Aston Chemicals Ltd – Written evidence (FFT0009)
Aston Chemicals Ltd is a UK distributor of speciality chemicals. We import chemicals from all around the world into our UK headquarters and warehouses. We then supply these chemicals to manufacturers of Personal Care products in the UK, and also export them to manufacturers based in the EU. Over the past 30 years we have grown from nothing to a medium sized company, employing people in the UK and Poland, supporting UK manufacturers, and contributing to the UK economy and public services. The trade barriers caused by Brexit have already damaged our business and led to manufacturers leaving the UK. The future looks even more bleak without a sensible UK-EU trade agreement and close alignment on chemical regulations. The UK government’s current plans appear likely to cause immense disruption, increased costs, duplication of animal testing, the destruction of previously thriving industries, and the resultant failure of businesses, job losses, reduction in UK tax revenues and negative impact on UK public services, and the UK population. I am therefore speaking about the damage we see happening, and asking the House of Lords and Parliament to do everything possible to prevent Brexit from causing a long-lasting catastrophe for the UK.
For our business there are two main non-tariff barriers:
The UK government’s plan to leave the EU Chemicals Agency (ECHA) and require all chemicals to be REACH-registered again, under UK REACH, will cause huge additional costs and complexity for UK importers, exporters and manufacturers. This will lead to manufacturers moving out of the UK (this is already happening), some chemicals and products being unavailable to UK consumers, increased prices for all chemicals imported into the UK, and decreased competitiveness of UK companies exporting into the EU. It will also lead to the duplication of animal testing. UK REACH, in its present form, will cause insurmountable costs and problems for many UK companies, and will destroy many UK businesses. Some more detail on why this is, here:
Most REACH-registrations of chemicals used in the UK were conducted and paid for by the manufacturers of the chemicals. These manufacturers paid huge amounts of money and spent years organising the registrations, including many animal tests. The costs were worthwhile because the reward for registration was access to the whole EU market including the UK.
To give some background on the size of the costs involved:
Many of these manufacturers will not repeat the process for UK REACH because the UK sales alone do not warrant the duplication of expense and work. Their products will therefore not be available in the UK in the future. In some cases this will result in that chemical not being available for UK manufacturers, although it will still be available for EU manufacturers. In other cases it will mean a reduction in the number of suppliers of a chemical, hence reducing competition in the UK, and probably increasing prices. In all scenarios, the chemical manufacturers doing the UK-REACH-registration will need to recoup the costs of registration, and will do so by increasing the prices of their products in the UK.
Personal Care manufacturers who want to continue to use these chemicals to manufacture products for sale in the EU will move manufacture from the UK into the EU, where they are still available with no extra cost or work. Several of our customers are already doing this.
Aston Chemicals also currently exports chemicals from the UK into the EU. These chemicals are currently imported from around the world into the UK, before being exported to the EU. This allows us to consolidate freight and warehousing, and pay our Customs duties to the UK government. UK REACH will make this impossible, and instead all chemicals destined for the EU will bypass the UK and be shipped from around the world direct into the EU. The UK will lose their share of our Customs duties for these products, our UK freight and warehousing partners will lose our business, and administration work will move from the UK into the EU.
UK REACH will reduce the availability of UK-manufactured products, because their chemical ingredients are no longer available in the UK. In theory these products could be manufactured in the EU and imported into the UK. But, if UK-REACH works in the same way as current EU-REACH does, then any chemical brought into the UK with a total volume of over 1,000Kg per year, either in the form of the chemical itself or included in a finished product, would need to be registered. There would therefore still be a limit to the amount of the finished product that could be imported into the UK – this would lead to shortages in availability of all finished Personal Care products.
It is also clear that HSE and DEFRA do not have the budget or manpower to manage UK REACH. It also does not seem to have a working IT system yet, which would be necessary to manage thousands of UK REACH registrations.
The costs of UK-REACH are huge. Some include:
For Chemical Manufacturers:
UK Personal Care Manufacturers:
Delays at ports:
We ship products between the EU and the UK by road every day. Any delays cause disruption to freight organisation and manufacturers’ production schedules, cause additional costs, and reduce the competitiveness of UK companies compared to EU-based importers and manufacturers.
The U.K.'s draft Brexit border plan has no detail on how Dover-Calais lorry traffic would work after transition, and there is still no confirmed plan for how lorries will be able to seamlessly cross between the U.K. and EU. There also appears to be no working IT system, and not enough border personnel. This will affect the speed and cost of both imports and exports. The EU says it will impose full customs controls on UK exports from Jan 1. 2021, so reducing the speed and ease of exports from the UK to the EU, and again reducing the competitiveness of UK companies.
Additional checks and delays at borders will slow down UK manufacturers and increase their costs, making UK-made products less competitive in the EU and losing business for UK companies.
Aston Chemicals will address this problem by bypassing the UK as much as possible, and shipping products from around the world direct into the EU. However this will increase our costs and reduce our competitiveness versus our EU-based competitors, thus increasing the likelihood of business being lost by UK companies and gained by EU companies. It will also mean that we do not pay Customs duties to the UK government, and UK freight partners lose our business.
UK REACH, as detailed above:
For our business, leaving ECHA and replicating EU REACH with UK REACH is the most important technical barrier to UK trade with the EU. This could be addressed by:
OR, if the UK is determined to set up UK REACH:
The above proposals would save UK companies time and money, while ensuring continuity of supply of chemicals to UK manufacturers and making it unnecessary for manufacturers to move out of the UK and into EU-27 countries to ensure they can obtain the chemicals they need. It would also drastically reduce the number of employees needed by a UK version of ECHA and reduce the requirement for a very large and complicated new IT system to manage UK REACH registrations, (ECHA had 11 years to prepare for the implementation of REACH).
Technical Delays at Ports:
As described above.
As described above, ideally the UK should seek to remain a member of ECHA, and recognise all current and future EU REACH registrations. This would remove all of the costs to UK businesses listed above, and remove the impetus for manufacturing to move from the UK into the EU. It would also remove the need to duplicate animal testing for both current and future REACH registrations, which is likely to be popular with the public.
The UK should also seek to remain in the Customs Union and Single Market, to avoid the delays and costs associated with freight between the UK and EU after Transition.
As described above, the UK and EU could minimise costs and disruption by the UK remaining a member of ECHA. This would be extremely effective at removing all additional costs and disruption.
If the UK leaves the Single Market and Customs Union there is no process or documentation that can simplify the customs processes to be as fast and cheap as the system we had when we were in the EU. The most effective way to keep customs simple is for the UK to remain in the Customs Union.
We do not find existing customs facilitations to be helpful.
The absence of a UK-EU trade agreement would be a catastrophe for UK businesses. The non-tariff barriers would be as harsh as possible, without any further opportunity for collaboration with EU agencies in order to reduce their impact. UK businesses are not ready for this for several reasons:
26 June 2020