On 21 August 2017, the UK Government published its position paper on “Continuity in the Availability of Goods for the EU and the UK” (the “Paper”) (available here). The proposals contained in the Paper seek to prevent a “cliff edge” by ensuring that goods will be able to freely circulate between the UK and remaining 27 EU Member States (“EU-27”) immediately following the UK’s withdrawal from the EU.

While the proposals are partially consistent with the Commission’s position paper on the topic (see further here), the UK’s Paper is more detailed and optimistically addresses additional points, such as the position of goods that have not yet been placed on the market as at the date of withdrawal but for which compliance activities have already been conducted or which have already been approved or authorised for sale across the EU as a whole (including the UK). That said, the Paper does not provide businesses with any clarity on the longer term alignment of UK and EU-27 product laws and standards post-withdrawal or how the UK’s suggested principles would work in practice for any specific regime or industry. Despite this, many will no doubt welcome the paper as a reasonable start to the long and complicated negotiations that will need to take place between the UK and EU-27 in this area.

Background

By way of background, the vast majority of products sold on the EU market (eg food, medicines, consumer products, chemicals, machinery and electronics etc) are regulated by EU-wide harmonised laws. This has the advantage of preventing non-tariff barriers that would arise if each EU Member State were able to adopt different national technical regulations and product standards, while still providing a high level of protection for health, safety and the environment.

UK’s proposed principles for an agreement on goods

The UK’s Paper sets out four proposed principles:

Goods “placed on the market” in the EU before the date of withdrawal can continue to circulate freely between the UK and the EU-27 post-withdrawal without being subject to additional requirements or restrictions.

This aims to ensure that the UK’s withdrawal does not trigger new requirements or restrictions in respect of goods already in the distribution chain at the point of withdrawal. For example:

  • Many goods have to be marked with an EU importer’s address which prior to withdrawal could be a UK entity. It would be undesirable for businesses to have to relabel or sticker products that have already been placed on the market in the EU prior to withdrawal that they want to move between the UK and EU-27 (and vice versa) at a later date.
  • EU-wide pre-marketing approvals / registrations / authorisations for some types of products will have been awarded by either a UK authority or an EU-27 authority prior to the UK’s withdrawal. Severe supply disruptions could be caused if those approvals / registrations / authorisations ceased to be valid in either the UK or EU-27 for products already in the supply chain.
  • Certain regimes require an EU entity to be nominated as responsible for compliance with product regulations (eg the “Responsible Person” for cosmetics or “Authorised Representative” for medical devices). The UK proposals envisage that entity should remain responsible for products placed on the EU-wide market prior to withdrawal, irrespective of whether it is based in the EU-27 or UK, and without the entity needing to relocate.

This first principle is generally consistent with the Commission’s suggested approach, although the final details will likely be greatly negotiated. For example, the Commission’s paper contains a single definition of “placing on the market” consistent with the Blue Guide 2016, while the UK Paper acknowledges that specific sectors have different definitions of the term and that any agreement between the UK and EU-27 would need to take these into account. Whatever the outcome, the interpretation of “placing on the market” is notoriously complex and so businesses should ideally be provided with as much clarity as possible under any agreement entered into between the UK and EU-27.

Where businesses have undertaken compliance activities prior to withdrawal, they should not be required to duplicate those activities post-withdrawal.

This aims to capture regulatory compliance activities that will have taken place prior to withdrawal but in respect of goods that are not yet placed on the EU market at the point of withdrawal (for example, a GMP inspection of a manufacturing site, submission of hazard data for a chemical substance, an approval/registration/certificate or authorisation issued by a third party such as a Notified Body) or that will be ongoing (eg where a Qualified Person is required for testing and batch release of medicines to the market). The UK’s position is that these activities should be recognised for the full time period or type of products intended when the compliance activity was originally undertaken or initiated. This would avoid businesses and authorities needing to undertake significant duplicative compliance activity in both the EU-27 and UK.

This proposal goes significantly further than the approach outlined in the Commission’s paper, which notably expressly stated that procedures which are ongoing in the UK on the withdrawal date in respect of biocidal products, plant protection products and (human and veterinary) medicinal products should be transferred, where appropriate, to a competent authority in the EU-27. This principle is therefore likely to be heavily negotiated.

Although the UK’s proposal will likely be welcomed by businesses looking for as little regulatory change as possible post the UK’s withdrawal, the Paper does not elaborate on what this would mean in practice for any specific regime or industry.

The agreement between the UK and EU-27 should facilitate the continued oversight of goods

This principle aims to ensure co-ordinated market surveillance between the UK and EU-27 post the UK’s withdrawal. This will not be controversial in respect of goods placed on the EU market prior to the withdrawal date, as the Commission’s paper advocates close co-operation in this regard as well. On the other hand, discussions around co-ordinated market surveillance for products placed on the market after the withdrawal date will obviously be closely connected to the discussions in respect of the UK’s second proposed principle (see further above).

Further, there is still the question of enforcement and dispute resolution if UK authorities’ decisions are challenged – the UK is unlikely to want this to be handled by the European Court of Justice.

Where goods are supplied with services, there should be no restriction to the provision of these services that could undermine the agreement on goods

The Paper acknowledges that this is an area the UK Government would like to explore in more detail but that ultimately the UK wants to avoid uncertainty and disruption to business and consumers.

Comment

While the Paper provides some insight into the UK’s intentions for its future relationship with the EU-27 in respect of product-related laws, because it only sets out general principles, it does not provide much clarity for specific industries trying to work out the practicalities of how their products will be regulated post-withdrawal. It also does not contain any firm proposal about how to deal with products which do not fall into principles 1 or 2 outlined above ie new products for which there are no ongoing regulatory compliance activities at the date of withdrawal. For example, although the paper notes that the European Union (Withdrawal) Bill will convert existing EU law (including product law) into UK law as at the date of withdrawal, the Paper does not say anything about the UK’s longer term intentions for alignment of UK product laws to EU product laws, or whether the UK will be seeking post-withdrawal mutual recognition of products which comply with either the UK or EU-27 product regimes.

Finally, whilst the Paper sets a good start to negotiations, it must be remembered that these are all proposals from the UK side – to work in practice they need to be part of a bilateral agreement, negotiated and agreed upon with the EU-27. The final outcome will be subject to political will and bargaining power on each side of the negotiations – and we are a long way from official talks on the future relationship even beginning, let alone being subsequently agreed with the EU-27.