Conformity assessment and the WTO option (part 2)

In my previous post, I introduced 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 am confining myself to products covered by the New Approach legislation, and have focussed on the form that legislation has taken since the introduction of the New Legislative Framework in 2008. The main points were:

  1. In principle, the obligations placed upon manufacturers in the EU legislation are exactly the same, whether they are in the EU or out of it. Not only are the essential safety requirements that have to be met by their products the same, but the assessment procedures laid down to demonstrate conformity to those requirements are the same.
  2. Manufacturers based outside the EU require an ‘importer’ to receive the products into the EU and place them on the Community market. But the obligations upon the importer are relatively minor, and do not include carrying out the conformity assessment procedures.
  3. Under the Module A conformity assessment procedure, the manufacturer carries out the whole process himself, draws up a Declaration of Conformity on his own responsibility, and attaches the CE Mark, without any need for a third party to confirm the accuracy of the declaration.
  4. All other procedures require that a third-party Notified Body issues an EC Type-Examination Certificate for the product, and most of these other procedures also require the involvement of such a body in the production process. The manufacturer draws up a Declaration of Conformity on his own responsibility, and attaches the CE Mark, as before, but in these cases the declaration must include the details of the procedures performed by the Notified Body (or Bodies), and of the certificate issued.
  5. For most products, the Module A procedure is sufficient, so that there is no need for a Notified Body.

We can now begin to assess what might be the consequences, with regard to conformity assessment of their products, of the WTO Brexit option for UK exporters of CE marked products to the EU.

Export of Module A products

First of all, for Module A products, there would be no change at the place of production. The manufacturer would make the product, test it, affix the CE mark, and draw up the Technical Documentation and Declaration of Conformity just as before.

One difference would be that the product would no longer be placed on the Union market by the manufacturer, but by an importer. For a company that is already exporting (or ‘dispatching’ as the EU prefers to call it) to r-EU, this would not necessarily involve the addition of another agent in the supply chain. Rather, it seems to me that whoever is currently receiving the goods into r-EU, whether it be an import agent, or a freightforwarder, or a local office or subsidiary of the company, or even the purchaser himself, could potentially take on the modest obligations of the ‘importer’ (given generally in Article R4 of the framework Decision 768/2008/EC) under New Legislative Framework legislation.

UK Notified Bodies after Brexit

Under the WTO option, without any additional agreements on the mutual recognition of conformity assessment bodies, it seems almost certain that those bodies which had been notified by UK notifying authorities would lose their ability to function as Notified Bodies. In the case of PPE, for example, not only is there a requirement that, in order to be notified, a conformity assessment body must be established in a Member State (Regulation 2016/425):

notif

but there is also a requirement that the notifying authority restrict, suspend or withdraw the notification if that condition is no longer fulfilled:

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I think this proves that it is intended in the legislation that the Notified Body should continue to fulfil the same requirements set for its original notification, including being established in a Member State. Admittedly, after Brexit, we would no longer have a notifying authority to inform the Commission and remaining Member States of the change, nor indeed would the Regulation any more be in force to oblige it do so, but then they would hardly need to be informed since the changed circumstances would be obvious to all.

In a post-Brexit statement on product certification, BSI ‘anticipates’ that it will:

remain an EU Notified Body for assessing and approving products against the relevant CE directives and regulations (such as Construction Product Regulation, PPE Directive and the Gas Appliance Directive).  There are recognized existing mechanisms in place for non-EU countries to participate, these include the Mutual Recognition Agreements between the EU and America, Canada, Australia, Switzerland and Japan.  Regulatory authorities in these countries designate Notified Bodies to carry out these activities in the same way as member states of the EU.

By implication, therefore, BSI does not expect to be able to continue as an EU Notified Body without some ‘mechanism’ to enable it to do so. I happen to be of the same opinion as BSI that some such mechanism will indeed be found, with a traditional freestanding intergovernmental MRA being one option, and a Mutual Recognition chapter in an FTA being another. But for the purpose of this examination of the WTO fallback option, I will assume that UK notified bodies, including UK subsidiaries of non-British companies, would lose their notified status.

