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Beyond Brexit: food, environment, energy and health Contents

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Chapter 6: Chemical regulation

Background and context

220.The chemicals sector is a major manufacturing industry in the UK: in 2019, its economic output was £11.2 billion.235 In 2018, 57 per cent of the UK’s chemical exports went to EU Member States, and 72 per cent of chemical imports came from the EU.236

221.REACH, or Regulation (EU) 1907/2006, is the main piece of legislation covering the regulation of chemicals in the EU.237 Alongside the EU Member States, three of the European Free Trade Agreement States (Norway, Iceland and Liechtenstein) participate in REACH through their membership of the European Economic Area (EEA). There are currently no other participants: although both Switzerland and Turkey have enacted legislation mirroring REACH,238 their legislation was developed independently.

Box 5: The Regulation concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)

REACH aims to protect human health and the environment from the use of chemicals and allow the free movement of chemicals on the EU market. Manufacturers and importers have to register a substance if they intend to import or manufacture a tonne or more of that substance per year. This involves providing information about its properties, hazards and any appropriate risk management measures. The ‘one substance, one registration’ principle means that manufacturers and importers of the same substance have to submit their registration jointly and provide consistent information. If a substance poses an unacceptable risk to human health or the environment, it is subject to restrictions.

222.Following the UK’s withdrawal from the EU, the Government has launched an independent regime known as UK REACH which operates in much the same way as its EU equivalent.239 Despite its name it will only apply in Great Britain, as the EU REACH system will continue to apply in Northern Ireland by virtue of the Protocol on Ireland/Northern Ireland.240

223.Throughout the UK-EU future relationship negotiations, the UK chemicals sector expressed an emphatic desire for a close relationship with EU REACH to minimise barriers to UK-EU trade in chemicals. We explored the challenges facing the sector in our report Brexit: chemical regulation.241

The Trade and Cooperation Agreement

224.As the UK Lubricants Association pointed out, the EU-UK Trade and Cooperation Agreement (TCA)242 “allows for continued free trade between the UK and the EU, free of tariff and quota, which is to be welcomed”.243

225.Against this backdrop, the objectives of Annex TBT-3: Chemicals of the TCA are to facilitate the trade of chemicals, ensure high levels of protection for the environment and human and animal health, and provide for cooperation between regulators in the UK and EU (Article 3(1)). The Annex states that both Parties will participate in relevant international organisations (Article 5), and facilitate “the exchange of non-confidential information” (Article 7(2)).

226.In a joint submission, the Chemical Industries Association (CIA) and the European Chemical Industry Council (Cefic) welcomed the commitments for cooperation at international fora, but added that “the key issue of data and the absence of securing provisions relating to EU REACH data remains a significant concern for the sector”.244 The Chemical Business Association (CBA) agreed:

“Beyond the headline of ‘No tariffs and No quotas’, the Agreement heralds unwelcome non-tariff barriers that complicate trade with the UK’s largest trading partner … The Agreement introduces logistic delays and other supply chain issues through new and complex customs processes as well as a duplicative and unaffordable UK REACH regulatory regime.”245

227.Tariffs and trade quotas would have been a substantial barrier for the UK chemicals sector given the amount of trade it does with the EU, so we welcome their absence from the TCA.

UK REACH

228.To be effective, the UK REACH database needs to be populated with information about each substance’s properties and hazards. Securing access to this information could be a costly exercise for some companies. Tom Bowtell, Chief Executive Officer of the British Coatings Federation, told us that “the financial cost of tariffs is much less to us than our estimated cost of UK REACH”.246 The UK Lubricants Association summarised the situation: “The underpinning principles of REACH are one substance, one registration. We are now in a situation of one substance, two registrations.”247 They went on to explain why this presents a cost to chemical manufacturers:

“The cost and ownership of the data [related to a registered substance] is shared across all companies within the consortia. Therefore to apply to use the existing EU REACH data for a further registration under UK REACH, the individual company must apply for a letter of access to allow the consortia to release the data in return for a fee. Although the individual company has already paid a share of the initial costs of developing the underpinning data to support an EU REACH registration, they will have to pay again to use the data to support a UK REACH registration.”248

According to the CBA, “The industry estimates the full cost of UK REACH could be up to £1 billion.”249

229.We heard that these costs could mean lower product availability in the UK. According to the UK Lubricants Association, “The average cost to a petrochemical company for a letter of access is around 10,000 euros per substance … For a market the size of the UK which represents around 15% of the total EU market, it might well be uneconomic for all substances to be re-registered with UK REACH.”250 The CIA and Cefic agreed.251

230.The Secretary of State for the Environment, Food and Rural Affairs, Rt Hon George Eustice MP, took a different view:

“There is a good prospect that the industry both here and in the EU, given that many companies are in consortia, with different companies being lead registrants on different products, may, when they finally sit down and look at it, realise that there is not much for any of them to gain by trying to hold one another to ransom over data that they might have.”252

231.Witnesses also raised concerns about the implications if UK REACH were to diverge from EU REACH. For example, the UK Lubricants Association told us: “It is important that the UK continues to align with EU chemical regulation otherwise UK companies will incur additional costs to comply with both the UK and EU regulation which will divert resources away from product, process or service innovation towards regulatory compliance.”253

232.The Secretary of State’s suggestion that chemical companies may be willing to share substance data without significant cost ignores the situation the industry has been describing throughout the Brexit process. The Government cannot act in the interests of the chemicals industry unless it acknowledges the challenges it faces.

233.Divergence between the UK and EU REACH systems would increase compliance costs for the UK chemicals sector. In exercising its new sovereignty, we urge the Government to avoid divergence for divergence’s sake.

Institutional data sharing

234.Our witnesses were sceptical about the value of the TCA’s reference to exchanging non-confidential information. As CHEM Trust pointed out, “The EU REACH system has already been designed to share non-confidential information widely, for example through the substance information available on ECHA’s website.”254

235.The CBA therefore contended that “a novel solution is needed that ensures UK REACH does not result in an excessive regulatory burden on the UK industry and avoids duplicative substance testing”.255 The Royal Society of Chemistry agreed: “There needs to be … discussion between UK and EU about harmonised or divergent safety decision-making for chemicals centred around the same trusted set of facts.”256 The CIA and Cefic, and the CBA proposed various mechanisms for how data on registered substances could be shared.257

236.However, as Dr Michael Warhurst, Executive Director of CHEM Trust, explained:

“The first, key, thing to achieve that would be for the UK to decide to align with EU chemical controls and continue to use the outcomes of the REACH process. If it does so, it unlocks the potential that the EU will say, ‘If you are definitely going to be aligned, we will share data with you.’ … The UK has to decide to align with REACH to achieve that.”258

And as we heard from Secretary of State Rt Hon George Eustice MP, “It was a clear stance that we had across the board that we could not go for regulatory alignment.”259

237.Ultimately, the Secretary of State told us, “The Government tried very hard to get the EU to agree to data sharing on this, since it is in everyone’s interest … but it was refused by the European Commission.”260

238.The fact that institutional data sharing on chemical regulation was not agreed through the TCA is a necessary consequence of the UK’s withdrawal from the EU Single Market and the Government’s decision not to commit to aligning with EU REACH in the future. Although the chemicals industry is keen to find an alternative way towards a data sharing agreement, the positions taken by the UK and the EU suggest that such an outcome is unlikely.

239.We call on the Government to monitor how many substances are registered with UK REACH over the coming months, to publicly report how these registrations compare to the number of substances already registered with EU REACH, and to set out what actions it will take if it appears that the new regime will result in fewer substances being available for use in the UK.

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