Chemicals bosses warn of "double whammy" of Brexit & new EU rules

The European chemical sector is facing the prospect of a 'double whammy' from the potential damage of a no-deal Brexit and divergent rules between the EU and the UK, FT has reported the heads of chemical industry associations on both sides of the Channel as saying.

Speaking ahead of the publication this week of a new EU Chemicals Strategy, Marco Mensink, director-general of Cefic, the European Chemical Industry Council, and Steve Elliott, head of the Chemical Industries Association in the UK, warned that the impending changes risked severely disrupting or damaging the highly integrated supply chains that exist between the UK and the EU, and would make Europe less competitive globally.

“We face a double whammy with this chemical strategy and Brexit coming together,” said Mensink, adding that, as a result of new costs and additional bureaucracy, some speciality chemicals may vanish from supply chains.

If the UK leaves the EU on December 31 without a deal - a situation that is looking increasingly likely - European competitiveness would be hit hard, with an estimated increase of around €1.5 billion in tariffs, claims Cefic.

Even with a trade deal, from January 1 the EU will no longer be part of the EU's Reach registration system for chemicals, opting to set up a rival version in the UK, meaning companies will have to duplicate registrations at an estimated €1 billion in further costs to the industry.

“There will be a duplication in the system of Europe Reach into UK Reach — double registration, double data, double the cost,” Mr Mensink said.

On top of this, from January 1 UK chemicals businesses that want to export to the EU must have a registered representative, but many companies have still yet to do so.

“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,” Mensink added.

The head of the Chemical Industries Association, Steve Elliott, said that a no-deal Brexit would have a huge effect on the north of England where the chemicals sector is vital 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 said. “We are the UK’s number one manufacturing exporter. We need that deal.”

Earlier this month, Neil Hollis of BASF warned that some chemicals may no longer be available in the UK, adding: “There's no positive spin on this.”

Mr Mensink also said that there was a sense of exasperation that ideology and political decisions were being put ahead of practical considerations to managing a cross-Channel industry with annual trade of €20 billion.

With just two and a half month to go before the end of the Brexit transition period - the point where the UK will fully leave the single market and customs union, the fact that the EU's new chemical strategy had no section on Brexit was "incomprehensible".

A deal, Mensink argued, was imperative to ease the flow of trade in an industry that is vital to a range manufacturing sectors - from food to automotive to pharmaceuticals to aerospace.

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