Market Access: Just one of many aspects of Brexit

In view of the withdrawal of the United Kingdom from the EU by the end of March 2019, the project group ‘Market Access’ of the BDI Task Force Brexit is investigating the dimensions of product legislation. The group’s findings on technical products and chemical substances are presented as an example here. Far from being negligible, the burdens of non-tariff technical trade barriers are comparable to those of customs duties.

The acquis communautaire of EU directives will, with a few exceptions, probably be completely transposed into UK law and will therefore remain in force in the UK. This includes legislation at EU level for the protection of the environment and on the harmonisation of standards of technical products. EU regulations could be taken over into UK law as a complete package (“Great Repeal Bill” for about 20 000 EU laws), even without full parliamentary scrutiny; changes could be made by secondary legislation. This step would safeguard far-reaching harmonisation with EU law. Even then, however, major problems would nonetheless arise, for instance, where EU legislation refers to EU committees or is specified in implementing provisions of EU legislative institutions. It remains to be clarified, whether future UK law will allow for such references to what will then be external EU institutions, and, if so, whether this will be accepted by the UK government.  

There are many specific technical issues that urgently need to be addressed and agreed on in good time before Brexit. Possible disruptions to supply chains and markets must be prevented reliably and at an early stage. Provisions on mutual recognition and transition periods of several years need to be prepared with a future free trade agreement already in mind. In order to stabilise market confidence without further delay, the principles of the future regulatory cooperation should be defined as early as possible. For the mutual benefit of both sides, they should correspond to the current internal market provisions. The high standards that have been reached by the EU in order to protect health and environment should be maintained on the current harmonised level.

Technical products

Technical products are extensively regulated on EU level and are subject to the provisions of the New Legislative Framework (NLF). The respective directives and regulations lay down requirements for the products within its scope. These requirements are, in turn, set down in more detail in harmonised EU standards. The principle of “one standard, one test, accepted everywhere” applies within the EU internal market. The corresponding presumption of conformity forms the basis for free access to the single market. This achievement must remain reliably secured on both sides of the channel even after Brexit, and technical barriers to trade must be permanently eliminated. This also includes the administrative and organisational framework covering, among other things, conformity assessment, accreditation, product documentation and labelling, and the sharing of information on product safety and market surveillance. 

Chemical substances

Chemical substances and mixtures are also comprehensively regulated at EU level, for example through REACH (Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals) and the CLP Regulation (Classification, Labelling and Packaging). Divergent legal requirements on the registration, evaluation, restriction, authorisation, classification, labelling and packaging of chemical products would create bureaucratic barriers to trade. The status quo of today’s internal market legislation must be secured. Possible options here are a mutual recognition of the chemicals regulation, as agreed with e.g. Switzerland, or voluntary adherence to the REACH Regulation as agreed with Norway, Iceland and Liechtenstein. 

Solutions are also urgently needed for the fact that registrations and authorisations under REACH that are held by UK companies will become invalid as of end of March 2019. This could result in disruptions to supply chains for their EU27 customers, which is absolutely to be avoided. Here, the EU needs to make special transition regulations beyond REACH that enable registrations and authorisations to be transferred to the subsidiaries of UK companies or other companies on the continent. A large number of private law agreements will also need to be made on data ownership, rights to studies and animal experiments, and the costs borne by UK manufacturers for these, particularly for Substance Information Exchange Fora (SIEF). The time required to address these problems should by no means be underestimated. There is a whole range of further problems of comparable complexity in legislation on chemicals. 

Required action 

It has become clear that the fine ramifications of EU product legislation pose enormous risks for supply chains. The BDI has analysed these problems and developed constructive solutions in order to assist the negotiators. EU lawmakers, too, must play their part in enabling a smooth transition to the new situation. Finally, companies on the continent also need to take action. Where legislation on chemicals is concerned, they should immediately start taking stock of risks to their supply chains, investigate alternatives and contact their current UK suppliers to find out what kind of measures have been planned to secure the supply chains.