The British Coatings Federation has welcomed the news of a Free Trade Agreement (FTA) between the UK and EU. Despite the lateness of the decision, an FTA will mean, among other things, that BCF members will be able to benefit from tariff-free trade with the EU in future. This at least will ensure the coatings and printing inks sectors across Europe will not now be hit by new tariff costs of an estimated £100 million.
However, while there is talk of a Chemicals Annexe being included in the deal, it is not yet clear this will include the key data-sharing clauses the UK wanted. If this has not been agreed today, we hope that data-sharing might still be able to be negotiated as an ‘add-on’ at some point in 2021.
The 1st January 2021 sees the introduction of the UK’s new independent chemicals regulations. UK REACH is a direct copy of the original, EU REACH, a piece of legislation widely regarded as being one of the most – if not the most – burdensome in the world. If data-sharing has not been agreed as part of the FTA, UK REACH will now require the registration with full data dossiers of all chemical substances being used in the country to be put into a new database. This process is going to cost the chemicals industry an estimated £1 billion plus, a figure not disputed by the UK Government. It is also likely to mean some substances will not be registered in the new UK database at all for reasons of cost, leaving many UK manufacturers in a position where they have to make do without, change their formulations, or take on the registration costs themselves.
In addition, UK-based companies wanting to export to the EU will not only have to comply with UK REACH but continue to adhere to EU REACH rules too. This will become more complicated if the UK and EU chemicals regimes start to diverge in future.
Commenting on the deal, Tow Bowtell, CEO of the BCF, said:
“We welcome the fact a Free Trade Agreement has been concluded. Businesses are going to be hit significantly by Brexit and at least this FTA means some additional costs, such as tariffs, are now going to be avoided.
However, the FTA agreed appears extremely ‘thin’ and basic. The reality is this is a ‘hard’ Brexit, with significant extra costs and burdens placed on UK industry as a result. BCF members and businesses across the country will still have to deal with new customs and borders controls, as well as delays to goods and raw materials caused by those additional procedures. This will make UK companies less competitive, having to spend more time and money dealing with bureaucracy that has not been there for decades.
In particular, we have serious concerns about the way UK REACH will duplicate the onerous EU REACH, despite the UK chemicals market being only 1/10th the size of the EU. It seems as though the FTA negotiations failed to secure a data-sharing agreement on chemicals. If that is indeed the case, we either need to see further negotiations in 2021 to try and reach that agreement as an ‘add-on’ or Defra will need to urgently review how UK REACH is going to work. Proceeding as currently planned will cost businesses – including downstream users like those in the coatings, printing inks and wallcoverings sectors – over a billion pounds with absolutely zero added benefits. We will continue, as a matter of priority, to make this case for change into 2021.”