Brexit preparations for product manufacturers – what's the no-deal?

The UK government has recently published a series of technical notices aimed at guiding businesses and citizens as to what they would need to do if the UK leaves the EU without a withdrawal agreement in place – the 'no deal' scenario. The technical notices are available here.

The government emphasises that the notices only form a part of its ongoing programme to plan for all eventualities: it has stressed that significant progress has been made on negotiations between the EU and UK and that it remains confident of achieving a positive deal.

The technical notices set out some details of what producers will have to do to place goods on the UK market from 29 March 2019 if no deal is reached. If the UK and the EU fail to reach an agreement, it's clear that producers selling goods both in the EU and the UK would have to comply with both EU law and UK legislation - in whatever form that takes post-Brexit.

Overview

A key issue for producers is the announcement that a new UK conformity mark is being developed to replace the CE mark on products sold in the UK in the event of a no-deal scenario. To counter concerns that this would be costly and burdensome to companies, the government has confirmed that, for a limited time (not specified in the technical notice), manufacturers could continue to use the CE marking following assessment by an EU recognised body rather than the UK marking to denote conformity. In the short term, therefore, manufacturers would not be required to retest products for conformity with new UK legislation.

Additionally, new UK "approved bodies" would assess products currently subject to common EU rules (for example, electrical and electronic products and toys) against UK rather than EU essential requirements. Initially, UK requirements will mirror the current EU position so products tested under either regime would be held to the same standard. But when, or if, UK regulation starts to diverge from the EU system, there could be more impetus to insist on products complying with the UK conformity testing. The government has stated that it will allow sufficient time for businesses to prepare for such change.

For companies selling these goods in the EU, the technical notice states that, in a no-deal scenario, the EU would no longer recognise the results of conformity assessment from UK notified bodies. Manufacturers that currently use UK notified bodies to undertake their conformity assessment for goods to be placed on the EU market would need to arrange for their files to be transferred to an EU recognised body before the UK withdraws from the EU to continue to be valid. Otherwise, in order to continue selling goods in the EU they would have to have the goods retested and re-marked by an EU recognised body. On a similar note, type-approvals for vehicles and vehicle components issued in the UK would not be recognised by the EU and EC type-approvals issued outside of the UK would not necessarily be automatically accepted on the UK market.

Other products (such as textiles), subject to national regulations rather than common EU harmonised standards, can currently be sold across the EU under the mutual recognition principle. This stops EU member states prohibiting the sale of products which have already been lawfully sold in another EU country. In a no deal scenario, post-Brexit this would no longer apply to the UK. Therefore, UK businesses exporting such goods to the EU market would have to meet the national requirements of the first EU country to which they export. Non-UK businesses who wish to sell products on the UK market would have to ensure they meet UK national requirements - even if the products were previously marketed legally in another EU country or in the UK.

Comment

While the UK government remains optimistic that a no deal Brexit will be avoided, it is clear from the technical notices that a no deal scenario could have a significant impact on companies who sell goods in the UK and Europe. The introduction of a new UK conformity mark would have considerable implications for product labelling. Regarding the ongoing recognition of the CE mark, the government has committed to ensuring that businesses are provided with adequate notice of any change to the arrangements but ongoing uncertainty would remain. This is a key issue for businesses – with less than six months to go until the UK leaves the EU, we still don't know what the landscape will look like post-Brexit. The EU have, to date, publically taken a fairly hard line on what its approach will be post-Brexit and the UK technical notices reflect that in setting out how the government might respond. However, it is unclear to what extent the EU would maintain its approach faced with a no deal scenario or whether they will allow more flexibility to ensure continued smooth trade is maintained.

The outcome of the negotiations between the UK and the EU is still unknown but companies should be considering what reasonable steps they can take to ensure they're prepared for all eventualities.

Hogan Lovells Global Products Law Practice
@HLProductLaw

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