There is shadow looming over the 31 May 2018 REACH deadline for registering substances in quantities of above one tonne and made in or imported into the EU: Brexit. Though all the union’s regulations continue to apply to the UK until at least 29 March 2019, some suppliers may be tempted to assume that those enforcing REACH will not catch up with them by then or could decide not to supply the product because of the expense of meeting a registration that might become redundant next year.
In the May 2018 issue of IOSH Magazine we look at the post-Brexit options for REACH, their implications and at the indications of which way negotiations might take the UK. Whether businesses are based inside or outside the UK they could well be affected by the post-Brexit options for REACH.
Around 60% of chemical exports from the UK go to EU countries and 75% of substance imports come from them. Companies based in the EU supplied by a UK manufacturer, or by a UK company registered as the only representative (OR) for a non-EU manufacturer, might need to find a new supplier. Non-EU manufacturers that use a UK supplier as their gateway to Europe might need new European partners. It is also widely accepted that the expertise of the UK regulator has had a positive impact on shaping and managing REACH; this too will be missed.
In or out?
The government has ruled out remaining a full participant in the single market – the so-called Norway model – so the choice is to negotiate either an arrangement by which the UK, though outside the free trading bloc, stays in REACH or an out-of-REACH option. Out-of-REACH is the default position if nothing is agreed by next March. Carlos Miguel Fazendeiro, managing director of specialist chemical consultancy OnlyCoreChem, explains the view of the European Chemicals Agency (ECHA): “If no positive agreement is reached, after March 2019 the UK would be considered as a ‘third country’. Only representatives with a registered office in the UK would no longer be valid and would have to move to an EU country. British manufacturers would need to appoint an only representative located in the EU.”
Geraint Roberts, editorial director of Chemical Watch, which publishes advice on chemical risk and regulatory management, says a deal that keeps the UK inside REACH “would avoid the need for companies to re-register their substances and is clearly far more economical”. But he is not optimistic: “The outcome is likely to be what the EU decides it will be.”
The cost of BREACH
The assumption of the experts, backed by the UK government’s pledge to copy EU regulations into its EU Withdrawal Bill, is that UK will not abandon chemical regulation. However, copying over the rules will not be enough. Roberts says a British REACH (BREACH) would have to be established “at great expense to British industry and the British taxpayer”.
The costs to the taxpayer would involve setting up a parallel system of registration, evaluation, authorisation and restriction. The ECHA has 500 staff and a budget of more than £100m a year. At a time when the Health and Safety Executive’s resources have been cut, it is difficult to see where these services could come from. In a report on the future of chemicals regulation (bit.ly/2BASdTK) the House of Commons Environmental Audit Committee admitted that “establishing a fully standalone system of chemicals regulation for the UK is likely to be expensive for both the taxpayer and for industry”.
As well as the government’s costs in setting up a parallel system, the cost to industry of lost registrations, lost exports and higher import costs is difficult to calculate. The UK exports chemicals worth almost £15bn to the EU each year, and an out-of-REACH option could result in cancelled orders or smaller margins for UK businesses, or higher prices for EU purchasers. One estimate is that UK companies have already spent £250m on registering with REACH – money that cannot be recouped if the UK ends up out-of-REACH. In addition, the UK’s Chemical Industries Association has estimated the cost of re-registering substances with a new national equivalent system would be around £350m.
For downstream users – most businesses that use chemical formulations in everyday applications, from cleaning to lubrication – the implications of this are equally uncertain. If a smooth transition is not negotiated, and registrations become void on 29 March 2019, substances on which users rely could become unavailable in weeks.
If a transition is not negotiated, and registrations become void on 29 March 2019, substances on which users rely could become unavailable in weeks
If a managed departure is negotiated, new registrations could be phased, making supply chains more reliable, though with the possibility of increased costs. Whether immediately or after a transition period, if you currently buy a substance from a UK company acting as an OR for a non-EU manufacturer, they will no longer be able to hold that status. They could still import under UK rules, but it might be uneconomic for them to do so without access to the EU market.
Though the ECHA website (bit.ly/2fOhbDw) has a confident statement that “the overall aims of our operations will remain untouched by the UK withdrawal”, Jeff Kelsey, REACH and toxicology specialist at Chemsage, believes that the evaluation and authorisation process will be affected if the UK leaves.
“The UK has been a moderating influence,” he says. “The other Europeans will miss us.”
There is also the fact that, by March this year, 13% of the registrations had come from the UK – only Germany had a higher proportion. Some of those registrations will be for substances registered in other countries, but the UK has taken the lead on many. The rest of the EU will have to fill the gap.
Part of the success of REACH has been in improving communications between organisations across the EU – sharing data and incident information. One concern about the BREACH model is that, whatever the EU Withdrawal Bill says, we will not continue sharing information in this way. The UK-based Environmental Policy Forum (EPF) highlighted the consequence of this, warning: “Not only would the need to generate repeat safety information be expensive, it could also require significant duplication of animal testing, with the associated impact on animal welfare.”
