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01.12.2016 | Webinar
Impact of Brexit on REACH
Riku Rinta-Jouppi Partner, Head of Global Compliance
Presenters
Keven Harlow Reachlaw Business Partner
(UK & Ireland)
Some technical advice for this webinar
Let’s make this webinar interactive:
1. You are able to send questions to us using chat, please do
that! We will answer your questions in Q & A, if possible.
2. Remaining questions you have been sending may be answered
after the presentation by e-mail.
3. All questions – unless you claim them as confidential (“this is
CBI”) - will be included in a separate Q&A document, which
you can order from [email protected]
4. In case you want us to contact you after the webinar for Q&A,
please send an e-mail to [email protected]
AND IN ANY CASE PLEASE SEND US FEEDBACK, THANK YOU!
3
What we do? We provide global regulatory compliance and
environmental sustainability services to ensure market access and
operational sustainability for global businesses
KEY FACTS ABOUT US
Established in Helsinki
Offices in Brussels, New
Delhi and Istanbul
30+ toxicologists, chemists,
lawyers, socio-econ.
analysts, business and
environmental specialists
20+ local partners in
Europe, Asia, Latin-America
and the USA
350+ REACH registrations by
2010 deadline, 5% /all OR
Language support in
10+ different languages
eSpheres investor
More info about Us at:
www.reachlaw.fi
SERVICE AREAS
Global chemicals regulatory
compliance, e.g.
We prepare the required
dossiers to authorities,
SDSs, labels and provide
related business strategy,
legal and monitoring
support.
Provide Outsourcing
solutions for chemical
compliance management
Supply chain compliance
management tools:
www.compliantsuppliers.com
OUR CLIENTS
More than 300 customers
from 40+ countries, from
Fortune 100 companies to
SMEs.
Major industries served:
Oil, chemicals, specialty
chemicals, metals,
space sector and other
downstream users (DU)
industries, etc.
Our customers are
manufacturers, importers,
traders, DU´s, industry
associations and
governmental
organizations.
REACH CLP
Biocides Turkish
Compliance
K-REACH China REACH
REACHLaw in brief
Disclaimer
AGENDA
1. Brexit- Background and key negotiation points
2. REACH options on the table for the UK
3. REACH status of UK companies after Brexit
4. Implications for Only Representatives
5. Conclusions
6
Understanding Brexit Realities
• Brexit will be an extended transitional process, not a single event
• Certain ‘Hard’ Brexit options involve substantially more costs
than others
• No cake, terms upon exit will not be better than as member as no
substantial value created for either party from the separation
• There will be a “loss of rights” upon exit for the EU rights
that cannot be converted into UK national law
High Court Decision: Parliament to Vote on A50,
Judgment Includes Analysis of “Loss of Rights”
03/11/2016 Judgment R Miller v. Secretary of State for Exiting the EU:
Categories of rights arising under the European Communities Act
1972 and EU law (and now to be subject to Brexit negotiations):
Category 1: Rights capable of replication in UK domestic law (eg.
Working Time Directive, but without right of reference to EU courts)
Category 2: Rights enjoyed in other member states of the EU (eg.
free movement of persons, capital, goods and services, right of
establishment)
Category 3: Rights that could not be replicated in UK domestic law
(eg. rights of reference and participation as member of “EU club”)
Long Summer After Referendum: impact limited,
but uncertainty & difficult trade-offs anticipated
“a trade-off between securing a deal as quickly as possible to reduce
uncertainty in the short term, and securing the best possible deal
for the U.K. to minimize the economic costs of exit over the long
term.”
UK Treasury
”There are actually two negotiations. First you exit and then you
negotiate the new relationship, whatever that is.”
C.Malmstrom, EU Trade Commissioner
Exit timetable is still uncertain, FTA negotiations
can only start upon agreement on terms of exit
• The clock only starts ticking when Article 50 TEU notice is given
• Exit upon entry into force of Withdrawal Agreement or 2 years
from notification
• Now the High Court judgment not to allow launching Article 50
process without full debate and vote by the parliament will be
appealed by the government, further delay before A50 process
• On the other hand, the exit process can’t wait forever as further
delay creates significant uncertainty
• No agreement on Free Trade Agreement (FTA) with the EU legally
necessary for exit from the EU, therefore it is possible that a there
is a period during which trading takes place under WTO rules
UK Political Process and Positions So Far, 2-5
October, Birmingham Tory Party Conference
“Article Fifty – triggered no later than the end of March [2017].”
“A Great Repeal Bill to get rid of the European Communities Act –
introduced in the next Parliamentary session.”
“Our laws made not in Brussels but in Westminster.”
“Our judges sitting not in Luxembourg but in courts across the land.”
“The authority of EU law in this country ended forever.”
