Technical Barriers to Trade in the event of No Deal: Notified Bodies (3/4): Migration of BSI medical device certificates to the Netherlands (3d).

In my last three posts I have been examining the barriers to trade that could arise in the event of No Deal as a result of the UK Notifed Bodies’ loss of notified status. The European Commission announced in January 2018 that certificates issued by UK Notified Bodies will lose their validity immediately upon the UK’s withdrawal from the EU, in the absence of transitional arrangements. In part 3a, taking medical devices as an example, I looked at the efforts made by UK Notified Bodies to gain the required notifications in branches situated in EU-27 member states, so that existing certificates can be transferred across, and new certificates issued. I concluded that BSI, the largest of the four main UK medical device NBs, has probably largely completed this process. Lloyds Register and SGS UK have the process underway but not yet completed. I found no definite indication that Underwriters Laboratories are attempting to achieve notified status for medical devices in the EU-27. While some manufacturers may have taken action to migrate their certificates to other companies or organisations with notified status in the EU-27, the impression I have gained is that many have preferred to remain with their current notified body. If this is correct, then products certified by Lloyds Register, SGS UK and UL UK would, as things stand, lose access to the EU internal market immediately in the event of No Deal.

In part 3b, I drew attention to longstanding Commission guidance that certificates previously issued by a notified body would not immediately lose their validity if the body ceased operation; and in 3c, I detailed more specific guidance currently in operation to allow a grace period of up to a year in the medical device sector for ‘orphaned’ certificates of this sort. Arguably, therefore, the Commission’s decision with regard to Brexit is in contradiction to its own guidance, and to current practice in the EU.

Nevertheless, the decision has been taken, making it necessary to try to assess the consequences of it being put into effect in the event of No Deal. I will show in this and subsequent posts that a remarkably high proportion of medical device manufacturers worldwide, including within the EU-27, have employed UK NBs to certify their products.

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Technical Barriers to Trade in the event of No Deal: Notified Bodies (3/4): Current ‘grace period’ arrangements for medical devices (3c).

The European Commission announced in January 2018 that certificates issued by UK Notified Bodies will lose their validity immediately upon the UK’s withdrawal from the EU, in the absence of transitional arrangements. In my last post, I pointed to Commission guidance that certificates issued by a Notified Body should not lose their validity immediately in the event that it ceased operation, and asked why it was adopting a different approach with respect to UK Notified Bodies and Brexit. In this post, I describe the detailed arrangements that are currently in place to allow medical devices to continue to be marketed in the EU for a ‘grace period’ when a Notified Body ceases operation, and ask whether there is any good reason why similar arrangements should not be adopted in the event of a No Deal Brexit.

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Technical Barriers to Trade in the event of No Deal: Notified Bodies (3/4): Is the Commission being consistent? (3b)

The European Commission has stated that, in the event of No Deal, product safety certificates issued by UK Notified Bodies (NBs) will become invalid for products placed on the EU-27 market after the withdrawal date:

In response, UK NBs have been seeking notified status in the EU-27 through a subsidiary or other arm of their company or organisation. In my last post, taking medical devices as an example, I examined how far this process has progressed. The largest UK medical devices NB, BSI, achieved notified status in the Netherlands in November 2018, and began transferring certificates across to its Dutch subsidiary. Lloyds Register and SGS UK are part way through the process, while UL UK do not appear to be making any such No Deal preparations.

While some manufacturers may have acted independently after the UK’s decision to leave the EU, and transferred to a different company already notified in the EU-27, it would appear from certificates currently available online that many have stayed with their UK NBs. As things stand, therefore, a No Deal withdrawal could result in an immediate loss of market access for many medical devices, with potentially serious consequences for recipients of medical services in the EU-27, and for manufacturers worldwide.

SGS, the world’s largest, Testing, Inspection and Certification company, have remained sanguine, describing the Commission’s position as ‘extreme’, and expressing confidence that the EU-27 will adopt a ‘more pragmatic position’ and allow UK NB certificates to continue to be recognised while they are being transferred to EU-27 bodies:

In this short post I:

i) show that EU product safety legislation does not contain provisions which specify the status of certificates issued prior to a denotification;

ii) argue that current Commission guidance indicates strongly that there should be no immediate loss of validity of such certificates.

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Technical Barriers to Trade in the event of No Deal: ‘Notified Bodies’ (3/4): Readiness (3a)

I am responding to a claim made by Sam Lowe that new non-tariff barriers to trade would be ‘highly disruptive’ in the event of a No Deal Brexit. I am confining myself to those technical regulations which come under the WTO Technical Barriers to Trade (TBT) Agreement, rather than those covered by the WTO Agreement on Sanitary and Phytosanitary Measures. Like Lowe, I see three types of TBT barriers arising:

i) An EU ‘importer’ would be required (see part 2), who would have a responsibility to carry out checks that the manufacturer had carried out the necessary conformity procedures.

ii) UK ‘Notified Bodies’ will lose their notified status, and the certificates they have issued will lose their validity.

iii) UK exports to EU-27 would be subject to regulatory checks at the border.

In this post, I begin an examination of the difficulties that may arise in connection with UK Notified Bodies.

