ILMA Compoundings - March 2020 - 15

the only standard. That does not require wholesale abandonment of the EU-based laws. For the next 11 months,
Parliament and regulatory bodies must identify the laws
they want to tackle and implement the current EU-based
laws as their own. It is impossible to predict which laws
will change, but two major categories will soon take center
stage and will be key to the interests of the U.S. lubricant
industry, among others.

The remainder of this calendar
year will be spent balancing
the need to protect U.K. industry
from EU competition and balancing
the need to foster profitable export
trade to incumbent member state
customers of U.K. businesses."
First, U.K. international trade policies and standards are
now highest priority. These will also be the most complex
and controversial. Currently, the U.K. economy is buoyed by
tariff-free commerce with other EU member states. That will
end Dec. 31. The remainder of this calendar year will be spent
balancing the need to protect U.K. industry from EU competition and balancing the need to foster profitable export trade
to incumbent member state customers of U.K. businesses.
This landscape is currently tariff-free, and the points of competition within key industries are well-known. The complexity
will lie in finding a rational starting point that avoids risk of
major change to current market dynamics and relationships.
Failure in this area can take many forms, but the failure to act
with some form of tariff/trade policy will cause U.K. import
tariffs to default to the base rates established by the World
Trade Organization (WTO), which are high and unfavorable
to fostering strong trade economics. This default standard
would apply to all trade partners. Concerning trade tariffs
and policies with the EU, the negotiating advantage seems
to favor the EU, based on the perception that the U.K. has
greater need to preserve the EU export market. Strong effort
by the U.K. will be needed to win important concessions.
The second category concerns U.K. market eligibility of
chemical products and substances. Regulations that control
this eligibility will also have high priority as a subset of international trade policies. Aside from the tariff rates themselves,
the U.K.'s ability to foster a viable (let alone thriving) policy
landscape will depend on EU market eligibility for chemical
products and substances produced in the U.K. that were

imported and sold by U.K. distributors. Here again, the EU
has the upper hand by virtue of the dominant impact of EU
REACH. U.K. authorities have generally announced their
intention to implement a temporary measure that extends
market eligibility for products that contain substances that are
EU REACH-compliant. Many of the specific details have not
yet been published, but this measure has been postured as a
temporary one that will cover at least a two-year period.
Until Dec. 31, market eligibility remains intact based on
a party's EU REACH compliance/registration. During this
period, a process will be more fully defined whereby the
eligibility can be extended based on submittal of information concerning the EU REACH registration or exemption
status. Much of the details previously announced were in
anticipation of a no-deal scenario with the EU. Given the
current "deal," the market eligibility path might be more
fully developed, and new details might be announced.
The greater challenge with market eligibility of chemical
substances and products lies in addressing their ongoing
risk management issues as human and environmental health
knowledge grows concerning each chemical. This challenge
also extends to issues that relate to growing understanding
of chemical product life cycles and the measures needed to
control risk associated with disposal and waste generation.
These issues are unlikely to be addressed immediately in a
manner that is sustainable, but the opening policies and
regulations must include beginning measures that offer a
viable framework upon which to build.
CONSEQUENCES OF FAILURE
Meeting the challenges posed by these two categories
is understandably daunting. Imbalanced trade policies
with the EU could pose serious consequences to the U.K.
economy, with lasting effect. Plus, an inadequate start can
make future negotiations more difficult. This process will
undoubtedly be slow.
Similarly, inadequate policies concerning market eligibility of chemical substances and products can pose an
abundance of risks and can also be difficult to correct.
What's more, the approach taken (and eventual changes)
will impact trade policies and economic success. For the
immediate future, expect to see initial provisions, followed
by a series of changes in both categories, while the respective
government authorities continue their policy development
and negotiation process. More discussion will follow as
developments occur.
Eggenschwiler, an ILMA consultant, is an international
trade attorney and principal, global trade and chemical
regulations services for the Redstone Group, a Trinity
Consultants company. He can be reached at
614-923-7472 or jeggenschwiler@redstonegrp.com.

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ILMA Compoundings - March 2020

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