Brexit deal ‘indispensable’ for chemical industry, conference told

Written by Martin Banks on 1 February 2019 in News
News

A conference in Brussels has been told that a Brexit deal between the EU and UK is “indispensable” for the chemical industry and that an extension to the transition period is also needed to ensure minimum disruption to the sector when Britain leaves the bloc on 29 March.

BASF chemicals plant, Ludwigshafen | Photo credit: Press Association


Speaking at the event, Ian Cranshaw, head of international trade at the Chemical Industries Association (CIA), said his organisation had conducted a survey among the companies it represented and not a single company had come back saying that Brexit would benefit them.

With a turnover of £18bn, the chemical industry was of “crucial importance” to the United Kingdom, he told the audience.

It provides 500,000 jobs indirectly, with another 150,000 people directly employed, many of them in high-quality jobs located not only in the cities but also in the regions.


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“What the industry needed most was certainty,” he said.

UK companies had invested £6m to comply with REACH, the EU chemicals legislature, and the industry welcomed that regulation, he noted.

“Therefore, the concept of a UK REACH being introduced and asking UK companies to pay again for re-registration did not make sense.”

"We are convinced that the UK should be included in the EU REACH regulation and also in the ECHA” René van Sloten, European Chemical Industry Council

The UK's possible role in the ECHA, the EU chemicals agency, also “needed to be discussed.”

Further comment came from René van Sloten, executive director of the Industrial Policy Programme at the European Chemical Industry Council, who said the British and EU chemical sectors were “strongly interconnected.”

He said that from the onset of Brexit negotiations the council “had stood united in favour of an agreement for frictionless trade in chemicals.”

A no-deal needed to be averted, he added, underlining regulation as the industry's key area of concern.

"We are convinced that the UK should be included in the EU REACH regulation and also in the ECHA", he said.

WORST-CASE SCENARIO

The conference, organised by the European Economic and Social Committee and the Consultative Commission for Industrial Change (CCMI) on Thursday, heard that divergence of regulation is the biggest fear and a no-deal is the “worst-case scenario” for the aeronautics and chemical industries.

It was said that, in the event of a deal, the UK should stay aligned with EU laws.

“The UK should aim to stay as close as possible to REACH, which should in turn be translated into UK legislation” Kate Young, CHEM Trust

For chemicals, the REACH regulation is key, while for the aeronautics industry, agreements on reciprocity are most important.

Several speakers, though, said that the planned two-year Brexit transition period is too short and should be extended to at least five years.

The conference brought together high-level experts of the aeronautics and chemical industries.

Jan Pie, secretary-general of the AeroSpace and Defence Industries Association of Europe (ASD), said, "It is crucial to find reciprocity solutions in the main sectors otherwise both parties - the EU and the UK - will lose out. The transition period, however, is too short and from our perspective we would need at least five years to adapt to the new situation."

While new tariffs were a challenge to Europe's competitiveness, the impact would, for the most part, fall on the supply chain in the event of a no-deal because just-in-time delivery needed a smooth supply chain, it was said.

Since the aeronautical supply chain was highly transnational, components often had to cross the Channel several times before the product was finally assembled. A blockage of only one item could already bring the whole supply chain to a halt.

The same also applied to the movement of workers: specialists needed to move quickly between Britain and France, or Spain or another EU country, and back again. Any restrictions would inhibit smooth production, the conference was told.

The ASD represents 3,000 companies and around 80,000 different suppliers whose major concern is that putting new bodies in place in the UK on the one side and retaining the existing EU27 ones could create divergence in the future.

The relocation of enterprises in order to escape the uncertainty, however, was not an easy decision, given that there were often many sub-suppliers involved – in the case of Airbus, for instance, they numbered around 5,000.

Kate Young, Brexit and chemicals campaigner at CHEM Trust, warned that it was “essential to keep a level playing field,” adding, “The UK should aim to stay as close as possible to REACH, which should in turn be translated into UK legislation.”

REACH has never been popular in the US, she said, and in its search for a good trade agreement with the US the UK could become more aligned with the US.

CHAOS ON THE HORIZON?

Further contribution came from UK Tory MEP Jacqueline Foster who said that she had already voted against the UK staying in the "Common Market" back in 1975.

"There won't be a second Brexit referendum", she said, adding, "the government needs to carry out the process to the end.”

She said the UK had played a key role in setting up responsible legislation in the EU and, post Brexit, it would not water down any standards. Foster called for a grown-ups' divorce that included “reciprocity” and a seamless process on how to take industries forward.

Luc Tytgat, strategy and safety management director at the European Aviation Safety Agency (EASA), said the agency had received several applications from UK operators and they were prepared to deal with any options.

Another speaker, Mia Wouters, director of the European Aviation Club and professor of Air Law at University of Ghent, said that leaving the EU also meant losing the EU's airspace for the UK and the need to negotiate bilateral agreements.

"Nobody is ready for Brexit yet and it could end up in chaos. People have not been informed of what is at stake", she said.

During the discussion, other participants also expressed their disappointment regarding the “staggering” amount of uncertainty still surrounding the UK's exit from the EU just two months before the final divorce and wondered if the British people had really been aware of the negative impact of their vote.

About the author

Martin Banks is a senior reporter at The Parliament Magazine

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