On January 31, 2020, the UK decided to forgo its membership with the European Union. The UK is currently in an 11-month transition period, during which it is to follow standard EU guidelines. However, the focus of this period is to formulate their future relationship with the EU.

What makes this 11-month period crucial? Some points are listed below:

● The UK's chemicals sector is the second largest in the country, adding a value of £18 billion to the economy. (Read more here)

● Out of 31% of the UK's exports that are for other countries, 54% go to the EU market. (Read more here.)

● Other industries affected by Brexit include the automotive, airlines, financial services and chemical sectors. A massive shift from existing business practices will make it challenging to match global competition while remaining in the UK.

At this point, the question arises, "How will Brexit chemical regulations impact the chemical products industry, especially to the supply chain operations?"

The EU REACH

The European Chemical Agency(ECHA) decides the EU's chemical compliance and regulatory processes. Its duties include enacting policies that promote sustainable management of chemicals that, in turn, create a mutual benefit for both the citizens and the environment. The REACH regulation is one of the well-thought-out policies of the ECHA, enforced across all EU member states. By following strict procedures of registration, evaluation, restriction and communication, the guidelines laid down help in the early identification of intrinsic properties of chemical substances.

What are the UK REACH regulations?

The UK has already begun to work on its own set of rules for product regulation and compliance. Termed as UK REACH, which is being developed by the UK's Health and Safety Executive (HSE), is expected to be similar to the norms of the EU Reach. The Brexit chemical regulations are expected to remain similar to the EU REACH requirements norms.

When the transition period is complete, the impact will be majorly on the economic operators, i.e., manufacturers, importers and distributors working in UK supply chains. As per UK REACH, entities need to ensure their products comply with different sets of guidelines, which can be a cumbersome task. Directives can also vary based on whether they are the manufacturer, importer or distributor.

Before Brexit, heavy-duty commitments fell on the manufacturer or importer. The latter typically faced lighter regulatory obligations.

Brexit chemical regulations will see supply chain operations change greatly from the old practices. However, the following expectations find some ground:

● The UK REACH guidelines will require manufacturers exporting products to the UK market to have a UK importer/distributor.

● The alternative for the UK certification mark post-Brexit is also under process. Known as UK Conformity Assessed (UKCA) mark, it will be mandatory for manufacturers to obtain it before placing any product in the UK market.

● It is also possible to have both CE and UKCA marks on the same product. The customer will know the product meets the regulatory standards of both the UK and the EU.

Finalizing the Brexit chemical regulations is a crucial goal to complete during this transition period. However, it is also necessary to formulate new UK-centred policies to replace ECHA's other product compliance guidelines. These include the Classification, Labelling and Packaging (CLP), Biocidal Product Regulations (BPR) and Safety Data Sheets (SDS) guidelines.

Brexit chemical regulations replacing CLP guidelines:

Irrespective of a 'deal' or 'no-deal' scenario, the UK must establish an independent body for regulation of chemicals that enter its borders. As a first move, the UK has adopted the UN globally harmonised system (GHS), which is similar to the EU's CLP Regulation. While most things will remain the same, some procedural differences can be expected, which includes:

● The UK's Health and Safety Executive (HSE) will perform as the regulating body for the country. In this regard, UK companies will have to classify and label products according to the new regulations.

● Instead of the UK-based exporters, the responsibility of working under the ECHA's C&L inventory now falls on the EU-based importers.

How will the UK REACH replace the Biocidal Product Regulations (BPR)?

● Brexit will see UK companies give up their authorizations under BPR. To maintain its validity, said entities would have to transfer their permissions to entities from the EEA or Switzerland before Brexit.

● A significant change is the removal of UK-based suppliers from the list of substance and product suppliers registered under the BPR. Without having a representative on said list, the UK-based suppliers will not be allowed to sell their products in the EEA or Switzerland markets. Thus companies must act quickly, appoint a representative within these markets and update this to ECHA before Brexit so that the list contains updated information before exit day.

● The HSE will be the responsible body to handle active-substance or biocidal product approvals for companies applying in the UK.

● The UK should also act to reform the Article 95 list for approved active substances and suppliers. While it would include companies already on the EU list, supporting information will be required by the HSE to establish them in the UK within two years.

UK REACH guidelines around Safety Data Sheets (SDS)

● During the transition, these will not change from current requirements.

● The SDS layout will likely be the same in the UK REACH as in EU REACH.

What to expect?

It is still uncertain if the UK post-Brexit will apply to be an EEA EFTA state. However, the voices in the industry need to speak out and have their concerns heard. Most significantly, the changed Brexit chemical regulations will impact heavily on time and additional administrative costs. In a case study conducted by DHL, an average delay of 2 minutes to customs, would result in a 17- mile queue from Dover to the UK Hinterland.

Thus, it is unsure how these additional costs will distribute out over the supply chain. Until the final guidelines come out, we can only prepare for the worst.

The Conclusion

In short, Brexit chemical regulations are likely to facilitate an overhaul of all supply chain processes. This begins from:

● Planning and stock maintenance(with due consideration of additional lead time for customs and uncertainty in supply)

● Supply chain optimisation and operations (dealing with new customs processes and compliance).

● To tackle the issues of changes in supply chain processes, new information capture and reporting and further enhancement of stock due to variation in requirements.

In the case of a "deal" Brexit or a "no-deal" Brexit, manufacturers must plan for the worst and hope for the best. For now, companies to work with the worst-case scenario in mind until guidelines surrounding the UK REACH become final. Companies should look to increase their chances with the possible compliances by mitigating supply chain risks, performing the adequate supply chain audits and adapt to when and where requirements change.

   

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