Out-Law News | 25 Sep 2018 | 5:11 pm | 2 min. read
Brexit specialist Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said the government's new guidance on regulating chemicals (REACH) if there’s no Brexit deal should spur businesses operating in the UK chemicals industry and active in the EU market to consider their corporate structure.
REACH is the legislative regime for chemicals that requires EU companies to register chemicals before placing them on the EU market. Chemicals companies based outside of the European Economic Area (EEA) are obliged to comply with REACH when importing chemicals to the EU. The rules require these non-EEA companies to engage an EEA-based importer or procure the services of an 'only representative' to serve as an agent for a non-EEA importer in compliance with REACH.
In its new guidance, the government confirmed that it would seek to replicate REACH in UK legislation and establish a UK regulatory framework, which would be led by the Health and Safety Executive, to underpin the rules in the event of a 'no deal' Brexit scenario. The UK system would "enable the registration of new chemicals through a UK IT system that is similar to the existing EU IT system; [and] provide specialist capacity to evaluate the impact of chemicals on health and the environment", among other things, the government said.
However, it warned that a 'no deal' scenario would restrict UK-based chemical companies' access to the EU market.
It said: "In the unlikely event that the UK leaves the EU without a deal, this would mean: companies registered with REACH would no longer be able to sell into the EEA market without transferring their registrations to an EEA-based organisation. Companies would therefore need to take action to preserve their EEA market access."
"UK downstream users currently importing chemicals from an EEA country would face new registration requirements. Under the UK’s replacement for REACH, importers would have a duty to register chemicals. Similarly UK downstream users of authorisations would no longer be able to rely on authorisation decisions addressed to companies in the remaining EEA countries," it said.
The government's guidance paper is part of series of technical notices it has issued that highlight the implications for businesses of a 'no deal' Brexit.
Lougher of Pinsent Masons said the guidance on chemicals regulation was "one of the starker documents" the government has issued.
He said: "REACH is the regime for the regulation of chemicals imported into and used in the EU. The guidance note explains that existing REACH registrations held by UK businesses will, in a no-deal scenario, need to be replaced by registrations held by EEA organisations. Because effecting such registration changes will take time, in addition to costs, this puts pressure on UK companies holding REACH registrations, if they have not already done so, to consider beginning now the process of transferring their registrations, rather than waiting to see if a no-deal outcome can be averted."