“Let’s state one thing loud and clear: we are not leaving the European
Union only to give up control of immigration all over again and we are
not leaving only to return to the jurisdiction of the European Court of
Justice. That’s not going to happen.”
PM Theresa May
UK Unofficial “Red Lines” (No Compromise),
2-5 October, Birmingham Tory Party Conference
“No contribution to the [EU] budget”
“No jurisdiction of the European Court of Justice”
“The end of Free Movement”
“British laws made in our sovereign parliament”
Stewart Jackson, aide to David Davis,
Secretary of State for Exiting the European Union
Hardening Rhetoric: Limitations, Costs & Blocks
Next steps: UK’s model for future relationship
• The new prime minister needs to agree and present a model for
relationship that the UK is seeking with the EU in the future
HM Government: Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016
Next steps: Different groupings available
HM Treasury analysis: the long-term economic impact of EU membership and the alternatives, April 2016
Next steps: EU sets the scene for two sets of
negotiations
• Full rights and obligations apply to the UK as EU member until exit
• Withdrawal to take place in an orderly fashion, Article 50 to be
activated as quickly as possible
• No negotiations of any kind before Article 50 notification
• ”Any agreement, which will be concluded with the UK as a third
country, will have to be based on a balance of rights and
obligations. Access to the Single Market requires acceptance of all
four freedoms”, EU Summit Statement, 27th June 2016
• FTA with the EU comes at the back of the queue: ”Britain will not
be able to start talks on a new trade arrangement with the EU
until other aspects of its exit have been settled”, Cecilia
Malmstrom, trade commissioner, 1st July 2016
• Australia: EU takes priority, formal FTA negotiations with UK can
start in about 2,5 years after exit from EU is complete
Negotiators and contact persons are appointed
Jean-Claude Juncker Didier Seeuws Guy Verhofstadt Andreas Herdina
President Head Brexit Taskforce Chief negotiator ECHA
European Commission European Council EP contact person
Managing the UK-EU relationship via bilateral
agreements? Switzerland has more than 120
AGENDA
1. Brexit- Background and key negotiation points
2. REACH options on the table for the UK
3. REACH status of UK companies after Brexit
4. Implications for Only Representatives
5. Conclusions
19
EEA Scenario: Still viable to stay as OR in the UK?
• Still-in-REACH Scenario - EEA
– Very few only representative registrations from Norway, Iceland or
Liechtenstein compared to 2249 from the UK (relative position 1.)
EEA State No of OR Regs
31.12.2015
Percentage of
total
Relative position
Norway 10 0.10 25.
Liechtenstein 1 0.01 29.
Iceland 0 0 30.
ECHA REACH Registration Statistics by Country, 31.12.2015
AGENDA
1. Brexit- Background and key negotiation points
2. REACH options on the table for the UK
3. REACH status of UK companies after Brexit
4. Implications for Only Representatives
5. Conclusions
21
What will happen with UK companies and
subsidiaries in UK and their REACH compliance?
• Two main scenarios
• Hard or Clean Brexit – WTO rules – NO TRADE DEAL IN 2 YRS
– If no FTA in place after 2 year deadline after Article 50 notice given
– Orderly exit from the EU but nothing to replace it with
– Interim arrangements? Only available option would be to join EEA
• Soft Brexit – Negotiated agreement
– Continued access to EU Single Market
- EU law still applies
- Budget Contributions etc.
– REACH still in force in some form?
Brexit risk analysis for subsidiary acting as OR
Non-EU
suppliers
Your company
Group
EU – supplier
Substance A
Your OR /
subsidiary
Independent
importers
EU
Non-EU
Your company
(Group)
Independent
Non - EU
Manufacturer
Non-EU
suppliers
1c.
1a.
2.
3.
4.
EU - customers
5.
1b. Scope: topics to be covered
1a. Appointing Parties, substances, legal entities
1b. Appointment Process
1c. Appointed Party (OR)
2. Independent non-EU suppliers
3. Indirect export
4. Independent EU importers
5. Potential EU suppliers, reimport
6. New ”REACH counterparts/liabilities/risks”
7. New liabilities against your customers
New counterparts
ECHA, SIEF,
Consortia.... 6.
7.
Purpose of Brexit Risk Analysis
• To understand the legal basis for OR operation in different Member
States
• Identify all relevant relationships, liabilities and risks involved with
Brexit
• To find ways to manage risks, so that the probability for future
losses due to Brexit will be as low as possible
• Action plan for management
Structure of Brexit Risk Analysis:
Gap Year(s) from REACH for the UK?
