ to stay on the market and keep supplies.” In its press release, ECHA stated that it is “reminding companies that they need to prepare for a ‘no deal’ scenario ahead of the UK’s withdrawal from the EU, which is to take place on 31 October 2019 … As of 1 November 2019, the UK will be a ‘third country.’” ECHA urged downstream users located in the European Economic Area (EEA) to “act now” to avoid supply chain disruptions.
ECHA indicates that registrations completed by “UK manufacturers, importers and Only Representatives” will become void if they are not transferred to the EU Member States remaining after the United Kingdom’s (UK) withdrawal (EU-27)/EEA before the UK withdraws from the EU. ECHA provides that downstream users in the EEA can check the “List of substances registered only by UK companies” to “see if they will be affected and need to take action.” ECHA indicates that if such entities “plan to get their supply from the UK after the withdrawal, they should register the substance themselves as an importer, unless an Only Representative has been appointed for that registration in the EU-27/EEA.”
ECHA provides further that UK-based manufacturers and formulators that want to keep substances registered under REACH legally on the EU-27/EEA market can either transfer their business to, or appoint an Only Representative in, one of the EU-27/EEA countries. ECHA also refers in its press release to its guidance document entitled “How to transfer your UK REACH registrations prior to the UK withdrawal from the EU.”
Parliament Issues Report On Consequences Of “No Deal” For UK Business: On July 19, 2019, the UK House of Commons’ Exiting the EU Committee published a report entitled “The consequences of ‘No Deal’ for UK business.” The detailed report includes several sections, including “Services,” “Automotive sector,” “Food and farming,” and “Pharmaceuticals and chemicals.” The “Pharmaceuticals and chemicals” section of the report includes multiple subsections, including “UK life sciences and chemical industries,” “Life sciences and regulatory divergence,” and “Chemicals and regulatory divergence.”
The report indicates that, according to figures published in January 2017, the UK chemical industry generated an annual turnover of £32 billion. The report provides further that the UK’s chemical industry employed 99,000 people directly and that the industry is “also at the top of the supply chains for many other sectors, including life sciences, aerospace and the automotive industry.” The report also states that, in recent times, 60 percent of the UK’s chemical exports “went to the EU” and 75 percent of UK chemical imports “came from the EU.”
In the “Chemicals and regulatory divergence” chapter, the report emphasizes the importance of REACH, and states “we were told that it is becoming the industry standard worldwide and that despite initial industry reservations, there is no appetite to diverge from its specifications.” The report emphasizes the implications of a “no deal” Brexit on EU REACH compliance for UK entities and discusses implementation of a post-Brexit UK REACH frame work, including its “grandfathering” provisions. The report highlights UK REACH criticisms and compliance challenges, including environmental campaign groups’ concerns regarding lower standards of chemical safety and data rights issues.
In the “Conclusions” section of the “Pharmaceuticals and chemicals” chapter, the report provides that “[u]nder no deal, chemical and pharmaceutical companies operating in the UK will be cut off from EU regulatory systems and databases, which protect the environment and patient safety. Companies operating in both markets will need to register chemicals or seek marketing approvals for drugs twice, in the UK and the EU, an expensive and bureaucratic process that will reduce the attractiveness of doing business in the UK.”
CBI Issues Report On No-Deal Brexit: The Confederation of British Industry (CBI) has issued a report entitled “What comes next? — The business analysis of no deal preparations.” CBI’s report addresses various issues, including movement of goods, regulated goods, tariffs and taxation, regulated services, and global regulations. In the foreword to the report, CBI states “[n]o one is ready for no deal.” CBI indicates that it has analyzed the no-deal preparations in the UK, the EU, and businesses in 27 key areas of the economy and “concluded that — despite existing mitigations — disruption is likely in 24 of those areas immediately after no deal.”
CBI’s report provides various recommendations pertaining to a potential no-deal Brexit for the UK and the EU, including “[r]ecommendations for joint action between the UK and the EU.” The report also provides recommendations for businesses, including immediately resuming no-deal preparations and prioritizing people in the event of a no-deal Brexit. Within the section of the report covering regulated goods, CBI offers various comments on chemicals in consideration of a potential no-deal Brexit. The report provides, in the context of post-Brexit UK chemicals legislation, that “no deal will mean some UK companies will be forced to duplicate testing to register EU substances in the UK, including in some cases through animal studies.”
CBI highlights data sharing issues for post-Brexit chemical regulatory compliance in the UK and indicates that “[t]he choice for chemicals firms in no deal is stark: pay more for the right to use chemicals they previously had access to or cease to use them altogether.” CBI offers the following recommendations, among others, for the UK and EU to mitigate the “disruption of no deal for chemicals businesses”: (1) guarantee that the new UK REACH-IT system will be ready on “Day 1” and expand related “trials and testing”; (2) provide a route for firms to have additional time to submit full UK REACH registrations in the event of the need to re-run testing; (3) reduce UK REACH registration fees “to ensure they reflect the UK’s smaller market size”; and (4) “[p]rovide a grace period of 180 days from no deal for UK manufacturers to transfer registrations to the EU market.”