Sector News

UK chemicals should continue to be counted in quotas for EU-origin material for finished products post-Brexit or risk being stripped out of supply chains, according to trade group the Chemical Industries Association (CIA).

The UK government should push for local-origin product to continue to be counted as part of EU production quotas or risk seeing domestic players removed from European supply chains, the trade group is expected to say in its new Britain at Work manifesto.

EU rules of origin dictate that a certain proportion of the materials used in a finished product such as a car be sourced from producers within the bloc to qualify as local, which has implications for taxes and tariffs applied.

If UK-origin product no longer counts toward those quotas, then European players may prioritise material from compliant sources, which could see UK chemicals firms fall out of EU supply chains.

“The UK sector is a strong partner in the European chemical sector and products cumulate value as the finished product is developed,” the CIA is expected to say in the manifesto.

“The value of the UK economic input must be viewed as an integral part of the EU value for the purpose of conferring economic origin. Failure to do so will likely see UK content stripped out of European supply chains.”

The UK government has come to recognise the importance of rules of origin for manufacturers in the country, according to CIA head of international trade Ian Cranshaw, citing the political declaration issued in October this year after Prime Minister Boris Johnson brokered a revised version of former premier Theresa May’s EU Withdrawal Agreement.

The text states that a free trade agreement between the UK and EU post-Brexit should ensure no tariffs, fees or restrictions be placed between UK and EU players.

The CIA noted that it is politically neutral on the direction that EU exit talks should take in the UK, but added that 60% of UK exports and 75% of imports are to or from the other 27 countries within the bloc, and that whichever party that finds itself in charge after the 12 December general election – if any – urgently needs to clarify the next milestones for the Brexit process.

The trade group is also expected to call for the government to take a more active co-investment role on sustainability programmes such as circular economy innovation and sustainability as a necessary step to building advanced new supply chains.

CIA chief Steve Elliott is expected to address guests at the trade group’s annual dinner on Thursday.

“The current global challenges are huge in areas such as population growth, demand for food, water, and healthcare. But these also present an opportunity for business to show what we can do and the chemical sector is right at the heart of this,” he is expected to say, according to prepared remarks.

The trade group criticised the increased energy cost that nuclear and renewable power investment has levied on producers in the country, backing increased domestic natural gas production as a cleaner alternative to imports, and calling for reform to carbon pricing mechanisms in the country.

“Our manifesto is an open invitation to Government and society to engage with us and explore together how Britain can lead the way on sustainable growth,” Elliot added.

By Tom Brown

Source: ICIS News