Issue of new EC Certificates

It must follow that these previously notified bodies would no longer be able to issue new certificates, whether for new products or to renew expired certification. According to the legislation, EC Type-Examination Certificates, which I will abbreviate henceforth to ‘EC Certificates’, are to be issued by a Notified Body (Decision 768/2008/EC, Annex II, Module B, Section 6):

type

The PPE Regulation, for one, stipulates explicitly that the CE Certificate should bear the name and identification number of the Notified Body (Annex V, 6.2(a)):

cert

as illustrated, for example, in a BSI EC Type-Examination certificate issued to Philips Medical Systems in the USA under the existing PPE Directive 89/686/EEC:

bsi2

pietro

A manufacturer would hardly employ a testing and certification body to certify its products for export to the EU, if that company were not EU notified. But then the question arises as to whether existing certificates, issued when the body was still notified, would lose their validity when notified status was lost.

Validity of existing EC Certificates

On the one hand, BSI anticipate that:

products already certified and those certified while the negotiations progress, will continue to be accepted by the EU authorities and member states of the EU.

While on the other, Richard North, in a paper (version dated 29 July 2016) on the WTO option, writes (p. 7) that, after such a loss of notified status by UK testing and certification bodies:

Documentation generated by them may no longer be recognised by EU authorities.

‘Generated’ can be read either as referring to the past, or to the future. It seems certain that the EU would reject EC Certificates issued by formerly notified bodies after the loss of notification. If they were to accept such certificates, they would set a precedent for non-notified bodies worldwide, and remove a central plank of their legislative framework. Therefore I think it unlikely that North is referring to the future here, because if he were, he would surely not have indicated uncertainty about the matter by writing ‘may’ rather than, say, ‘will’.

Moreover, it will be recalled that in his evidence to the Treasury Select Committee, North claimed that under the WTO option, British exports to the EU would be ‘automatically detained’ at the border, until ‘approved checks’ had been carried out:

proof

Such a scenario could not be envisaged if it were only new certificates, issued from time to time as companies introduce new models of their products, that would lose their validity. So I conclude that North is probably suggesting that existing certificates could be rejected by EU authorities. I can see at least two reasons why this could happen.

Reasons why EC Certificates might lose their validity

First, the EC Certificates generally refer to the certifier as a Notified Body, which they would no longer be, and give its number, which it would no longer have. So the certificates would no longer reflect the current state of affairs.

Second, more substantively, the legislation provides for an ongoing role for the Notified Body, which it would no longer be able to fulfil. For example, under Module B (‘EU Type-Examination’) of the framework Decision 768/2008/EC, the Notified Body (Annex II, Module B, 7) is to keep itself apprised of any changes in the state of the art which would necessitate design modifications:

art-2

And where the Notified Body is involved with the production process, as in Modules D through H of the PPE Regulation for example, its continuing role is greater still. 1 Module E, for example, provides (Decision 768/2008/EC, Annex II, Module E, 4.3-4) for the Notified Body to carry out both periodic audits and unexpected visits:

visits

If the body has lost its notified status, it will no longer be able formally to fulfil these requirements, as they are reproduced in the various NLF Regulations and Directives.

Arguments for continuing validity

On the other hand, I can see at least three arguments against a sudden cut-off in the validity of certificates.

First, many EC Type-Examination Certificates have stated periods of validity, as provided for in the ‘common framework’ Decision 768/2008/EC, Article 4(5)(e):

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modules

validity

The PPE Regulation 2016/425 makes such provision at Annex V, 6.1, with the period being for five years, and renewals permitted:

five-years

Manufacturers have had to invest financial resources to obtain such a certificate, and no doubt made plans on the basis of its continuing validity. It seems to me that they could argue justly that they had been treated unfairly, if the certificate were abruptly withdrawn, through no fault of their own. A British company could perhaps be held to share moral responsibility for the national decision to leave the EU, and lose the national right to notify conformity assessment bodies to the EU. But consider this certificate issued to an India boot manufacturer, by ITS Services (UK Notified Body 0362) under the PPE Directive, valid until 8 September 2019:

ryder

If the UK leaves the EU before that date, could it be just or reasonable abruptly to terminate this company’s exports to the single market? Their neighbouring competitor might have had their products certified with an r-EU Notified Body. Could they even, if I maybe forgiven a brief speculative excursion outside my area of any competence, have any basis for a legal claim, say for a breach of implied contract?

