FAQs Regarding Brexit—What Chemical Companies Need To Know
The results of the United Kingdom’s December 12, 2019, elections give the Conservative Party under the leadership of Boris Johnson a clear mandate to withdraw from the European Union (EU), a process colloquially known as “Brexit,” by the January 31, 2020, deadline agreed with the EU. The mandate is clear, the details of withdrawal are not, and the forthcoming negotiation with the EU promises to be challenging. 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. Based on the experience we have gained supporting global clients in Brexit preparations, we have prepared the following answers to frequently asked questions (FAQ), which we are pleased to share with our clients and affiliates:
|How will Brexit affect UK-based companies that have successfully registered a substance under the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation?
|REACH applies to the European Economic Area (EEA), and registrants under REACH must be based in the EEA. As the UK will no longer be part of the EEA, UK-based entities’ registrations will be regarded as “non-existent” upon Brexit. In consideration of the UK becoming a “third country” under EU REACH, chemical substances sent from the UK to the EEA post-Brexit will be subject to registration in accordance with requirements under EU REACH. To continue providing EEA-based customers with REACH-registered substances post-Brexit, UK-based entities can appoint an Only Representative (OR) in the EEA or transfer the manufacturing or import activity to the EEA.
|How will Brexit affect companies providing EU REACH Only Representative (OR) services from the UK?
|Under EU REACH Article 8, ORs are required to be legally established in the EEA. As the UK will be outside the EEA, UK-based entities will no longer be able to provide OR services under EU REACH upon Brexit, and any existing registrations held by UK-based ORs will be invalid. Non-EEA based entities need to work with their UK-based ORs to transfer the OR role and relevant registrations, prior to Brexit, to entities that will remain in the EEA post-Brexit.
|If UK-based companies hold EU REACH authorizations for certain uses of EU REACH Annex XIV substances, will such companies need to adhere post-Brexit to conditions of use under the authorizations?
|Not within the UK, as EU REACH will no longer apply to the UK post-Brexit. UK-based entities should follow the development of UK chemicals legislation to ensure that they are compliant with post-Brexit UK requirements for the substances.
|Post-Brexit, will UK-based downstream users of substances registered under EU REACH need to inform UK or EU-27 suppliers of their use?
|UK downstream users of an EU REACH registered substance will cease to be downstream users under that regulation upon Brexit and will no longer be subject to this obligation for their uses outside the EEA. Such companies will need to manage their post-Brexit uses and sales in accordance with post-Brexit chemicals legislation in the UK.
|If an EU-27 based company has purchased and stocked a substance that has been registered pre-Brexit by a UK-based manufacturer, importer, or OR, can the EU-27 based company continue to use and sell the substance after Brexit?
|Yes, quantities of a substance registered by a UK-based manufacturer, importer, or OR that are placed on the EU-27 market prior to Brexit can remain on the EU-27 market and be used following Brexit. Any consignment of a substance imported into the EU-27 on or after exit day must be registered by an entity within the scope of EU REACH.
|Will UK-based companies need to comply post-Brexit with EU REACH restrictions?
|No. UK-based companies will no longer be subject to EU REACH restrictions, as this regulation will not apply in the UK post-Brexit. Companies will need to manage their UK-based activities in accordance with post-Brexit chemicals legislation in the UK.
|What are the post-Brexit options for non-EU/non-UK companies that place substances on the EU market through a UK-based importer under EU REACH?
|There are three options: (1) the non-EU entity maintains its current supply chain and notifies its EEA customers that compliance under EU REACH is now the customers’ responsibility; (2) the non-EU entity adds an importer to its supply chain that will remain within the EEA post-Brexit, and if the EEA entity is a qualified affiliate, transfers the EU REACH registrations to this entity; and (3) the non-EU entity appoints an OR in the EEA and includes its customers as downstream users under EU REACH registrations.
|What are the expectations regarding the UK’s post-Brexit regulation of industrial chemicals?
|A UK-specific version of REACH is expected to be implemented in the UK post-Brexit. The overall principles and requirements of UK REACH are likely to be similar to those of EU REACH. Further information is available in the UK REACH Statutory Instrument.
|Based on available information, will UK REACH provide any transitional arrangements or benefits for compliance measures already undertaken under EU REACH?
|Yes. UK REACH will provide transitional and “grandfathering” arrangements covering various scenarios, including: (1) UK-based EU REACH registration holders wishing to maintain UK market access; and (2) UK-based downstream users under EU REACH wishing to maintain UK market access. Further information is available in the Department for Environment, Food and Rural Affairs’ (DEFRA) Guidance.
|Are there any major differences in the substantive rules of EU REACH and UK REACH?
|Although the rules and principles of both laws are expected to be similar, certain material differences are likely to arise as implementation of UK REACH progresses. For example, EU REACH functions fulfilled by the European Chemicals Agency’s (ECHA) Board of Appeal (BoA) will be addressed under UK REACH by the local tribunal system, which is more adversarial in nature than ECHA’s BoA. Certain EU judgments and legal principles will have limited relevance in the UK upon Brexit. These differences suggest that it will be prudent for entities to devote adequate resources toward UK REACH compliance.
|What effect will Brexit have on UK-based biocidal product authorization or Union authorization holders under the EU’s Biocidal Products Regulation (BPR)?
|As authorization holders under BPR are required to be based within the EEA or Switzerland, authorizations held by UK entities will be invalid upon Brexit. UK-based authorization holders can transfer authorizations to entities within the EEA or Switzerland prior to Brexit for maintenance of validity.
|What will be the impact of Brexit on non-EU suppliers under BPR that have appointed representatives in the UK for purposes of the Article 95 List of Active Biocidal Substance and Product Suppliers (List)?
|Under BPR, substance or product suppliers included in the List must be established within the EEA or Switzerland. Upon Brexit, UK-based suppliers will be removed from the List, and biocidal products from UK suppliers will no longer be allowed to be made available on EEA and Swiss markets. Suppliers based outside the EEA and Switzerland that have appointed List representatives based in the UK, and wish to maintain post-Brexit access to EEA and Swiss markets, can appoint a new representative within the EEA or Switzerland and communicate this to ECHA prior to Brexit, so that the List information is updated prior to exit day.
|Will the substance- or product-specific data owned by a UK-based company remain protected by the data protection rules of BPR after the UK withdrawal?
|Yes. Data protection applies to all information submitted for purposes of BPR or its predecessor, the Biocidal Products Directive.
|What effect does Brexit have on active substances under BPR that were originally evaluated by the UK and subsequently approved in accordance with BPR processes?
|Brexit will not affect the validity of the approvals for such active substances, as the decisions were taken on the Community-level while the UK was still part of the EU.
|What impact will Brexit have on appeal proceedings before ECHA’s BoA?
|Appeals before BoA of ECHA decisions concerning UK-based entities will apply only until the UK withdrawal date. UK-based companies that have challenged ECHA decisions before the BoA prior to Brexit should stay tuned, as ECHA’s Contested Decisions will cease to have effect for UK entities upon Brexit. In such cases, unless a UK-based appellant provides evidence of a material interest in ECHA’s BoA continuing to handle its appeal, the appeal proceedings may be discontinued, as there would be no need for the BoA to rule on such an appeal.
These are just some of the important questions for industry to consider as we approach the UK’s withdrawal from the EU. Acta offers a wide range of Brexit preparation services and is prepared to assist businesses in managing compliance under these challenging circumstances. For further information regarding Acta’s Brexit services, please contact Jane S. Vergnes, Ph.D. (email@example.com).