The UK should take the "pragmatic approach" of keeping open the option to extend the Brexit transition period, the Chemical Business Association (CBA) has said.
In a 4 May letter to the business minister and parliamentary under secretary of state at the Department for Business, Energy & Industrial Strategy, Nadhim Zahawi MP, the CBA said the final decision to extend should be dependent "on both Covid-19 decompression and the progress made on an UK/EU free trade agreement".
The CBA’s letter, signed by chief executive Peter Newport, was made public on 28 May, ahead of round four of trade talks from 1–4 June.
It names unresolved Brexit trading and regulatory issues, the Covid-19 pandemic and the possibility of an imminent recession as the main issues the UK’s chemical supply chain is facing.
"Together, they provide a perfect storm for the UK economy. The CBA believes their potential cumulative impact should guide the UK government’s industrial strategy."
The UK has so far ruled out an extension to the transition period, which is expected to expire on 31 December. The deadline for any mutual agreement with EU member states and the European Commission to lengthen the period is 30 June.
On 25 May, EU chief Brexit negotiator Michel Barnier sent a letter to UK government opposition MPs saying that the Union remains open to extending the transition period by up to two years.
The CBA said that the business community views the potential outcome of Brexit negotiations "with foreboding" since ruling out regulatory alignment "has effectively denied the chemical sector access to growth EU markets".
Rejecting an extension to the transition period "out of hand" increases the risk of a no-deal exit from the EU, it added. "Politics appears to have trumped pragmatism unless a deal can be secured within the astonishingly short time remaining."
Earlier this month, the UK’s Chemical Industries Association (CIA) said that it is "working towards" the expected December 2020 deadline and is not currently considering proposing an extension, despite ongoing coronavirus Covid-19 disruptions.
REACH concerns
In the letter, the CBA also aired its concerns about a separate UK REACH regime and the issues around sharing information on substances.
"If the UK fails to gain access to the Echa database and the crucial testing data it contains, it will further weaken, perhaps fatally, the government’s plans for a regulatory framework for chemicals."
MPs have recently demanded clarity from the government on its chemicals strategy – set to be released in 2022 – on which work has been paused due the Covid-19 pandemic.
Additionally, the letter says, the proposed level of fees for UK REACH is "opposed by every sector" of national industry and should be "urgently reconsidered as should the implementation timescale".
Addressing the issue last month, the CIA called the fees a "great concern" and urged a review to take into account proportionate market size.
Member advice
In reaction to the UK government’s unwillingness to seek regulatory alignment with the EU, the CBA has advised its members to pursue certain options before the transition period ends to secure continued EU market access. These are:
- use an existing subsidiary or create a new one in the EU and transfer any EU REACH registrations to that subsidiary;
- establish a partnership with a company in the EU and transfer any EU REACH registrations to that company; or
- support the CBA’s plan to create or contract with a collective only representative entity in the EU for member companies.