22 July 2016
Brexit: Consequences on REACH and Other EU Environmental Laws for the UK
Hong Kong traders, regardless of sector, may have been left reeling by the British referendum to leave the EU; the environmental law sector is no exception. The full impact of the referendum result will depend a great deal on the exit negotiations. Exit negotiations only begin when the UK formally initiates Article 50 of the Lisbon Treaty.
Theresa May’s appointment as Prime Minister on 13 July 2016 does make a triggering of Article 50 likely, as she campaigned for Conservative Party leadership with the promise that “we do this on the right timescale and we do it to get the right deal for the UK”. To provide a firmer timeframe, David Davis, the new Secretary of State for Exiting the EU, has said that Article 50 should be “triggered before or by the beginning of next year”. In any event, until the UK actually exits the EU, the latter’s chemical and environmental laws will continue to apply to Hong Kong goods exported to the UK.
The immediate impact of Brexit is the reduced influence of the UK in EU institutions. Britain’s permanent representatives working in the Council of the EU have already been advised to “actively intervene less” in meetings. In the European Parliament consideration of the “circular economy” package has been delayed, and the European Chemicals Agency (ECHA) has gone as far as to appoint a Brexit ‘contact point’ for British staff and companies. Every area of environmental law is impacted by Brexit, but, among others, three areas particularly reliant on EU legislation are: chemicals law compliance (REACH, CLP, etc.), waste management (WEEE, batteries, packaging, etc.), and climate change regulation.
If the UK stays part of the single market through continued membership of the European Economic Area (EEA) it will continue to be required to implement REACH. The UK would remain in the existing single market for chemicals and maintain its REACH registrations, but the UK would lose the ability to take part in EU decision-making.
In the meantime, the final deadline for the REACH registration of existing chemical substances, manufactured in or imported into the EU in annual volumes between one and one hundred tonnes, is 31 May 2018. It is fully expected that registrations will need to be completed by UK companies to continue trading on the single market until Brexit is finalised, even though these registrations may end up being deactivated in the future. Other ongoing REACH obligations, e.g., in relation to Substances of Very High Concern (SVHCs) and restrictions, will also continue to apply.
In the event that the UK leaves the single market, the REACH Regulation, which is directly applicable in all EU/EEA Member States, would no longer apply. As with other non-EU manufacturers, UK-based companies would have to get their importers or newly appointed only representatives (ORs) in the EU or EEA to register their substances. In consequence, UK manufacturers may have to restructure their supply chains to enable compliance and will have to supply all relevant information and documentation needed for registration. For Hong Kong traders who have appointed an OR in the UK, these arrangement will most likely need to be reassessed. This is because ORs have to be established in an EU/EEA Member State. If the UK joins the EEA agreements, the OR option would remain.
Should REACH no longer apply in the UK, the validity of REACH-registered manufacturers, importers and ORs is unclear. It also remains to be seen whether the around 5,000 REACH registrations that have been made by companies in the UK will be deactivated and replaced by those of importers or ORs in the EU.
If the UK develops a replacement national chemicals policy, then it might be possible to reintroduce substances that had been phased out in the EU, providing a new market for Hong Kong traders. Some manufacturing companies in the UK, particularly SMEs, are keen to see their REACH administrative burdens reduced.
As regards waste management, EU legislation is prominent in this sector. Recycling targets (such as in the case of waste electrical appliances), the waste hierarchy and definitions of waste are all derived from EU regulations. The UK’s waste management sector is strong and includes significant exports of recyclable material to other common market Member States. Given the UK’s current favourable position it is assumed that the government would wish that to continue and would not drastically alter waste management law following a Brexit. Questions have, however, been raised about compliance with recycling and waste reduction targets in the long-term as this could undermine planning and investment in waste infrastructure.
As for climate change legislation, the UK government has its own legally-binding climate change (emissions reduction) targets, through the Climate Change Act of 2008, and its own carbon reduction schemes, such as the climate change levy and CRC Energy Efficiency Scheme. It is generally considered that these are unlikely to change.
Some Hong Kong traders in renewable energy may be concerned about the UK’s obligations towards international climate change measures, concerns stemming from Theresa May’s decision to dissolve the Climate Department. However, many see it as a purely cosmetic change as the portfolio has been given to the new Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, a published supporter of the “low carbon economy”.
In conclusion, while EU environmental law is expected to continue in the UK for the short-term, a great deal of uncertainty has been caused by Brexit. Many environmental groups, which campaigned for the UK to remain in the EU, fear deregulation and an abandoning of climate change goals. However, given the large number of businesses and industries which benefit from the single market, remaining in the EEA is a likely negotiation goal for the UK. Consequently, if the UK were to have a new arrangement, similar to Norway, it would be bound by many of the same EU environmental protection laws and regulations used today.