An alternative out-of-REACH option would be to mirror the outcomes of the REACH process, thus avoiding the expensive process of evaluation. This would commit the UK to applying EU rules without access to the underlying data on which a decision had been made. A version of this route has now been agreed for the transition period, which is set to run from 29 March 2019 to 31 December 2020 when a new UK-EU relationship kicks in. Though the transitional arrangement depends on the EU and UK agreeing a final withdrawal treaty, it states that during the 19 months the UK will continue to adhere to all EU chemicals regulations, including REACH, and remain a member of the ECHA. But it will have observer status only and will have no say in policy development.
However, this option seems unlikely as a longer-term fix, given the content of Prime Minister Theresa May’s Plan for Britain speech in January 2017 when she declared: “We will not have truly left the European Union if we are not in control of our own laws.”
Kelsey suggests a further option that would salvage some benefits from leaving the EU and retain the benefits of an EU-wide project.
“If the UK could stay part of the registration part of REACH, existing UK registrations could remain valid,” he says. “But we could bring authorisation and restriction back to a UK authority so that a more risk-based (as opposed to hazard-based) approach could be taken.”
Kelsey concedes that his favoured approach implies that substances the ECHA would prefer to ban or severely restrict might still be used in the UK. “This wouldn’t affect our exports to the EU as we’re talking about substances used in manufacturing that are not present in the end product being exported.”
However, the EU might see this approach as an example of the “cherry picking” its general secretariat has criticised the UK for.
Organisations, from those representing producers such as the Chemical Industries Association (CIA) to green organisations such as the Environmental Policy Forum, have called for an in-REACH solution. Some fear that anything less could lead to the UK importing and using dangerous substances banned across the rest of the EU. The Guardian newspaper (bit.ly/2Ho9G2e) was pessimistic in its warning: “May’s interest in a US trade deal seems likely to mean the UK ends up with a much more permissive system, and more toxic chemicals.”
There was evidence in January that the UK government was not just considering a separate BREACH system but planning for one. The ECHA developed IUCLID (International Uniform Chemical Information Database), a software system to record, store, maintain and exchange data on intrinsic and hazard properties of chemical substances. The ECHA has been talking about sharing IUCLID with countries keen to adopt REACH-like regulations, including India, China and Turkey.
In January the UK Department for Environment, Food and Rural Affairs (Defra) approved almost £6m for the first phase of developing its own registration software (bit.ly/2ofWbcd), suggesting ministers were less than optimistic that the UK’s relationship with the ECHA would be as close as the Chinese.
Defra minister Dr Thérèse Coffey told MPs in February that an in-REACH solution was not likely (bit.ly/2ptsSnK). This was despite a recognition that the main concern of industry was “to ensure that existing REACH registrations remain valid” and noting that “trade associations and other organisations have continued to call for the UK to stay in REACH”. Her response confirmed BREACH as the government’s favoured option. “We will not stay in REACH per se but, through the provisions set out in the European Union (Withdrawal) Bill, we will bring into law the regulations that put REACH into effect.”
But by the end of the month the tide seemed to have turned. First, opposition leader Jeremy Corbyn, previously shy about his precise views on Brexit, delivered a speech mentioning the “vital task of evaluating and authorising chemicals as safe for use” performed by the ECHA, along with the important roles of the Food Standards Agency and Euratom (the European nuclear regulator). Corbyn concluded: “It makes no sense for the UK to abandon EU agencies... supporting our industrial sectors, protecting workers and consumers and safeguarding the environment.” He proposed that the UK should be “negotiating to support individual EU agencies rather than paying more to duplicate those agencies here.”
Then in early March, May appeared to open the door to an “in-REACH” option. In a key speech on Brexit she said the UK would want to explore with the EU the terms on which it “could remain part of EU agencies such as those that are critical for the chemicals, medicines and aerospace industries: the European Medicines Agency, the European Chemicals Agency, and the European Aviation Safety Agency. We would, of course, accept that this would mean abiding by the rules of those agencies and making an appropriate financial contribution.” May added that associate membership of agencies such as ECHA would be “the only way to meet our objective of ensuring that these products only need to undergo one series of approvals in one country” and would also “ensure that we could continue to provide our technical expertise”.
The CIA broadly welcomed the prime minister’s reassurances; chief executive Steve Elliott described the speech as “an encouraging step forward which acknowledges our industry’s long-standing call for regulatory consistency in leaving the European Union.
“Theresa May’s commitment to enabling the continued involvement of UK officials and their related technical expertise in the workings of REACH is something that I believe would be welcomed by our European partners. Her aim of avoiding duplicate testing and related costs under REACH would also help to protect a decade’s worth of investment in REACH by chemical businesses in the UK.”
The £6m invested in developing a UK-only chemical database might have been wasted but for UK organisations, especially those that have invested in registration dossiers, the savings of not finding themselves out-of-REACH are likely to outweigh that cost.
Though the future of post-Brexit chemicals regulation is far from clear, organisations that are downstream users of substances covered by REACH – and that is most businesses – can help prepare for eventual changes by ensuring their inventories of substances are up to date, including details of their suppliers and safety data sheets. Then it would be wise to identify substances that are critical to their operations and check with suppliers their likely position post-Brexit.