The Chemical Business Association (CBA) has said it is vital that the UK’s chemical sector achieves a level of regulatory alignment with the European Union (EU) after Brexit that preserves its frictionless access to important EU markets. 
 
The CBA, along with other business associations, is responding to the Chancellor’s, Sajid Javid’s recent statement that there would be no regulatory alignment with the EU following Brexit.
 
The CBA is calling again for the UK Government to negotiate a form of regulatory alignment or regulatory equivalence that ensures that thousands of UK businesses can continue to rely on the key chemical components they need for their products and processes. Some 60% of the UK’s chemical exports are sold to EU markets and 70% of the UK’s chemical imports are sourced from EU suppliers.
 
“The Chancellor’s remarks do not take account of the situation facing highly regulated areas of the economy, such as chemicals, that are dependent on international trade as well as underpinning the needs of UK companies.  Simply stating that the UK ‘will not be a rule-taker after Brexit’ risks denying UK business access to essential chemical products,” said CBA Chief Executive, Peter Newport.
 
“The chemical sector’s regulatory framework has a distinctive relationship with trade,” he continued. “Regulatory compliance is the key to market access. In this case, the European Union alone determines the nature and extent of the compliance required. Compliance with EU requirements is non-negotiable. Failure to comply is a barrier to market access. Without market access there can be no trade.”  
 
Recognising the central importance of regulatory alignment and market access, many UK companies in the chemical supply chain have already taken action to protect their customers’ interests.  CBA’s survey evidence shows that a significant number have created subsidiaries in EU member states – with premises and employees – representing a permanent loss to the UK exchequer and to UK employment.
 
In moves sharing much the same consequences, other companies have transferred key products to EU-based companies to guarantee continued regulatory compliance and market access.  CBA is also aware of European-owned chemical companies repatriating products.”  
 
Peter Newport added, “The regulatory divergence suggested by the Chancellor pursues so far unidentified benefits but risks additional border checks and delays and costs – as the UK and EU ensure products flowing in either direction meet their respective legislative compliance requirements”