Brexit: “Coatings and ink producers are experiencing many more issues than anticipated”

Where do you see the challenges for paint and coatings producers after Brexit?

It was a relief of course to see a trade deal done at the 11^th hour, but coatings and ink producers are experiencing many more issues than anticipated – the most reported issues are increased costs of shipping; dealing with customs paperwork; problems shipping finished coatings, paint or inks to the EU from the UK; price increases of imported raw materials to the UK; understanding rules of origin; delays to shipments of raw materials coming into the UK; impact of rules of origin on tariffs; shipping coatings/inks to Northern Ireland and the lack of availability of imported raw materials from the EU to the UK. Interestingly, more than half BCF members are suffering major issues, despite having spent significant time and money preparing for Brexit.

We also expect additional and even bigger problems in the medium term, with the introduction of new, independent UK chemical regulations. In particular, the new UK REACH regulations will require a whole new database of substances being populated from scratch with full data dossiers. The costs of data acquisition and associated administration fees will cost the chemicals sector around £1 billion. These costs will inevitably filter downstream to the coatings sector. What’s more, there is a real possibility that these extra costs will mean some substances will simply not be registered in the UK REACH database as it will be deemed uneconomic to do so. This will mean that downstream users of chemicals, like those in UK coatings companies, may well find they do not have access to the full range of substances currently available to them with which to make their products.

75% of BCF member companies see UK REACH as having a negative effect on their businesses, therefore we are lobbying the UK Government for changes to the UK REACH system to try to mitigate some of the additional burdens on business. Finally, UK manufacturers will now need to comply with EU REACH, CLP, BPR and other EU regulations as third country businesses with all the additional burdens that requires. In fact, the same is true for EU companies dealing with new UK equivalents of REACH, CLP and BPR. So, a huge amount of extra bureaucracy to deal with for the industry across the board.

How do you rate the Free Trade Agreement between the UK and the EU?

It is a very basic, thin deal and a long way from the Customs Union and Single Market we have been used to operating in for so long. We were pleased that the FTA saw zero-tariff, zero-quote trade between the UK and EU. However, this is only for goods meeting strict rules of origin that prove the goods have been manufactured within the UK or EU. We are already starting to see examples of how this impacts on members’ business models regarding re-distribution of coatings or inks made in an EU member state, shipped to the UK and then re-exported to the EU (eg Republic of Ireland).

Some of the problems might be overcome with time, as everyone gets used to new processes and paperwork. However, the overall picture is that additional bureaucracy and associated costs on importing and exporting are here to stay, and will increase costs of doing business.

How will the BCF support its members?

We have been providing support for our members for the past couple of years helping them to prepare for Brexit and we continue to offer advice and guidance now that the transition period is over. We issue regular e-bulletins summarising latest government advice and guidance, hold webinars as tutorials and advice clinics, have set up a dedicated page on our website, and answer dozens of emails and phone calls a week to assist members with queries. We have also been lobbying the UK Government to make changes to UK REACH legislation as the way it is currently planned will significantly impact on downstream users of chemicals like those in the coatings sector.  For more information visit www.coatings.org.uk/brexit