1. Identification of relationships and liabilities of OR
2. Defining the legal base of OR (EU & local legislation)
3. Identifying possible Brexit risks and exposures
4. Development of methods to protect against risks
5. Recommendations: action plan
1. Identification of relationships and liabilities of OR
2. Defining the legal base of OR (EU & local legislation)
3. Identifying possible Brexit risks and exposures
4. Development of methods to protect against risks
5. Recommendations: action plan
1. Identification of relationships and liabilities of OR
2. Defining the legal base of OR (EU & local legislation)
3. Identifying possible Brexit risks and exposures
4. Development of methods to protect against risks
5. Recommendations: action plan
EXIT NEGOTIATION PHASE POSSIBLE INTERIM PHASE NEW FTA PHASE
AGENDA
1. Brexit- Background and key negotiation points
2. REACH options on the table for the UK
3. REACH status of UK companies after Brexit
4. Implications for Only Representatives
5. Conclusions
26
For non-EU manufacturers
• Select competent new OR
• Consider the event of OR change in contractual provisions
• Ask for REACH expert advice if consent is refused by previous OR
• Timing of change of only representative?
Change of Only Representative
Take home messages
27
Change of Only Representative
Non-EU manufacturer
(legal entity according to
non-EU national law)
OLD OR
NEW OR
NEW OR
appointment
letter
OLD OR
agreement to
transfer of
pre-
/registrations
Termination of
OR agreement
with OLD OR
4. inform EU
importers about
OR change
3. REACH-IT
”hand-shake”
procedure
Consequence: the agreed pre-registrations, registrations, notifications and
inquiries are transferred from OLD OR to NEW OR via a legal entity change
28
AGENDA
1. Brexit- Background and key negotiation points
2. REACH options on the table for the UK
3. REACH status of UK companies after Brexit
4. Implications for Only Representatives
5. Conclusions
29
General Conclusions
• Timeline and model of Brexit are still somewhat open questions
• Currently the UK is compliant with REACH so as an individual
question it would be in the UK’s long term interest find a way to
continue with REACH and with full access to the single market
• This may well be in conflict with the UK’s aim to limit immigration
and not be subject to EU law so only a bilateral FTA may be
available in practise
• As a FTA can only be concluded with the UK as a third country
there would be likely to a period of time during which the UK is
trading with the EU under the WTO rules without any preferential
treatment
REACH Specific Conclusions
• REACH registrations, authorisations and notifications may not be
valid after Brexit in the UK so an OR change could be an option
• Companies outside the EU reliant on UK REACH importers may also
need to seek alternative arrangements to access the EU
• UK manufacturers and importers industry organisations should
lobby for their members’ REACH rights to be protected in the
coming negotiations but continuation of REACH being outside the
scope of EU law is hardly possible
• Changes to current arrangements should be based on a Brexit risk
analysis that takes into accout the possible ”Gap Year(s)”, the
interim period after exit when a free trade agreement would not
yet be in place between the EU and the UK
Presenter: Riku Rinta-Jouppi
Partner and Head of Global Compliance
+358 40 773 8143
REACHLaw Ltd.
Vänrikinkuja 3
02600 Espoo
Finland
www.reachlaw.fi
www.reachlaw.fi
Anticipate
&
plan for
www.reachlaw.fi
REACH role(s):
• EU substance importer (I)
• EU substance manufacturer (M)
• EU only representative (OR) of a non-EU substance manufacturer
or a combination of these roles…
Article 8: “Only representative of a non-Community
manufacturer”
REACH impacts only on legal entities based in the 31 countries of
EU+EEA (‘EU’)
Only Representative: back to basics:
www.reachlaw.fi
Article 8 applies
Only representative of a non-Community manufacturer
1. A natural or legal person established outside the Community who manufactures a
substance <…………….> that is imported into the Community may by mutual agreement
appoint a natural or legal person established in the Community to fulfil, as his only
representative, the obligations on importers under this Title.
2. The representative shall also comply with all other obligations of importers under this
Regulation. To this end, he shall have a sufficient background in the practical handling of
substances and the information related to them and, without prejudice to Article 36,
shall keep available and up-to-date information on quantities imported and customers
sold to, as well as information on the supply of the latest update of the safety data sheet
referred to in Article 31.
3. If a representative is appointed in accordance with paragraphs 1 and 2, the non-
Community manufacturer shall inform the importer(s) within the same supply chain of
the appointment. These importers shall be regarded as downstream users for the
purposes of this Regulation.
www.reachlaw.fi
Remember…
An OR does not assume the obligations of the non-EU
manufacturer; rather, the OR takes over the REACH
obligations of the EU importers from that non-EU
manufacturer.
Each EU-based importer becomes a downstream user of
that OR for the substance they import from that named
non-EU manufacturer
www.reachlaw.fi
Why appoint an Only Representative (OR)?
Makes good business sense to appoint an OR
Why?
