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The Netherlands can benefit from British chemicals registration race

23 April 2019

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The Brexit dust has far from settled yet, but many British companies are bending over backwards to secure the export of chemicals to Europe. ‘These substances need to be re-registered and that process is gaining momentum’, says Michiel van der Maat, director of corporate services at financial service provider Intertrust. ‘A distribution country such as the Netherlands has now great opportunities to attract British companies.’

Brexit poses major challenges to many British companies, one of them being that companies exporting chemical substances to member states of the European Union and the European Economic Area (EEA) must have these substances re-registered in the EU. This is done by means of a so-called REACH registration with the European Chemicals Agency (ECHA).

REACH is the European regulation for the production of and trade in chemical substances. After Brexit, the UK will become a third-party country outside the Union and the current registrations for British companies will terminate. If these companies want to be able to continue their export of chemicals into the Union, they will have to take swift action. They can transfer their REACH registration and operations to a European group company, transfer the registration to an only representative in one of the EU countries, or make their European customers as importers responsible for their own registrations.

It concerns a large number of companies, says Van der Maat. ‘After all, REACH covers all chemicals in its broadest sense. Not only substances used in, for example, the pharmaceutical or electrical engineering industries, but also ingredients for, say, cleaning agents or dyes for clothing.’ The main purpose of the registration is to protect consumers from harmful substances. More than 1,700 British companies jointly represent more than 12,000 REACH registrations.

Own local representation

The ECHA agency reports that over 5.000 registrations have now been transferred to EU companies. However, Van der Maat states that some of the companies are in the process of setting up their own local representation. ‘We see tensions mount in these companies, and we receive a lot of questions about how they can set up local representation in the Netherlands. Various parties have now enlisted our help in starting this process.’

The deadline for this new registration has been postponed with the extension of the Brexit deadline, but no one knows what the final deadline will be. In order to maintain access to customers in the European market, British companies now feel the need to react quickly, says Van der Maat. ‘The whole process has gained momentum.’

Registrations offer opportunities

Intertrust helps companies to gain and maintain rapid access to the European market, for example by set up a new entity and maintaining the necessary administration. ‘The setting up of such a company is currently still driven by the desire to be able to obtain the new REACH registration quickly and to avoid disruption to the business’, says Van der Maat. ‘But in the long run, these registrations will create opportunities for the Netherlands.’

Van der Maat says, ‘It is not expected that the company will only be set up for a REACH registration. After all, the registration must be kept up to date, there are many obligations and there must also be sufficient knowledge of the substances in question. So I expect such a company to play a more active role in the long term in the European distribution process of the British company, with the associated FTEs in marketing, sales and logistics. For this reason, British companies that need to set up a new entity in Europe will choose to do so in a country with a good overall distribution and logistics infrastructure. As a distribution country, the Netherlands will then have a considerable advantage over other European countries.’