Following the latest political developments, companies are advised to continue or urgently start to prepare for a 'no deal' Brexit, which is now rated as high risk on 31 October 2019 when the UK is due to leave the EU. A 'no deal' Brexit will have an extremely negative impact on the cosmetics and the wider chemicals industry, not only in the UK with UK REACH, but also in the EU.
Impact of 'no deal' Brexit on EU REACH
UK entities and UK-held registrations will no longer be recognised under EU REACH in the event of a 'no deal' Brexit. This means that any EU company that is currently a downstream user or distributor of chemicals with a UK-based REACH registration will be impacted: unless the UK-based registrants have transferred the registrations to an EU-based entity, these companies will become importers and will have to register those chemicals themselves.
It is important for EU companies to identify if and which substances are impacted by mapping their supply chain and understanding what the contingency planning of such suppliers are. It is also worth mentioning that a chemical coming from a UK supplier may have an EU-held registration, which means that the EU future importer would benefit from the re-import exemption. However, it may be that the EU future importer no longer reaches the 1 tonne limit by excluding the UK market from the tonnage calculation. There are many considerations that have to be taken into account to understand if and how a company can be impacted, as there can be a complete change of role and responsibilities.
According to the latest EU notice on Brexit, as of April 2019, 463 registrations held by UK companies have been transferred to EU27 entities. However, 718 registrations held by UK companies have not yet been transferred; if this is not done, the EU importer will have to register the substance itself under EU REACH or the substance will not be allowed to be marketed in the EU. Europe can also face a possible loss of raw materials.
Impact of UK REACH
If the UK exits the EU with 'no deal', the UK REACH Statutory Instrument (SI) will come into force on 31 October 2019 for chemicals used and marketed in the UK.
CTPA and the UK cosmetics industry strongly support a regulatory framework for chemicals in the UK to protect human health and the environment; but while the UK REACH legislation is suitable for new chemicals, unfortunately it is not workable for all existing chemicals that have already been registered under EU REACH.
The UK REACH law provides for pre-registration and subsequent full registration of all existing chemicals, which means that all the work that has been done for EU REACH has to be duplicated for the UK market. In more detail, current registration holders have to submit the pre-registration information within 120 days from Exit day; 2 years after Exit day they will need to submit the full registration dossier. EU-based companies will be able to do this by appointing an 'Only Representative' (OR) in the UK. For more detailed information on the provisions of UK REACH, please visit the CTPA Brexit 'No Deal' Contingency Planning public page.
The key issues that arise for UK companies with the duplication of all registrations for existing chemicals already registered with the European Chemicals Agency (ECHA) are:
- most registration holders are part of joint submission groups and therefore share their registrations with other companies;
- in order for a company to be able to use the data for the purpose of another REACH framework, the company has to negotiate data access which involves time and money as this is ultimately a commercial decision of the company selling the data;
- there may be the need to make changes to the legal contract of the joint submission group to allow usage of the data for other REACH frameworks other than EU REACH;
- the same problems will apply to downstream users and distributors that may become importers and will have registration obligations under UK REACH, if their suppliers will not register the chemicals themselves.
In the same way, an EU based registration holder that wants to continue to sell chemicals in the UK market must appoint a UK-based OR, with whom to share the information for pre-registration within 120 days from Exit day and for the full registration after 2 years from Exit day; or do the import notification to help downstream users and distributors of chemicals sourced from the EU. If the EU company does not wish to appoint an OR in the UK but still wishes to continue to market chemicals in the UK, then the UK importer of these chemicals will have to fulfil these obligations. But in order to do so, the EU company has to give the UK importer access to the full registration dossier. Again, it's a commercial and legal challenge, depending on whether the EU company wishes to share such information with the importer.
CTPA has been extremely active in engaging with the Department for the Environment, Food and Rural Affairs (Defra), representatives at the House of Lords and No10 to highlight the industry's concerns on the provisions of UK REACH for existing chemicals and urge they are addressed with a more workable legislation. CTPA has also been collaborating with other trade associations in the chemicals sector, including the Alliance of Chemicals Association (ACA), to promote a cross-sector industry position. It is important for trade associations in the cosmetics industry and the wider chemicals industry within the UK and the EU to also collaborate and align on a cross-sector position and plan of action to ensure the industries' concerns are addressed. Importantly, CTPA would like to ask registration holders to reasonably share and provide access to data to those companies who would like to continue to market their chemicals in the UK, in order to allow them to fulfil their obligations under UK REACH. We understand that it is difficult to make commercial decisions in such an uncertain political situation, and we therefore invite companies to at least provide some certainty and to help downstream users understand where their suppliers stand. This will help companies better organise their contingency planning for a 'no deal' Brexit.
For more information on contingency planning advice for 'no deal' Brexit, please visit the CTPA Brexit 'No Deal' Contingency Planning public page.