MAKING A SUCCESS OF BREXIT
The UK chemicals and plastics industry has relatively high logistics costs as part of the total supply chain and thus 53% of the UK chemicals industry's exports are to the EU  . It will be important to keep UK-EU trade in chemicals and plastics tariff-free and as simple as possible. The average EU tariff on chemicals is 4.6%  , with higher tariffs in areas like finished paints and coatings, which face a 6.5% tar  .
The regulation of the UK's chemicals and plastics industry is predominately European, and businesses are concerned that any significant changes to these could be seriously disruptive and costly. This includes EU regulations such as REACH – through which UK companies have made 5,000 registrations of chemicals manufactured in or imported into the UK  – and COSHH, which requires employers to control hazardous substances. The EU has also facilitated international regulations, such as the adopting of the UN's system of labelling and classification, so the symbols for 'corrosive' and 'flammable' are universal.
Many of these regulations have been expensive to implement, with particularly severe burdens for SMEs. However, if the UK's chemicals regulations are no longer recognised as equivalent to the EU's, chemicals businesses may face multiple sets of requirements. Some businesses see opportunities for risk-based reform of what are today hazard-based regulations in the long-term, provided they do not undermine quality or access to the EU – which is the priority. Additionally, given the detailed nature of these regulations, a lengthy transitionary period for businesses and regulators to adapt to any changes would be needed, with clarity for existing supply agreements, where compliance with existing regulations is already embedded.
The chemicals and plastics industry needs large but fluctuating numbers of skilled workers for project turnarounds. As these peaks do not happen every year, contractors are dependent on certain groups of craftsmen from abroad – such as scaffolders from Poland or Croatia, insulators from Portugal, and specialists from Germany. The chemicals and plastics industry needs to maintain access to these workforces from abroad at times of need.
A sophisticated trade deal with the US, covering both tariffs and non-tariff barriers, would benefit the UK chemicals industry. Tariffs currently cost UK companies an average of 3% on £4.9billion of exports to the US  , and differences at customs and around classifications create barriers and costs.
The UK chemicals industry spends around £612million a year on R&D, and benefits from a thriving innovation environment. It will be important to avoid funding gaps as the UK transfers from EU funding to domestic systems of funding, in order to avoid harming innovation. It would also be of great benefit to the sector to maintain access to EU research systems – including data sharing.
The extent to which the chemicals and plastics sector would be affected by the UK leaving the EU without a deal or interim agreement depends on the progress of domestic regulatory arrangements. Some certainty could be provided by transposition of EU regulations and directives. However, there would certainly be detrimental effects on trade from tariffs and new compliance requirements to exports if no agreement is secured.
For chemicals at the CBI, contact: Nicola Hetherington on 0207 395 8080 or Nicola.Hetherington@cbi.org.uk
 CIA, August 2016 Economic Survey
 CIA, UK Chemical and Pharmaceutical Industry Facts and Figures
 EEF, 11 Key facts about the UK's relationship with the EU
 Open Europe, How would the UK's key export sectors fare under Brexit?
 BCF, November 2016
 Latham & Watkins LLP, July 2016
 Briar Chemicals, Open for Business