31 October is the new date fixed in UK and EU law for the UK's departure from the bloc. At this stage, the terms remain unsettled. The Withdrawal Agreement, agreed in draft with the EU at the end of 2018, has now been rejected three times by the UK Parliament. EU leaders insist that, by 31 October, the UK must choose whether to ratify the exit treaty, opt for a no-deal Brexit or cancel its departure.
Although several outcomes are achievable, there is a possibility that the UK will exit the EU without any agreed withdrawal terms. While the UK Parliament rejected the possibility of a no-deal Brexit, it does not definitively rule out the possibility. This remains the default position under UK and EU law.
A no-deal Brexit would mean an abrupt end to the UK’s membership of the EU, with the immediate cessation of UK participation in various EU institutions and regimes. This includes the REACH regime.
EU-REACH under the Withdrawal Agreement
Under the Withdrawal Agreement (if it were to be ratified eventually), the post-Brexit regulatory framework in the UK would stay broadly the same for a transitional period. The agreement provides for that transitional period to last 21 months. The UK would continue to participate in REACH during the transition and:
- the process for registering new chemicals under REACH would remain the same
- the UK would recognise all new registrations, approvals, authorisations and classifications granted by the EU
- registrations, approvals, authorisations and classifications in place before the UK leaves the EU would continue to be valid
Brexit impact on Irish companies
The majority of Irish chemical products come from the UK and most Irish companies are downstream users of chemical products under REACH, CLP and the Detergent Regulations.
For a great many substances, there is no other option available to Irish companies other than continuing to buy UK chemicals. Of the 22,119 substances registered under REACH, 1,181 are registered in the UK only.
This highlights the key issue for Irish companies in terms of REACH. Many rely on UK registrations for their supplies of chemicals. However, post-Brexit, the UK will become a ‘third country’, meaning UK REACH registrations will become non-existent. The UK authorities will no longer be able to access to the Echa databases and will no longer participate in EU regulatory and decision-making processes.
The UK government has promised that EU-REACH registrations held by UK-based entities will be automatically 'grandfathered' into the UK-REACH system from the same time. So, there should be no disruption in supplies from the continent caused by the new regulatory system alone.
The potential change post-Brexit in legal status for Irish companies to importers means that, apart from registration requirements, those companies will have responsibilities for:
- the safety of products
- ensuring documentation is supplied, such as safety data sheets
- ensuring that products are correctly labelled
Accordingly, companies may want to source products from other EU suppliers. They may also need to consider where their distributors are sourcing their supplies from.
Apart from sourcing other suppliers from the EU-27, the option for Irish companies is to employ a person competent in REACH and CLP. This is to ensure products imported from the UK are compliant, and become an EU importer, which may open up further market opportunities.
Questions Irish companies need to be asking themselves are:
- Do they source substances from a UK-based supplier?
- Are they downstream users, relying on a UK-based only representative (OR)?
- Are they reliant on an Irish distributor who sources from the UK?
- Are they reliant on authorisations granted to a UK company?
- Can they change supplier to another EU member state? And;
- Are they in a position to take on the role of importer if they continue to source in the UK?
UK-REACH under no-deal
Unless other arrangements have been made, in the event of a no-deal Brexit, the UK must immediately implement its own chemicals regime.
In such a scenario, EU-REACH will effectively be brought into UK law. This means that the new UK-REACH would retain the key principles of EU-REACH.
New chemicals placed on the European market will therefore need two separate registrations, one for EU-REACH and one for UK-REACH.
Obligations of non-UK businesses under UK-REACH
Under EU-REACH, non-EU/EEA companies do not have any have direct obligations, as those entities are not subject to the jurisdiction of any EU institutions or any EU member state. Any chemical substances marketed to the EU/EEA become subject to EU-REACH on entry into the region. To avoid a requirement for the registration of EU-based importers under EU-REACH, EU-REACH allows non-EU/EEA entities to appoint an OR to register a substance on behalf of its non-EU/EEA principal.
If and when UK-REACH comes into effect, existing EU-REACH registrations submitted by an OR will not be automatically grandfathered into the new UK framework. As mentioned above, grandfathering will only apply with some information filing obligations to existing EU-REACH registrations or authorisations held by UK-based entities (including UK-based ORs). For example, an existing EU-REACH registration held by an Irish-based OR, on behalf of a US chemical manufacturer, will not be grandfathered into UK-REACH.
Non-UK manufacturers exporting to the UK post-Brexit may decide to appoint a UK-based OR to take on UK-REACH obligations post-Brexit. If they do not, then UK-based businesses importing substances from non-UK suppliers may (subject to volume thresholds) have an obligation to obtain and hold a UK-REACH registration. Such UK importers may currently be relying on the UK REACH registrations of EU/EEA-based companies.
To ensure immediate post-Brexit continued access to the UK market and to maintain supply chains, the UK Health and Safety Executive (HSE) is proposing to implement a relatively light-touch ‘notification’ system before full registration obligations are applied to such UK importers. The specified information will have to be provided to the HSE within 180 days of UK REACH coming into effect.
Any UK-REACH registration by an OR on behalf of a non-UK principal within 180 days of Brexit would see UK importers regain the status of downstream users within UK-REACH. In addition, they would not need to become registrants themselves. The UK importers would be relieved of their duty to notify the HSE within 180 days.
In the example above of a US chemical manufacturer, to enable it to continue to import into the UK post-Brexit, its UK-based customers would either need to:
- register under UK-REACH (as UK importers); or
- the US chemical manufacturer could itself use a UK-based OR to effect a UK-REACH registration (which the UK importers could then rely upon).
Current UK downstream users of an EU-REACH authorisation held by an EU/EEA company will continue, under UK-REACH, to use that substance in accordance with that authorisation after the UK leaves the EU, provided they meet certain notification requirements. That element of existing UK/EU/EEA supply chains should not be materially impacted.
Importantly, EU-REACH registrations and authorisations which are pending when UK-REACH comes into effect will not be recognised by UK-REACH. New applications will need to be made under UK-REACH.
In terms of supply in to the Irish market, UK manufacturers and suppliers have various options. These including transferring their operations and registrations to other EU member states (this must be a legal-entity change and must happen before the UK withdrawal). The advice to Irish companies is to talk to UK suppliers to find out which options they are considering.
Echa opened a ‘Brexit window’ within the REACH-IT system to enable UK firms to make changes ahead of time. The alternative is for EU-27 based clients of UK suppliers to register as importers, a prospect that would encourage them to look elsewhere to meet their chemical requirements.
Now that the European Council has changed the UK withdrawal date to 31 October, Echa has advised companies to continue their preparations for the UK withdrawal without a transition period. The Brexit window will stay open, subject to further developments.
Given the continued uncertainty around Brexit, businesses should continue to closely monitor developments and seek to identify how they may be impacted by changing circumstances, including the potential implementation of UK-REACH.
This article was first published by Chemical Watch on 30 April 2019.