ECR0069

Written evidence submitted by Johnson Matthey Plc

Johnson Matthey is a British multinational company specialising in chemicals and sustainable technologies. Our business provides high quality, value adding products and services to the automotive, petrochemicals and pharmaceutical industries.

Johnson Matthey has a presence in over 30 countries and employs around 13,000 people worldwide; 53% of our employees work in Europe, 25% in North America, 17% in Asia and 5% in other parts of the world.

In the UK our presence is nationwide: we have major manufacturing operations in Royston (near Cambridge), Clitheroe, Swindon, Edinburgh and Dumfries; offices in London, Teesside, Cambridge and Milton Keynes; and corporate R&D centres near Reading and on Teesside. 

Summary

Johnson Matthey are pleased to have the opportunity to respond to this inquiry and would like to signal our willingness to give oral evidence.

The chemicals industry is the UK’s largest manufacturing exporter, with exports of nearly £50bn each year (Chemicals Industry Association report). Therefore it is important that the impact of Brexit on the sector is understood and is given due consideration.

Whilst coming out of the single market presents positive opportunities for Government, the current EU regulation in relation to the chemical industry is considered the gold standard globally. We recognise that as a result of leaving the single market we will need to establish a UK equivalent of the European Chemicals Agency (ECHA) but we would argue that this body should not diverge from REACH and should gain mutual recognition. The benefits of this approach are:

-          Maintaining our current levels of global trade – the chemical industry are huge exporters and Asia have modelled their chemical regulations on EU -REACH.  

-          Protection for consumers and the environment - currents standards have been designed to protect both.

-          It allows us to remain competitive – current regulation was designed to enhance innovation and competitiveness of the EU chemicals industry.

-          Save the UK government the resource associated with developing an alternative model.

Consultation response

Transposition

• What particular challenges will the UK Government face when it seeks to transpose REACH into UK law through the “Great Repeal Bill”?

Currently the European Chemicals Agency (ECHA) oversees the implementation and management of the REACH Regulation, in liaison with the Commission and the Member States. Following confirmation from the

Prime Minister that we are leaving the single market we will need to establish our own chemicals regulatory body. As we export a significant amount to the EU, the main challenge -at least in the short term- will be keeping the equivalent standard and seeking some form of mutual recognition for a UK regulation body.

The second issue is that whilst REACH is a standalone piece of legislation, it has touchpoints with other EU regulations such as the Classification, Labelling and Packaging Regulation and the Biocidal Products Regulation. Impacts of a “UK-REACH” on these regulations, as transposed into UK law, would need to be carefully considered in parallel.

• How far will the UK’s ability to effectively transpose REACH depend on negotiations with other Member States and the nature of the UK’s future relationship with the EU (e.g. Single Market membership)?

Based on our recommendation that we seek to establish an equivalent to the ECHA, a close relationship with the EU will then be required to gain mutual recognition of this UK equivalent body.

Part of REACH entails data sharing between registrants in order to establish if a substance is potentially hazardous to health or the environment, provide information on safe use, and alerting users to the presence of substances of concern. Comprehensive transposition of EU-REACH makes sense to ensure this is able to continue, this is most likely if the UK and EU agree mutual recognition of existing and future registrations.

At least in the short-term the simplest approach is to transpose EU-REACH, as is, and to agree with the EU-27 that the UK can rely on the ECHA machinery until a UK equivalent is established.

• What role should the devolved administrations play in setting the regulatory environment in this area? How should any divergences in policy be managed?

As a highly regulated industry the most efficient and cost effective model for both government and business would be to have a regulatory body which covers the whole of the UK. Any divergence of policy in the UK would be extremely costly for government and burdensome for business.

Administrative, Policy and Regulatory Implications

• How should administrative and enforcement responsibilities, which are currently being carried out by the European Commission or EU Agencies (such as ECHA), be transferred to domestic bodies?

Currently, responsibility is split between the ECHA and member states. The ECHA carries out completeness checks on submitted dossiers and, furthermore, in depth checks are carried out by member states depending upon national concerns.

On the ground, enforcement is carried out by the competent authorities of the individual member states. Currently this is the HSE in the UK. However, there is an appeal structure with the final

authority lying with the European Commission. Therefore the UK would need to set up a domestic appeal structure. We would advise appeals would be made to the HSE and then via the courts.

Replication of this model in domestic bodies will require significant additional resource and potentially up-skilling.

What are the likely implications for industry in terms of regulation, environmental and safety standards?

REACH registrations will have been submitted for all substances manufactured or imported in quantities greater than one tonne per annum up until 2018 and before the UK leaves the EU.. Therefore any decision to deviate from the existing framework would be hugely damaging to business.

With regards to the question, if the option we’ve outlined is agreed there will be a low immediate impact on environmental and safety standards.

• Does the UK Government have the requisite expertise and resources to take on these tasks?

This would depend on whether a mutual agreement was attained with Europe regarding REACH. A full blown replication of an ECHA type organisation and the REACH-IT interface would require considerable resources. It is difficult to say at this point whether the UK Government will have the skill base to take on this task.

Future of Chemical Industry

• What scope is there for the UK to pursue a divergent approach to chemicals regulation from the EU once the process of leaving has been completed?

As outlined above we believe that it is not in the Government’s interest to diverge from EU regulation in this area due to the international nature of trade in chemicals. EU-REACH has provided some legal certainty and ensured a “level playing field” in terms of chemicals control legislation within the single market, this has facilitated CAPEX investment decisions for multi-national companies over the medium term.

We would argue that given this it would be harmful for the sectors exports potential to introduce a divergent regulatory regime in the UK.

• What principles should a UK chemicals regulation regime follow?

The principles of REACH should be followed. However, if there is any deviation it should be that there is an emphasis on risk rather than hazard.

• What are the likely practical implications of having a UK-only chemicals regulatory policy for:

-          The Environment? Public Safety?

It is not possible to predict at this time as it depends on the model chosen but we are happy to work with the government on this issue.

-          UK Industry

There will be an additional workload and cost pressures in order to continue to supply to EU-27, maintain compliance, meet regulatory requests for additional information, respond to proposals to Authorise etc., as well as gearing up to comply with the UK-only chemicals regulation.

• What key features should any new regime have to ensure these are not compromised?

As close a replication of the current EU REACH as possible, with aligned deadlines in the UK if restrictions or authorisations are proposed/agreed.

January 2017