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Britain’s chemical and pharmaceutical industries have called on the government to allow them to remain within EU rules to avoid endangering investment and supply chains, even as Eurosceptic ministers step up a campaign to break away from the bloc’s regulations.

The issue of regulatory divergence has moved centre stage in the Brexit debate since Friday’s divorce deal with Brussels, in which prime minister Theresa May agreed that Northern Ireland would not stray far from EU rules in order to ensure there would be no hard border with the Republic of Ireland.

That promise has cheered pro-business cabinet members but raised alarms in Eurosceptic circles, where the prospect of sweeping deregulation has been one of the main policy goals Brexiters have promoted for leaving the EU.

In a letter to Michael Gove, environment secretary and the UK cabinet’s leading champion of regulatory divergence, the Chemical Industries Association urges the government “to do all it can to remain within or as close as possible” to the EU’s rule book for the sector.

Steve Elliott, the association’s chief executive, said leaving the EU framework “would seriously bring into question 10 years of investment, as registrations and authorisations that permit access to the EU single market would suddenly become “non-existent” on exit day”.

Referring to Reach, the framework legislation for the sector, he said the EU regulation was “far from perfect” but added that it was still the best way of “ensuring that cars continue to run, planes continue to fly and medicines continue to work”.

But the European Chemicals Agency, which determines EU standard-setting for the safety of chemicals and access to the single market, comes under the legal framework of the European Court of Justice, whose jurisdiction Brexiters are determined to end.

The Association of the British Pharmaceutical Industry added that securing co-operation between the UK and EU on chemicals legislation and medicines regulation would be vital to ensure that there was no disruption for patients “and that 82m packs of medicines can move between the UK and EU every single month without delay”.

As the cabinet prepares to discuss Britain’s future relations with the EU next week, Mr Gove has the backing of Gavin Williamson, the country’s new defence secretary, along with foreign secretary Boris Johnson, trade secretary Liam Fox and Brexit secretary David Davis to push for a clean break with the bloc.

Mr Williamson, the former chief whip, has told friends he is “definitely for divergence”, pitting him against a “hugger” cabinet faction led by chancellor Philip Hammond and home secretary Amber Rudd, who want to align Britain closely to the EU to maximise market access. The Brexit negotiations subcommittee will meet next week to discuss the next move.

While Mr Gove and his colleagues argue that Britain could achieve high standards of regulatory protection through a lighter-touch regime, business fears it could create new barriers to trade with the EU.

Mr Elliott acknowledged that the British chemical industry once vigorously opposed the Reach chemicals framework, but he told Mr Gove the rules were now increasingly seen around the world as “the global standard”, adding that “the most effective way to avoid disruption” was for Britain to stay inside Reach.

The EU has always resisted accepting other countries’ chemicals regulations as automatically equivalent to Reach, emphasising it considers its own rules as the gold standard. In practice, without any formal agreements in trade deals, companies around the world often adopt the Reach standards as their default regulation in order to be able to sell into the EU.

Several countries including China, Malaysia and South Korea have amended their own chemicals regulation along similar principles to Reach, though without being formally recognised as equivalent.

Mr Gove’s department is consulting on a new, independent body to uphold environmental standards in England after Brexit, but the chemicals sector could be forced to engage in costly duplication of registration of products in the UK and EU.

“We are working to ensure a smooth transition for the chemical industry as we leave the EU,” a spokesman for the Department for Environment, Food and Rural Affairs said.

“Our priority is to maintain an effective regulatory system for the management and control of chemicals to safeguard human health and the environment, respond to emerging risks and allow trade with the EU that is as frictionless as possible.”

The government has already been willing to fudge its Brexit “red lines” in other areas: it will ask for its aviation industry to be regulated by the EU after Brexit, in a move that will place it under the indirect jurisdiction of the European Court of Justice.

Additional reporting by Robert Wright, Alan Beattie and Jim Brunsden

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