1. more control over the whole REACH process
2. centralised administration function
3. control of confidential and proprietary data/information
4. only one registration cost per substance
5. your importers become ‘downstream users’ of the OR
6. updating of registration info is easier
7. competitive advantage
www.reachlaw.fi
Country M I M/I OR
Germany 26% 27% 38% 16%
United Kingdom 7% 13% 7% 23%
France 11% 8% 9% 6%
Netherlands 4% 13% 7% 12%
Italy 11% 8% 8% 1%
REACH registration roles - % of EEA: (ECHA - May 2016)
M manufacturer
I importer
M/I manufacturer and importer
OR only representative of non-EU manufacturer
www.reachlaw.fi
Assume UK full exit from the EU – “hard Brexit”
1. No REACH obligations for UK legal entities
2. UK-based ORs can no longer operate
3. All existing UK registrations become ‘invalid’ (including those
submitted in 2018)
4. Dossier updates, evaluation, authorisation, restriction, new
substance registrations etc no longer apply to UK actors
www.reachlaw.fi
Hard Brexit (case study 1): Non-EU manufacturer looking to
support a 2018 registration
• Strongly advised to consider the EU-based OR route:
- releases your importers (customers) of obligations
under REACH
- maintains your control of CBI
- centralised registration administration
- cost effective
- competitive advantage
• Do not select a UK-based legal entity as your OR
• Plan before Brexit is finalised as registration deadline is only 18
months away (31 May 2018)
www.reachlaw.fi
Hard Brexit (case study 2): Existing UK-based OR
Can no longer act as an OR following Brexit, meaning that EU-based
importers relying on that OR registration are then non-compliant.
Action
• Non-EU substance manufacturer must nominate an alternative OR
located within the EU
• If pre-registration is needed then late pre-registration deadline is
31 May 2017
• OR-to-OR legal entity transfer before Brexit is finalized (or a new
registration by the new OR may be needed)
www.reachlaw.fi
Hard Brexit (case study 3): UK substance importer
• No EU-REACH obligations
• Can import substance/s from any manufacturer worldwide (subject
to UK import requirements)
• If subsequently exported to EU, REACH obligations will fall to those
EU importers in the normal way.
www.reachlaw.fi
Other considerations:
• If the UK OR is a lead registrant (LR) then the substance co-
registrants must agree an alternative LR based in the EU and
transfer the role to that new LR before Brexit is effected
• Data ownership disputes / discussions may arise
• Be informed and keep your value chain informed
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
The OR must also be my EU sales agent Any EU natural person or legal entity can
act as the OR
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
The OR must also be my EU sales agent Any EU natural person or legal entity can
act as the OR
I must sell through my OR Existing sales channels can be maintained
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
The OR must also be my EU sales agent Any EU natural person or legal entity can
act as the OR
I must sell through my OR Existing sales channels can be maintained
I must provide substance information to
all my importers
Information only provided to the registrant
– the OR
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
The OR must also be my EU sales agent Any EU natural person or legal entity can
act as the OR
I must sell through my OR Existing sales channels can be maintained
I must provide substance information to
all my importers
Information only provided to the registrant
– the OR
I can only sell to REACH registered
importers
You can sell to whomever you wish
www.reachlaw.fi
Some myths and realities of the OR role
Myth Reality An OR registers on behalf of the non-EU
manufacturer
The OR registers in his own right
The OR assumes the obligations of the
non-EU manufacturer
The OR assumes the obligations of the EU
importers
The OR must also be my EU sales agent Any EU natural person or legal entity can
act as the OR
I must sell through my OR Existing sales channels can be maintained
I must provide substance information to
all my importers
Information only provided to the registrant
– the OR
I can only sell to REACH registered
importers
You can sell to whomever you wish
New importers (customers) will need to
register
All future importers will be covered by the
OR arrangement
www.reachlaw.fi
Conclusions:
• Based on a hard Brexit, UK-based legal entities shall no longer
have EU-REACH obligations
• Biggest impact will be on existing, UK-based ORs
• A non-EU manufacturer using a UK-based OR needs to make
provisions to transfer to an OR based in another
EU country
• Plan in advance of Brexit to mitigate cost, admin and possible
supply chain disruption.
• In reality, a hard-, soft- or 3rd-Brexit option may result. Regardless,
start planning your Brexit REACH options and strategy now!
www.reachlaw.fi
THANK YOU
Dr Keven Harlow
REACHLaw ( UK & Ireland)
Phone: + 44 7800 85 0692
Email: [email protected]
REACH and Chemical Regulations Seminar in Baltimore, Maryland (USA)
5th and 6th of April, 2017
REACH 2018 | SVHCs & Authorisation | BREXIT | Toll Manufacturing | Only Representation |
Global Chemical Regulations | Case Examples