Posted at 13 February 2018

How Are Brexit Talks Being Conducted

Paul Skade
By Richard Ludlam
Marketing Manager

Intrigued by all things engineering, as a youngster I originally looked to understand how things work then, how to make them work better.

After time in eng...

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Have you wondered how Brexit trade talks are going to be conducted? Are we, for example, going to take a sectoral approach or a broad-brush one-size-fits-all?

 

My well-informed sources tell me that a sector by sector approach is most likely. In other words, “It’s Tuesday, it must be chemicals”.

Now, this is good news, because chemicals are our second largest manufacturing sector, which means it’s likely to be prioritised along with aerospace and automotive and, with the clock ticking, being high on the list is important. God help you if you’re in textiles!

The problem with this sectoral approach is that it is likely to get bogged down in the minutiae. I envisage the following exchange across the negotiating table in Brussels between David Davies and Michel Barnier:

“Good morning Michel, I see its chemicals today. We’d like to focus on coatings, now I’d like to you to consider exempting them from your REACH regulatory regime.”

“Yes, it’s chemicals and no they must still comply. There can be no dilution of compliance in the Single Market.”

Sounding beligerent “I really must insist.”

Sounding aloof “Insist all you want, but it’s not happening.”

And on and on it will go. If it’s not coatings, it will be abrasives, polymers or flammables. Imagine this level of detail across automotive, aerospace, machine tools and pharmaceuticals and you can see why there is now real concern that there will be no deal in place by March 2019.

And make no mistake, the chemicals industry in the UK has a lot to lose if there is no deal. Exit from the Single Market would mean that manufacturers and exporters would no longer be recognised under REACH and would become non-EU manufacturers.

In turn, this would potentially mean additional measures and investment would be required to continue accessing the Single Market, not least re-registering each individual product.

In fact, the European Union’s own review estimated that each new registration would cost on average €70,000 with charges going as high as €400,000. And that’s before potential supply chain disruption costs and loss of contracts due to failure to supply are taken into account.

All the time the American, Middle Eastern and Chinese chemicals manufacturers, continue to push into European markets with competitively priced products due, in many cases, to low wage costs.

The chemical sector is one of the ‘jewels’ in the UK’s manufacturing crown, but we need to remember that 60 per cent of its exports go to the European Union. It needs protecting and the very least we need from the government is a transitional arrangement that allows manufacturers to get the proper accreditations and registrations in place before we go through the exit door.

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