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Regulations & EHS&S



Brexit: regulatory insights

By Naheed Rehman, Business Lead Consultant at Envigo - 3rd December 2018

Naheed Rehman, Business Lead Consultant at Envigo, shares insights into the way in which regulatory issues will be managed post-Brexit.  

The UK is a leading global chemical producer, with the chemical industry adding £14 billion to the UK economy every year, from a global annual turnover of around £40 billion. When Brexit was announced, concerns in the chemical sector were about three main things: tariffs, employment law and regulatory issues. Considering the contribution that the sector makes to the economy, it has been a vital part of the Brexit negotiations. Some progress has been made, but a number of questions remain, in particular those relating to the way in which regulatory issues will be managed post-Brexit. We spoke to Naheed Rehman (NR), Business Lead Consultant at Envigo, to find out more.
 
Earlier this year, the British Prime Minister, Theresa May, said the UK would like to remain part of EU agencies, such as the European Chemicals Agency (ECHA). Is this a feasible goal? 
NR: For the chemicals industry, and the non-clinical safety assessment industry that supports it, remaining part of the European Chemicals Agency (ECHA) would be a central component in the proposed transition period. During the transition the principle of mutual recognition is a key goal, with all existing REACH registrations continuing to be fully recognised.

Whatever shape Brexit takes, the regulatory goal of mutual recognition is paramount. No – or minimal – change in regulatory compliance requirements will be achieved if the UK is still subject to the EU’s regulatory regime for registration, evaluation, authorization and restriction of chemicals – with existing registrations of UK chemical substances still recognised by the EU. This would achieve the overarching UK industry goal of continuity.
 
A concern for us all has been a “no deal” Brexit without a transition. In preparation, the UK’s Health and Safety Executive (HSE)’s Chemical Regulatory Division (CRD) specifically set-up an Exit group whose remit has been to examine the implications, changes and consequences of a hard ‘no deal’ Brexit.
 
Negotiations are underway for establishing a transition period and the HSE, in collaboration with DEFRA, is looking to establish an equivalent system to REACH.
 
The UK government has started work on the delivery of a new IT capability, to enable the registration and regulation of chemical substances placed on the national market. How is this likely to differ from the current EU system(s)?
NR: The new IT capability from DEFRA has almost been completed. It would be equivalent to the EU’s REACH IT system and will be very useful in preparation for a potential hard Brexit scenario – a no deal.
 
At a recent meeting of the Health and Safety Executive, this system was discussed. Existing REACH registrations held by UK-based companies will be effectively copied and transferred directly to the UK replacement of REACH – legally ‘grandfathering’ the existing registrations into the British regulatory regime. Therefore, there are unlikely to be additional compliance requirements.
 
The EU and the UK are working constructively together on this proposed technical solution.
 
Are concerns about transfers and relocation caused by Brexit warranted and, if so, what can companies do in preparation for this?
NR: There are practical measures that can be taken. For example, at Envigo, we have appointed an Only Representative (OR) – defined under Article 8 of the EU REACH regulations. An OR is appointed by a non-EU manufacturer by mutual agreement and fulfils the REACH obligations of companies importing a substance on its own, in mixtures or in articles. The legal person or legal entity must be established in one of the EU member states or in Iceland, Liechtenstein or Norway. That member State then enforces the REACH requirements related to the substance when imported into the EU.
 
We provide an OR service for US, Korean, Japanese and Chinese customers who want to register chemical substances under REACH – with the customers appointing us as their OR. In preparation for a potential ‘hard Brexit’ (if transitional arrangements are confirmed without the UK being party to the EU REACH regulation – i.e. without access similar to that of Iceland, Lichtenstein or Norway), we have considered the options and associated administrative costs to transfer our legal entity to a country within the EU.
 
Overall, do you think Brexit offers an opportunity to reduce red tape, or is it likely to add another layer of complexity?
NR: At this stage the Chemical Regulatory Division (CRD) within the Health and Safety Executive are doing their best to minimize potential Brexit-related disruption to the safety assessment, approvals and registration of their chemical substances. Longer term, as the UK regulatory system may no longer be tied to the EU, there certainly is a possibility that the UK could pursue a system with a reduced bureaucratic burden.
 
What do you think will be the most important direct impact(s) of Brexit on speciality chemicals companies in the UK, in Europe, and in the rest of the world?
NR: The most direct impact will be any divergence of regulations, and the additional burden of managing that, and the imposition of tariffs on transport of goods between the UK and Europe.  
Clarity is also still required on whether the UK’s industry and scientific voice will continue to be represented at future ECHA scientific committee meetings and working groups.
 
If you had one piece of advice for those companies, what would it be?
NR: Chemical substance companies need the reassurance that their non-clinical research partners are working on minimizing the potential disruption, whatever the final Brexit deal and transitional period. We are monitoring developments and our preparedness provisions on a daily basis.  
 
We are preparing for all eventualities, including a no deal. Although the potential extension of the transition period from December 2020 to December 2021 is encouraging in terms of an extended period of continuity, it is not certain whether such an agreement will actually be reached. As an industry we must also keep an eye on the mooted mutual recognition principle which would come into play during the period of transition.
 
Continued lobbying is critically important. We have played, and will continue to play, our part in putting the industry’s case and concerns to the European Chemical Industry Council (CEFIC), Chemical Watch, the Chemical Industries Association and DEFRA. All these organizations are now involved in hard Brexit planning and preparations.
 
Author:
Naheed Rehman, Business Lead Consultant at Envigo, Woolley Road, Alconbury, Huntingdon, Cambridgeshire, PE28 4HS, UK.
www.envigo.com