The UK's vote last Thursday (June 23) to quit the European Union (EU) creates deep uncertainty over the shape of future plastics industry regulations in Britain. The same applies to EU market access for British plastics companies or exporters from the rest of the EU wanting to target British companies and consumers.
Victory by the ‘Leave' side in Britain's in-out referendum enables the UK government to kick off an exit process by invoking Article 50 in the Treaty on European Union, which gives notice that member state wishes to leave.
Assuming Article 50 is invoked, and only a serious political crisis would prevent this, Britain would have two years to renegotiate its relationship with the EU, during which time existing EU legislation would stay in force.
This ranges from the EU chemical control system REACH, excise duty controls, food health claims, plastic packaging content rules, packaging and packaging waste legislation, controls on nano-materials, research spending programmes, plastic bag usage rules, water pollution legislation, and much more.
It is up to the UK to decide when to request withdrawal, so that two year clock has yet to start clicking, and it maybe some months before Britain makes its formal Brexit application.
Once it has, then the UK must choose what kind of relationship it wants with its former EU partners. One option would be for Britain to apply to join the European Economic Area (EEA) – which currently includes non-EU members Norway, Iceland and Liechtenstein. This EU halfway house system could limit the economic impact of a Brexit. The UK could protect its food markets (and hence the plastics packaging they use) – although that freedom is prescribed for some manufactured foods.
Also, the UK could not raise tariffs against EU non-food exports.
The quid pro quo, is that the EU would be able to raise duties against UK food and drink exports, but not non-food exports. And Britain may baulk at this choice as non-EU EEA members have to pay into the EU budget to get access to non-food elements of the EU single market, including plastics and plastic goods; have no votes on the EU Council of Ministers and European Parliament; and other EEA countries would have to accept Britain as a member – as this includes other EU members states, upset over Brexit – British EEA membership maybe refused.
Another option would be following Switzerland and negotiating bilateral trade deals with the EU. But the Swiss usually have to implement EU rules as the price of such deals. And they are struck only where the EU wants to grant the Swiss market access – so duties on UK plastics and plastic products exports to the remaining EU could well be erected.
Another quandary would be the fate of EU trade deals that Britain is already part of – such as the free trade agreement with South Korea; those that are pending ratification – such as the deal with Canada; or those under discussion – such as the Transatlantic Trade & Investment Partnership (TTIP) with the US. The Canadian deal would have to be renegotiated as regards the UK, a process that maybe slower than with the rest of the EU – giving continental manufacturers better access to the Canada market. The US has already said that Britain would be at the back of the queue for a trade deal with America, long after TTIP is concluded with the rest of the EU. The US Trade Representative, Ambassador Michael Froman, has already said that “the economic and strategic rationale for TTIP remains strong,” although the US is evaluating the impact of the United Kingdom's decision on TTIP.”
And previously approved deals such as with South Korea would cease to apply after the UK's two year cooling off period, unless the South Koreans agree continued market access. They may want to renegotiate with the UK and could wait until Britain loses its Korean market access through the EU deal.
Another uncertainty is over whether the UK will implement EU plastics-related legislation that has already been approved by EU institutions, but where the deadline for following these laws has yet to pass. Given Britain intends to quit and the European Court of Justice (ECJ) could no longer order the UK to comply on pain of huge daily recurring fines, there is doubt whether the British will implement rules it may not like. One potential issue could be the draft EU regulation that would tighten limits set for bisphenol A (BPA) in plastic food contact materials; another would be the law curbing the use of thin plastic bags in the EU by at least 80% by 2019; and there is the EU regulation (EU) No 1169/2011 on the food and drink information for consumers. It insists that all pre-packed food and drink products sold within the EU must display nutrition information in accordance with the new rules by December 2016. Another major question will fall on British participation in the upcoming 2018 registration round under REACH, for chemicals manufactured in or imported into the EU in quantities of between one to 10 tonnes per year. Will the UK government insist on British company or importer participation, and will it allow companies to participate on a voluntary basis?
Will Britain enforce any of these new rules? Only time will tell.