Market Access: Just one of many aspects of Brexit

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In view of the United Kingdom's withdrawal from the EU, the BDI investigated the dimensions of product law in its "Market Access" working group of the "Brexit Task Force". Using the examples of technical and chemicals law, the findings are summarised here. The impact of non-tariff technical barriers to trade is not negligible; they are of similar importance as customs duties.

With few exceptions, the EU acquis in relation to EU directives has been transposed into British law - including environmental and technical law. EU regulations with direct legal effect have already been, or will soon be, transposed into British law. Some EU regulations refer to the responsibilities of committees and other EU bodies that further clarify, interpret, adapt or specify. It is unclear whether this will continue to be possible under UK law once the UK can no longer participate in these EU bodies. Moreover, if this were or could be legally possible, there would need to be the political will to do so.

A key finding for product law is that a large number of specific technical issues should be clarified in the envisaged free trade agreement (FTA) in good time before the final Brexit. Distortions in supply chains and markets must be reliably ruled out. The FTA should therefore contain provisions on mutual recognition and transitional periods of several years. In order to stabilize confidence in the markets, the principles of future regulatory cooperation should be defined at an early stage, which should, to the benefit of both parties, correspond as far as possible to current internal market regulations. Simultaneously, the high standard of environmental and health protection achieved must be maintained.

Technology Regulation

Technical products are consistently regulated at EU level and are subject to the rules of the "New Legislative Framework" (NLF). The associated directives and regulations define requirements for products in the regulatory area. These requirements are in turn specified in harmonized EU standards. In the EU internal market, "One standard, one test, accepted everywhere" applies. The corresponding presumption of conformity is the basis for free access to the internal market. This achievement must remain reliably secured for the period after the final Brexit on both sides of the channel; technical barriers to trade should be permanently excluded. This also includes the administrative and organisational framework in terms of conformity assessment, accreditation, product documentation and labelling, exchange of information on product safety and market surveillance, among other things.

Chemicals Regulation

Chemical substances and mixtures are also consistently regulated at EU level, including REACH (Regulation concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals) and CLP (Classification, Labelling and Packaging). Different requirements for registration, evaluation, restriction, authorisation, classification, labelling and packaging would lead to technical barriers to trade. The status quo of the current internal market legislation should be safeguarded in this area. Conceivable options are mutual recognition of chemicals regulation as with Switzerland or voluntary membership of the REACH system as in the case of Norway, Iceland and Liechtenstein.

It should be noted that registrations and authorisations held by British companies under REACH will become obsolete with the EU withdrawal. For their EU27 customers this could result in supply chain disruptions, which must be avoided at all costs. One option for action is to transfer registrations and authorisations to subsidiaries of British companies or to other companies on the continent. This also includes a large number of private-law agreements regarding data ownership, rights to studies and animal testing, and the costs incurred by British manufacturers. This especially applies to the Substance Information Exchange Forums (SIEFs). The time required for this problem area in particular should by no means be underestimated. A whole series of other problems in chemicals legislation are of similar complexity.

Need for action

It is evident that, due to the subtle ramifications of EU product law, the withdrawal can lead to significant threats to supply chains. In this context, the BDI has identified a whole range of problem areas and developed proposals for solutions that are aimed at the negotiators of a future free trade agreement. But continental companies must also become active in the organisation of their supply chains. With regard to chemicals legislation, they should continue to take stock of their supply chains, explore alternatives and learn about their British suppliers’ intended measures for securing supply chains.