UK government fails to give assurances on hard Brexit in chemical meeting

UK government fails to give assurances on hard Brexit in chemical meeting

Officials from the UK’s Department for Exiting the EU (DExEU) met this week with the chemical industry’s representatives to analyse post-Brexit scenarios but failed short to reassure them the sector will get access to the single market once the country leaves the bloc, an executive at trade group Chemical Industries Association (CIA) said late on October 26, 2016. Thus, the meeting was held before the verdict of three judges of the High Court in London on November 2, 2016 that the British government does not have the authority to proceed with the UK’s exit from the European Union without the approval of parliament. A legal challenge to the prime minister’s power to trigger article 50, the clause that formally begins Brexit, has proved controversial since being launched in the aftermath of the EU referendum vote earlier this year

The government’s representative, Robin Walker, said DExEU is seeking to limit uncertainty while the negotiations to leave the EU take place, possibly two years after the UK’s notifies to the bloc itsintention to leave, which will happen by March 2017.

“My message to the industry is that Britain is the same outward-looking, globally-minded, big-thinking country we have always been, and that leaving the EU offers us an opportunity to forge a new role for ourselves in the world,” the minister told CIA, along with representatives of some of the largest chemicals companies active in the UK, at a meeting on 26 October.

“I look forward to working with the chemical industry, as we embark on this historic and positive moment for our nation and get the best deal for Britain’s businesses and manufacturers,” he added.

However, assurances on access to the single market post-Brexit were not given by the minister. Leaving the 500 million person-strong EU single market has come to be known as a ‘hard Brexit’, the worst-possible scenario for chemicals, according to both CIA and the European Chemical Industry Council (Cefic) earlier this month.

“The hard Brexit is one of the possible outcomes [of leaving the EU] but today’s [26 October] meeting was a good opportunity to highlight how significant an impact that could have in the UK chemical sector,” said the CIA’s director for energy and competitiveness, Nick Sturgeon.

“There is a recognition [from the government] about how the chemical industry needs the brightest and the best of workers it can source, and we explained how much we rely on skilled people [coming from other EU countries].”

Automatically, a member of the EU single market also accepts the free movement of people within the bloc – anyone from a member country who finds a job elsewhere in the EU has the right to take it, without additional work visa requirements.

In the UK, following years of manufacturing decline, enrolment in vocational training and engineering degrees has fallen, causing a shortage of skilled – and, to certain extent, unskilled – workers in many sectors.

Although the controversy about how migrants from the rest of the EU impacts on salaries of those living in the UK made much of the referendum campaign in June, on the other hand many services and industrial sectors in the UK could not function without the input from EU workers moving to the its shores, Sturgeon said.

“On the science [engineering] side, for instance, good examples come from contractor companies taking part in big [infrastructure, construction] projects – you need a wider pool of labour than that available in the UK,” said Sturgeon.

“We haven’t got any answer on that. But we were reassured about how the government is listening to the industry’s position.”

Energy and the regulation were two other issues discussed at the meeting. Other attendees included representatives of INEOS, BASF, Johnson Matthey, Croda, Thomas Swan and Co, Biorenewables Development Centre, Fujifilm Diosynth Biotechnologies, Shott Trinova and Oxford Biotrans.

“On energy, we need access to the European single energy market, and we also spoke about an earlier development of shale gas in the UK while minimising the cost of climate change policy. Whether with Brexit or without it, we need to look at ways on how to meet the carbon budget which caps UK emissions while analysing opportunities to lower its costs,” said Sturgeon.

“We spoke about Reach as well and we explained the need for maintaining it – of course, we have to work under Reach and [post-Brexit] we need continued compatibility, so even after the departure from the EU there will be mutual recognition [of chemical products between the UK and the EU].”

The DExEU was formed following the result of the referendum on EU membership held in the UK on 23 June, which led to the resignation of the Prime Minister David Cameron.

In July, the UK’s Conservative party chose Theresa May as his successor, prompting a government reshuffle and the creation of DExEU.

The UK’s chemical industry, which exports around 60 % of its production to fellow member countries within the EU, said access to the tariff-free single market was key for operations following the referendum, as well as the ability to hire workers anywhere in the EU.

The UK government has embarked in a series of meetings with different economic sectors, and CIA’s Sturgeon said chemicals were at the forefront of the government’s priorities as the industry has become one of the main manufacturing exporting sectors in the UK.

However, the UK government has sent out contradictory messages. DExEU’s chief, Aecretary David Davies (in the UK, secretary is the highest rank at a ministry, or Department, while ministers are below the secretary) said a few weeks back in Parliament permanence in the single market was unlikely once the UK left the EU.

He was soon after corrected by his own boss, premier May, who has yet to give a clear message on the exit strategy the UK is to pursue.

After her speech to her party’s conference on October 2, political analysts understood she was supporting leaving the single market altogether, or ‘hard Brexit’, but she denied that extreme later on.

The lack of clarity has caused the UK pound to lose ground against other major currencies during past weeks, while the UK’s Office for National Statistics (ONS) confirmed on Thursday a slowdown in the economy during the July-September quarter, immediately after the EU referendum, compared to the preceding quarter.

www.icis.com


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