Chemicals and machinery and the UK
As global dialogues focus increasingly on the interaction between trade and the environment, the United Kingdom has placed efforts to ensure that trade interventions complement its environmental objectives.
While the European Union has been a leading proponent of using trade policy to pursue its environmental goals, the UK is following a similar path. Both the EU and UK have introduced several stringent Technical Barriers to Trade (TBTs) that mandate environmental protection measures – key being environmental TBTs.
The WTO members have notified technical measures for the protection of the environment since 2010s. Using information from these notifications, we see that these environmental regulations are concentrated in a few high-valued sectors globally. The top ten regulated sectors cover 71 percent of total environmental TBTs and accounted for about 14,000 billion USD of traded value in 2022.
We also find that the chemicals and machinery sectors have the highest degree of regulatory intensity globally – with 2,111 TBTs for instance across pesticides, organic and inorganic compounds, and fertilisers in chemicals. Further, the notifications process in the chemical industry is the prerogative of a small group of WTO members (an average of 37 notifying countries per sector). The regulatory intensity of machinery ranges from 766 TBTs in mechanical and electrical sub-sectors, notified by numerous WTO members.
Brexit and UKs technical trade regulations
Looking across UKs TBTs, we find that Brexit implied a change in the type of UK regulations: from enforcement measures notified pre-Brexit to technical regulations (73 percent) notified post-Brexit. The most adopted technical regulations relate to tolerance limits for residues and restricted use of substances in the chemical sector. In the machinery sector, the technical regulations relate to the product quality, safety or performance requirement. The number of such measures is particularly large in chemicals and machinery. The European Union is regulating use and tolerance limits for chemicals, whereas China is keener on labelling and packaging requirements, as well as quality, safety and performance requirements. As for machinery, US and China introduced numerous conformity assessment procedures, differently from the European Union, that adopted mostly technical regulations.
The EU is heavily regulating in the chemicals sector, with border requirements set in the Single Market. An emblematic example is the continuous process of notification of TBTs for the protection of the environment in the fertilizer sector. These TBTs (21 in number for the EU) are passing the requirements set by the 2019 EU regulation on fertilizers (effectively adopted since 2022) to the border. For the UK, having an understanding on where EU is going with regulations on chemicals will allow to anticipate future TBTs.
Collaborating for just trade policy in the UK
Businesses, and their representative organisations, are complex organisations with a range of stakeholders shaping their interests.
Businesses in the UK deal with the differences in regulations by markets they export to. Different sectors across UK have different perceptions to the environmental trade regulations globally. This corresponds to how UK businesses position themselves to align with environmental trade regulations by markets.
TBTs can be disruptive for producers. While businesses will act to shape this regulation in their own interest, but increasingly, this involves considering consumer attitudes globally. Businesses have a role in raising the profile of environmental issues with consumers, with high profile examples including IKEA’s foregrounding of the previously niche concept of circular economy ideas amongst Swedish consumers.
The latest “Public and business attitudes to the environment and climate change, Great Britain: 2024” study demonstrates the importance of these issues for people and businesses in the UK. Business attitudes towards climate change remain heterogenous across large and smaller businesses. Interestingly, supply chain disruption was the most common concern related to environmental impacts and climate change risk. Several of these disruptions can be linked back to technical regulations to trade.
Literature has shown the role that businesses can play in raising the profile of environmental issues with consumers. Forward thinking business could raise issues of environmental justice and the burden placed on producers with their consumers, to contribute to more inclusive trade policy-making processes.
This blog includes insights from work conducted by members of the Centre for Inclusive Trade Policy (CITP), supported by the ESRC [grant number ES/W002434/1] on “Environmental Trade protection and Business perceptions”. It has benefitted from interviews done with various businesses in the UK and EU by Amrita Saha, Bernardo Arce Fernandez (for his MA dissertation at IDS), and Tom Richardson.
