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Chemicals sector faces double blow of Brexit and new EU guidelines

The European chemical substances business is dealing with a ‘double whammy’ from the specter of a tough Brexit and newly divergent guidelines between the EU and UK, the heads of chemical business associations from either side of the Channel have warned.

Speaking forward of the publication of a brand new EU Chemicals Strategy, due this week, they warned that the approaching adjustments risked damaging the extremely built-in EU-UK provide chains whereas making the entire of Europe much less aggressive on the worldwide stage.

“We face a double whammy with this chemical strategy and Brexit coming together,” Marco Mensink, director-general of Cefic, the European Chemical Industry Council, mentioned, warning that some speciality chemical substances might disappear from provide chains on account of new bureaucratic prices.

The UK and EU’s failure to agree a brand new commerce deal by the tip of the Brexit transition on December 31 would hit European competitiveness even tougher, including an estimated €1.5bn in annual tariff prices, based on Cefic.

Even if a commerce deal had been to be struck, after January 1 the UK will now not take part within the EU’s Reach registration system for chemical substances, as a substitute organising a rival UK model that may pressure firms to duplicate registrations within the UK. The business has estimated this might price £1bn.

“There might be a duplication in the system of Europe Reach into UK Reach — double registration, double knowledge, double the associated fee,” Mr Mensink mentioned.

At the identical time, UK companies eager to export to the EU might want to have a registered consultant within the EU, however Mr Mensink mentioned many firms had been nonetheless ready to register.

“We think there’s a key challenge with the smaller chemicals companies in the UK having registration on mainland Europe, which means we’re going to see chemicals missing in several value chains,” he mentioned.

Geoff Mackey, the company affairs director at BASF, the German chemical maker, confirmed that inner surveys of consumers indicated low ranges of preparations for the approaching adjustments, lots of which can occur whether or not or not an EU-UK commerce deal is struck.

“A distinct proportion of the industry is now running to catch up with the uncertainty of where we are at. And part of the problem is that we don’t know if we have to run 200 metres or three miles,” he mentioned.

The UK authorities not too long ago prolonged the deadline to finish full UK Reach registrations from two years to 6, lowering time strain however not the general prices, Mr Mackey added. 

In the UK, Steve Elliott, head of the Chemical Industries Association, mentioned a ‘no-deal’ would hit areas of northern England the place the chemical substances sector is important to higher-paying jobs.

“I am concerned that the cumulative, negative impact of these priorities under a WTO outcome will make life much tougher for chemical businesses across the UK, the majority of which are foreign-headquartered,” he mentioned. “We are the UK’s number one manufacturing exporter. We need that deal.”

Mr Mensink expressed frustration that political issues had been getting in the best way of a realistic method to managing an EU-UK business with annual commerce of €20bn in each instructions.

With simply weeks to go till the tip of the Brexit transition interval when the UK will absolutely depart the EU single market and customs union, Mr Mensink mentioned it was “incomprehensible” that the EU’s new chemical substances technique didn’t have a piece on the UK or Brexit.

He added it was crucial that the deal, if performed, features a full annex on chemical substances to ease commerce in an business that’s important to manufacturing, from prescription drugs to meals, and automotives to aerospace.

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