Richard North, 03/04/2018  
 


Following on from yesterday when, amongst other things, I dealt with the implications of REACH (once again), I am seized with a strong sense of unfinished business. This a story without ending but, what is most troubling is that next to no one seems to be writing about it – not even trade industry magazines.

This, in itself, is spooky. When the system was first introduced, almost exactly ten years ago, there was substantial trade "chatter" about what has been described as "the most advanced and comprehensive chemical legislation in the world".

Currently, we are approaching another milestone in the implementation of the Regulation. This kicks in on 31 May 2018, when the legislation, initially applying to large-scale manufacturers, is to apply to manufactures and importers of chemical substances in the range of one to 100 tonnes per year.

So comprehensive is REACH, however, that it does not only apply to chemicals in their natural state, marketed as such, but also to mixtures and solutions. Typical mixtures include coatings, inks, dyes, adhesives or cleaners. This may extend to inks and toners contained in a printing cartridge and even "mixtures on a special carrier" such as typing or printing ribbons.

Necessarily, the expansion of the system brings in a huge tranche of additional chemicals and with them, their manufacturers and importers – many of them small and medium enterprises. These are the very businesses which are expected to have the greatest difficulty in complying with the law, and which are in the greatest need of help.

Yet, into this complex process comes Brexit, the ultimate spanner in the works, spreading confusion and uncertainty. Until the UK government has agreed with the EU the precise trade settlement, it will be difficult for firms to know precisely what to do.

Those who sell in the 1-100 tonne range are obviously having to consider whether to invest the time and expense in registering their products but for many there is no means of knowing whether, after Brexit, trade with the remaining EU Member States will be practical or sufficiently profitable to make it worthwhile.

As a possible indicator of things to come, I picked up a "tweet" yesterday from Sarah McCartney, who describes herself as a "perfumer". Tomorrow, she wrote, "we're shipping two boxes of my perfume to a shop in France. Not big business, but important for us".

As for the paperwork, it amounted to two labels and a quarterly VAT declaration. On the other hand, she revealed that, for the last six months her company had been trying to ship two boxes to India. On this, she commented: "42 forms so far - no progress".

Obviously, if traders are to face an avalanche of new "red tape", they need to know, in order to make their commercial decisions. But a search for detail yields alarmingly little detail, and next to nothing in the non-specialist media. The best I could find in the last few weeks was an article in Reuters, featuring Julian Sarkar and his Knutsford-based Zanos company.

Established in the year 2000, it claims to serves many aspects of the international speciality chemicals and ingredients market, with particular emphasis on the flavour and fragrance ingredients markets. It performs as a distributor, supplier, sourcing agent and consultant, with storage facilities across Europe including Hamburg, Rotterdam and Liverpool, working closely with several producers in India and China.

It its interview with Sakar, Reuters focuses on the "uncertainty of the situation", while recording that, while Sakar does not much like REACH, he would rather stick with the devil he knows than adapt to a new British system.

That seems to be a constant refrain from the chemical industry (and industries in general) in that, however much they dislike EU regulation, they are not at all keen on dealing with a dual system. Having to stick with REACH is far better than having to comply for the European market and then having a different system for the UK market and elsewhere.

But what is so illustrative about the Reuters piece is in its record of Sakar's reaction to Brexit. "We’ve had zero information", he says. "We've been told by the government this is where we are and this is where we would like to be. But the question is: what are they going to do?"

Even if the registration issue is resolved satisfactorily, however, potential exporters may not be out of the woods. From EUReferendum.com comments, we get Roger G who tells us there may be other problems.

For those to trade with the EU after Brexit, unless they are selling specialist chemicals, they will have to compete with suppliers from around the world that might be able to undercut the companies involved or are able to provide a wider supply (consolidation) of chemicals.

Roger G's company sells products that are generic and non-specialist. This means that once we are out of the EU, his company will have to compete with the wider world. The problem, he says, is not the competition but the fact that for most of our clients it is easier to order from within the EU than from without.

If they have to go outside, they will order from larger companies which are able to supply not just our particular products but a range of services which our company cannot provide due to scale. As a result, his company is moving to the Netherlands with the loss of 530 jobs to the UK.

For companies which survive the transition, they will either have to rely on their importers resident in the EU to register their products, which is a highly unsatisfactory situation for most, tying them to one customer, or they will have to appoint an "only representative" who must be a "legal person" or company established in the EU.

Germany's BASF estimates that managing REACH in a post-Brexit UK could cost it an additional €60 million a year – a small enough sum for a company worth €76 billion. For Julian Sarkar and his Zanos company, he will have to find around €50,000 a year to hire an "only representative", before other costs.

This are not huge sums, but the additional costs of re-registering the product inventory could be substantial. Information on the exact costs is sparse, adding to the uncertainty. Nor has the regulator, the European Chemicals Agency (ECHA), indicated how fast it is prepared to process the estimated load of 6,000 re-registrations, making the situation even murkier.

Adding still further to the litany of woes, the ECHA is unequivocal in stating that the UK will lose its access to the specialist scientific committees and participation in the decision-making networks involved in the administration and implementation of REACH and related regulations.

Participation in these networks, it rather brutally says, "would anyhow become immaterial as the United Kingdom will no longer have access to our databases or participate in our regulatory, enforcement coordination or other processes".

Losing our direct contact with the regulator is bound to have some undesirable effects, apart from making it more difficult to influence events. And all this adds to that "uncertainty" which is plaguing the Brexit experience.

More than anything, businesses need certainty to give them that all-important ability to plan ahead. And that is not what they are getting – not from the government, not from the media and not from industry representatives. And this is just one of a multiplicity of sectors which are having to suffer from a growing information vacuum.

Businesses should not be in a position where they are having to scavenge for the details they need to make their decisions. They deserve better. We deserve better.






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