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.

Technical Barriers to Trade without an MRA: Chemicals

In my last post I began to examine the extent to which, in the event of Britain leaving the EU, and in the absence of an agreement on the mutual recognition of conformity assessment procedures, there would be technical barriers to trade in industrial goods. I outlined the Old and the New Approach to EU Product Safety legislation, and showed that under the New Approach with CE Marking, British manufacturers could continue much as before. In the worst case, it is possible that they might have to change the Notified testing laboratory they employed to one belonging to a company established in the European Union, but I argued that even this could well be made unnecessary in most cases by means of subsidiaries of British testing and certification companies, or through subcontracting.

In this post I want to begin to examine the situation that would pertain in the Old Approach sectors, which include foodstuffs, biocides, motor vehicles, chemicals, cosmetics, detergents and pharmaceutical products. Whereas, in the New Approach, a whole sector may be covered by a single Directive or Regulation setting out the broad safety objectives, and a multiplicity of harmonised standards set by the European Standard organisations (CEN, CENELEC and ETSI), in the Old Approach the detailed requirements are contained in the EU legislation itself. Today I look at chemicals, of which UK exports amounted to £24.7bn in the 12 months to November 2014, and of which exports to EU countries increased by £0.7bn in 3 months between January and April 2016.

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Technical Barriers to Trade in the absence of a Mutual Recognition Agreement

Before continuing to examine the possible outlines of a post-Brexit Mutual Recognition Agreement on conformity assessment for products traded with the European Union, it occurs to me that it would be appropriate, and indeed logically prior, to consider what the situation would be without any such agreement. I have seen very different estimations of the extent of the problem of Technical Barriers to Trade in the absence of any such agreement. On the one hand, in Flexcit, Richard North has warned (p. 69, referring also to barriers related to Sanitary measures for trade in animal products) that in the absence of such MRAs the UK would:

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Overcoming Technical Barriers to Trade: An introduction to the EU’s Mutual Recognition Agreements

In my last post, I explained how Switzerland, having rejected in a referendum in December 1992 the EEA Agreement which it had signed in May, and having thereupon suspended its membership application to the European Community which it had made in the same month of May 1992, then found an alternative means of participating in the EU/EEA single market. First, it further developed the practice, which it had begun in 1988, of the autonomous adoption of EU law into its own domestic legislation; and second, it successfully negotiated with the EU a series of bilateral agreements, building upon the already extant 1972 Free Trade Agreement, which have given Switzerland a degree of access to the single market almost certainly greater than that of any other state outside the EU/EEA, but without the peril of being obliged (I am discounting here the virtually unusable right of reservation contained in Article 102 of the EEA Agreement) to adopt new EU legislation as it issues forth from the Commission.

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