To what extent Brexit will affect current regulation will vary from sector to sector, but the impact is potentially enormous. In many areas, the UK largely works to European-wide standards and it is likely that UK regulation will continue to comply with those standards (but with no ability to shape the policy behind them). However, there will be difficult transitional adjustment issues where the UK opts to diverge. In this briefing, we consider the potential scenarios, what barriers these might create to trade and how to prepare for possible changes.
Regulation covers many different things, including everything from labelling, product standards and safety, up to the way in which group companies are structured in view of any preclusion on the same company controlling different parts of a supply chain.
Although, of course, this is only one type of non-tariff barrier. Alongside regulation, there are likely to be others; depending on whether the UK leaves with or without a deal, and its future trading relationship with the EU. Other non-tariff barriers include measures such as border controls, phyto-sanitary checks, country of origin checks, and threats of anti-dumping duties.
- Should the UK leave the EU with a withdrawal agreement under Article 50 of the Treaty on European Union, there will be a transitional period during which EU law will continue to apply in the UK, as it does now, while both sides negotiate a future trade deal. This will mean that existing regulatory arrangements will apply and no new non-tariff barriers will be erected between the UK and EU.
- Companies will need to decide whether they wish to continue operating in both the UK and EU markets and, if so, what this might mean in terms of preparation for Brexit. For example, there may be a requirement to open a new office(s) in the EU, or to transfer registrations held in the UK to an EU office.
- Where currently products are manufactured in the UK and distributed from there to the rest of the EU, after Brexit, any similar arrangement will constitute importation into the EU from a third country. In such circumstances, some regulatory regimes place obligations on the importer to ensure that the products meet EU requirements. That means that a company's distributers on the continent will be seen as importers and may need to take on additional regulatory responsibilities that they do not have now - with changes in costs to reflect this.
1. Will I have to register my products somewhere in the EU27?
This will depend on who granted the registration or certification and who holds it. Where the certification or registration was granted by a UK body, a new registration may need to be sought from a body in the EU. Conversely, where it was issued by a central EU body this may still be acceptable.
Where the registration is held by a UK company, it is likely that it will need to be transferred to a company established in the EU or EEA.
Will I have to open an office in the EU27?
A number of factors will be relevant here, including whether certain tasks need to be performed in the EU. For example, several regulatory regimes require testing and monitoring activities to be carried out in the EU. However, some or all of those activities may be capable of being outsourced to an authorised representative or agent in the EU, thus avoiding the need for a company to open a new office.
It is unlikely however, that an authorised representative will be able to act as the holder of a registration or certification. So, depending on the need to hold a certification in the EU and perform certain tasks in the EU, it may be that a company could have a minimal operation in the EU, together with an authorised representative or a more fully fledged operation capable of undertaking required activities.
3. What if I have a CE mark?
Where a company's CE mark has been granted through a UK Notified Body, it will need to be transferred to a Notified Body in one of the EU27 states and a new certificate of conformity issued.
The UK will operate a parallel system of conformity marking following Brexit so companies will need to consider whether they wish to secure this for the UK market.
4. If I want to continue in the UK market, will I also need to have an office in the UK?
Where a company wants to continue operating in the UK market, it will need to take account of changes to UK law following Brexit. Although, for the most part, the UK will adopt existing EU regulations as they stand at the point of Brexit, companies should be alive to where these have been changed and where they may diverge over time.
Companies should also be aware that whereas under EU law some regulatory regimes currently do not require a company to have either an established presence in the EU, or an authorised representative there, however, some changes made by the UK will require either establishment or an authorised representative in the UK.
For example, Regulation (EU) 552/2004 sets technical requirements to ensure that constituent parts and associated operating procedures used in air traffic management systems forming part of the European Air Traffic Management Network are interoperable across EU member states. The Regulation does not require a manufacturer based outside the EU to have an authorised representative in the EU. However, the amendments made to the Regulation, as it will apply in the UK after a no-deal Brexit, will require companies either to be established in the UK or have an authorised representative in the UK in order to access the UK market in relation to the relevant parts.
Where to go to get more information?