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Technical Barriers to Trade in the event of No Deal: Importers (2/4)

I am responding to a chapter by Sam Lowe on non-tariff barriers to trade in a report on the implications of trading on WTO terms in the event of a No Deal Brexit. I am confining myself to those technical regulations which come under the WTO Technical Barriers to Trade Agreement, rather than those covered by the WTO Agreement on Sanitary and Phytosanitary Measures. I began in Part 1 by addressing the question, raised in the chapter’s heading, as to whether regulatory divergence would give rise to technical barriers to trade. I argued that if the UK regulations diverged from the EU after Brexit, this could create challenges for manufacturers, wherever based, to overcome in producing goods that satisfied the new regulations. These differences in regulations could be considered to be barriers, or hurdles, to the UK market, but hardly to the EU-27 market.

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Would UK regulatory divergence hinder our exports to the EU? (1/4)

On 6 December 2019, ‘The UK in a Changing Europe’, an ESRC-funded ‘Initiative‘ at King’s College London, published a report on the implications of trading under World Trade Organisation (WTO) rules (without a Free Trade Agreement or Customs Union with the EU) in the event of a no deal Brexit. Chapter 7, by Sam Lowe of the Centre for European Reform, concerns non-tariff barriers to trade under WTO trading: 1

My purpose here is to address Lowe’s first question:

I confine myself to those technical regulations which come under the WTO Technical Barriers to Trade Agreement, rather than those covered by the WTO Agreement on Sanitary and Phytosanitary Measures.

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Notes:

  1. As is customary, I use ‘WTO trading’ as a shorthand for trading under WTO rules without a GATT Article 24(8) customs union or free trade area.

Reply to Richard North on conformity assessment and the WTO option

I am pleased that Richard North has responded today to my series of posts on conformity assessment and the WTO option, which begin here. He claims, first of all, that I have made mistakes ‘relating to the activities of “notified bodies” and the continued recognition of UK bodies after a sudden withdrawal by the UK [from the EU].’

Status of UK Notified Bodies after Brexit

In part 2 of my series, in the section entitled ‘UK Notified Bodies after Brexit’, I explain why I think it ‘almost certain’ that, in the absence of an agreement on the mutual recognition of conformity assessment bodies, the UK Notified Bodies would lose their notified status. I conclude the section by stating that I will henceforth assume that to be the case for the sake of the analysis:

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The EU-US MRAs (part 2): agency recognition as an alternative to MRAs

In my last post I traced the origins of the 1998 EU-US MRA on conformity assessment back to the Internal Market program of 1985-92 and its New Approach to product safety legislation. In accordance with the Community’s obligations under GATT, and the GATT Standards Code in particular, both the essential requirements that products had to meet, and the assessment procedures laid down to demonstrate their conformity with those requirements, were formally exactly the same for all products, whether imported or produced in Member States. The potential problem for third countries was that the third party conformity assessment bodies (CABs), whose involvement was necessary for some products, were designated by Member States and might naturally be expected to be established in the same Member State. Would it therefore be necessary for third country manufacturers to send their products to laboratories in the Community for type approval? And where the procedures required inspection of the manufacturing facilities and quality control systems, would inspectors have to come from Europe to carry them out, at considerable expense to the manufacturer?

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The EU-US MRAs on conformity assessment (part 1): Fortress Europe?

In my last post, I examined a claim made by Nick Clegg that MRAs on conformity assessment are needed by exporters from third countries if consignments are not to be ‘impounded and checked at the EU border’:

clegg

I pointed out that China does not in fact have an MRA with the EU on conformity assessment, and explained how it is able to satisfy the EU’s product legislation requirements in the same basic way as an EU manufacturer does, either through a manufacturer’s Declaration of Conformity or, where third party certification is needed, through local test facilities, which are in either a subsidiary or subcontracting relationship with an EU-based Notified Body.

In this series of posts, to complete the picture as it were, I look at the second country named by Clegg as having an MRA with the EU and show that, while there are indeed two such EU-US MRAs in existence, they play only a marginal role in helping US manufacturers to export to the EU. The story of the first of these, the 1998 ‘Agreement on mutual recognition between the European Community and the United States of America’, is of considerable interest in its own right, as much effort was invested in attaining the agreement, and great hopes were attached to it, but in the end it is generally considered to have been a partial failure. There exist detailed accounts of the negotiations by Schaffer (2002) 1 and Deveraux  (2006) 2, which give valuable insights into the differences between US and EU regulatory structures, as well as into the conduct of trade negotiations. In this post, I try to explain the events that led in May 1989 to a joint US-EU commitment to open discussions on mutual recognition of conformity assessment.

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Notes:

  1. G. Schaffer, ‘Reconciling Trade and Regulatory Goals: The prospects and limits of new approaches to transatlantic governance through Mutual Recognition and Safe Harbor Agreements’, Columbia Journal of International Law 29 (2002-3)
  2. C. Deveraux ‘The Mutual Recognition Agreements’ in ‘Case Studies in US Trade Negotiation’ by C, Deveraux, R. Lawrence, M. Watkins (Washington DC: Institute for International Economics). Another version with references can be found here.

Conformity assessment and the WTO option (part 3): testing in third countries

In my previous two posts (here and here), I have been examining the concern that has been expressed, notably by Andrew Tyrie MP, about the obstacles UK manufacturers might face in exporting to the EU under the WTO option, because of the need to ensure that their products continue to conform to EU product legislation, and because of a need moreover to be able to prove that conformity. I have been confining myself to products covered by the New Approach legislation, and have focussed on the form which that legislation has taken since the introduction of the New Legislative Framework in 2008. My main conclusions so far have been that:

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