Brexit Tug-of-War around Brexit
Brexit is sealed ... What’s next for the EU-UK chemical industry? — Europe is the second largest chemicals producer in the world. With the UK now leaving the EU zone, what will this mean for chemical trade between the two sides? PROCESS Worldwide offers an insight into this dynamic market scenario.
Brexit has been making headlines since a long time now, however, in January this year the UK officially left the European Union block but it doesn’t end just there. There are numerous policies and trade deals for various sectors that still have to be worked upon between the two parties in order to carry out business smoothly. One such sector is the chemical industry. According to a report by Cefic (European Chemical Industry Council), the UK chemical industry represents more than 7 % of the total EU-28 sales and the EU chemical industry accounts for 52.5 % of UK sales, thus, showing that both markets are vital to each other.
Win-Win Situation for EU and the UK
In this scenario, Cefic and CIA (Chemical Industries Association), the main trade associations of the EU and UK respectively have highlighted the importance of finalising a good trade deal between both the sides for a win-win situation. But at the moment there are many challenges, especially concerning EU-Reach and Rohs as it is not clear how Brexit will affect Reach. In a recent Cefic release, Steve Elliott, Chief Executive of the Chemical Industries Association said, “Creating a parallel UK regulatory regime for chemicals, whilst still needing to meet the legal requirements of our biggest market place under EU Reach will, in our view, bring no commercial or environmental benefit and could put businesses and jobs at risk right across the country.”
Adding to this, Marco Mensink, Director General of Cefic opined, “The European chemical industry stands united in its wish to keep chemicals regulations aligned and for the UK to remain part of Reach and ECHA. Diverging regulations will lead to unnecessary costs for the chemical industry, duplicate animal testing and cause major distortion of industrial value chains.”
Industry Players Remain Cautious
On speaking to chemical players in the region, Ralf Krüger, Head of Country & Agency Management in the Legal & Compliance Group Function, Lanxess Deutschland shared the same opinion as the trade associations. He mentions, “The goal should be frictionless trade which would benefit both the EU and the UK. Future import duties and border inspections will burden the sales/purchasing business. With regard to chemical registrations, we expect this to have an impact on the chemical industry if a corresponding adjustment is not made in good time.”
The positive sentiments of the trade associations will bring respite to industry players who are currently undertaking precautionary measures post-brexit. In a statement to PROCESS Worldwide, the pharmaceutics company Bayer mentioned that it strongly believes that the goal of both Britain and the EU should remain an economic model with maximised economic integration.
The company’s scenario planning includes a comprehensive and robust mix of measures, which are designed to mitigate the most significant risks identified, for example border delays due to custom formalities. The company says that it will continue to maintain those measures which enable it to respond to any scenario in the best interests of its customers.
Meanwhile, Oliver Kinkel, Head of Region Europe, Middle East and Africa at Clariant mentions, “With the unknown outcome of the upcoming negotiations between the UK and the EU on their future relation, any impact of Brexit on our business is difficult to predict. Targeting the best continuation of the business with the UK, Clariant’s global experts and UK-based teams are closely monitoring the development and preparing the company to all possible scenarios.”
Currently, the chemical industry in the EU and the UK is hopeful that the implementation of the proposed chemical trade regulations by Cefic and CIA will reduce market disruptions and enhance trade relations in the long run. However, till then, guess we will just have to wait and watch this space...