A Perspective on Brexit

23rd October 2019

Chemicals, Events

With the possibility of Brexit happening very soon, we’d like to share our thoughts on what this means for ReAgent as a chemical company, and in the wider chemical industry.

There is a lot of existing European Union law which governs the chemical industry and protects human and environmental health for all members of the bloc. These laws permit chemical substances to be sold to market. The UK chemicals industry is currently regulated by this EU legislation, with the European Chemicals Agency (ECHA) responsible for its implementation. 

REACH (the Registration, Evaluation, Authorisation, and Restriction of Chemicals) is the main part of this legislation, and all companies that manufacture, sell or import chemicals into the EU must comply with REACH regulations.

So what happens when the UK leaves the European Union? The chemical industry will certainly encounter many challenges.

Challenges to the chemical industry created by Brexit

The first challenge is that there isn’t a direct way of copying REACH legislation straight into UK law because its implementation relies on the European Chemicals Agency and is closely tied to the single market. Therefore regulatory requirements will change, as will other trade barriers such as tariffs. Both the UK and EU chemical industries want a trade deal that ensures smooth trade and regulatory consistency between the two markets. It will be beneficial for everyone to stay as closely aligned to REACH as possible.

Another challenge is the general complexity of the chemical industry. With its intricate supply chains and trade in chemicals highly integrated within the EU, products can often cross the UK-EU border multiple times and a frictionless post-Brexit trade agreement is essential.

The scenario of a no-deal Brexit creates other challenges. 

What a no-deal Brexit could mean for the chemical industry

One of the challenges of Brexit for the chemical industry is the complexity of supply chains resulting in delays and tariffs

In the event of a no-deal Brexit, the UK could work with the EU to become an ‘associate member’ of the ECHA and consequently a third party to REACH. There are two main issues with this scenario:

  1. Exporting chemicals to the EU – UK chemical companies would still need to comply with REACH and will probably have to pay a tariff. They would also have to transfer their REACH registrations to a European Economic Area-based representative in order to maintain access to the EEA.
  2. Regulating chemicals in the UK – as REACH would no longer be applicable to UK companies, separate legislation for regulating chemicals in the UK would be required. Secondary legislation is in place to ensure that a UK version of REACH is set up on exit day.

The Government has stated that if there is a no-deal Brexit, UK REACH legislation would minimise trade barriers and critical services would not be compromised.

What does Brexit mean for ReAgent?

At ReAgent, we’ve been having ongoing and numerous internal discussions to ensure we are doing everything we can to prevent Brexit from having a big impact on our business and our customers. This includes:

  • Assessing our supply chains
  • Stocking up on certain products to ensure continuity of supply through any delay
  • Bringing orders forward to ensure they’re on-site 
  • Mass-producing certain products so we have a manufacturing buffer
  • Assessing perceived risks with major suppliers and taking appropriate actions

So far, Brexit uncertainty hasn’t raised any major issues or negatively affected our business, but we are keeping a close eye on market buoyancy and the implications of a no-deal exit. These implications include delays in delivery, lack of product availability, higher shipping charges, and general lack of clarity. While we are doing what we can to avoid these challenges, we – like everyone else – are waiting for the moment Brexit completes to be able to move forward and deal with any issues that arise.

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