It is not only companies in third countries that would be affected but also those in the r-EU or the EEA who have certificates from UK Notified Bodies. Here, for example, are parts of a Certificate issued this year by SGS UK (County Durham, UK Notified Body 0890) under the Machinery Directive 2006/42/EC:

sgs-uk-italy

sgs-uk-italy-2

SGS UK

The Swiss SGS, possibly the world’s largest TIC (Testing, Inspection, and Certification) company, with revenue in 2015 of CHF 5.7bn (£4.5bn, current rate) issues many of its EC Type-Examination Certificates through its wholly owned subsidiary SGS UK, which contains within it six separate UK-notified branches, each with their own identification number, and one Recognised Third Party Organisation which can fulfil certain third party functions under the Pressure Equipment Directive 2014/68/EU. 2:

sgs-uk

Remarkably, despite having wholly owned subsidiaries throughout the EEA, and despite there being a PPE chapter (Annex 1, Ch. 11) in the EU-Swiss MRA, allowing Swiss companies to operate as EU Notified Bodies, it would appear from the relevant page of the NANDO database that SGS are notified under the PPE Directive only through their UK subsidiary (Weston-super-Mare branch, NB 0120). Part of the demonstration of this is shown below, which shows three Swiss companies, but not SGS, notified by Switzerland under the Directive, and SGS UK notified by the UK:swiss

The results of a search for EC Certificates issued by SGS under PPE Directive 89/686/EEC include a safety helmet (2004) made in France, a coverall (2012) made in Luxembourg, a rebreather (2014) from the Czech Republic, rubber gloves (2006) from Mexico, PVC gloves (2007) from Chile, X-ray filtering lenses (2008), X-ray protective clothing (2010) and a mountaineering ice-tool (2015) from the USA, Kevlar Gloves from Sri Lanka (1998), and a gas tight suit (2004), a chemical protective suit (2015), nitrile gloves (2010), Kevlar gloves (2010), and shape connectors (2012) from the UK. All were certified by SGS UK, as was the management system (2015-18) of a company making protective apparel in China.

Further certification by UK Notified Bodies under the PPE Directive

Similarly BSI (UK Notified Body 0086) have issued, under PPE Directive 89/686/EC, EC Certificates for paediatric eye protectors (2015) to Philips Medical in the USA, as partially displayed above, filtering masks (2016, USA), self retracting lifelines (2014, USA), anti-vibration gloves (2007, USA), industrial safety helmets (2016, Canada), industrial bump caps (2013, Sweden), fall arresters (China, 2013), face masks (2016, Taiwan), filtering masks again (2016, Ireland), industrial bump caps again (2014, Ireland), goggles (2013, Malaysia), and nitrile gloves (2015, Malaysia).

The nitrile gloves, last mentioned, are manufactured in Malaysia for a German company Berner International. Of the six types of disposable protective gloves they offer, three are certified by BSI and three by BG-PRÜFZERT, now DGUV Test (German Notified Body 0299) of the German Social Accident Assurance. Of nine types of protective coverall the same company Berner offers, eight are certified by SGS UK (UK Notified Body 0120), and one by BG-PRÜFZERT. Of two respiratory masks they offer, one is certified by a UK Notified Body (no. 0194), Inspec International.

SGS Baseefa and the ATEX Directive

To look for a moment at the situation in another sector, that of equipment for use in potentially explosive atmospheres (covered by ATEX equipment Directive 2014/34/EU), one of the world’s foremost testing, inspecting and certifying companies is based in the UK, in Buxton. Work has been going on there since the 1920s (p. 25/3) (and prior to that in Cumbria), originally under the auspices of the Safety in Mines Research Establisment, and then of the British Approvals Service for Electrical Equipment in Flammable Atmospheres (Baseefa) and the Health and Safety Executive. After the HSE terminated its certification activity in 2001, Baseefa became a private company, which was then acquired by SGS in 2011, becoming SGS Baseefa. Its Technical Manager, Ron Sinclair (MBE), is Chairman of Technical Committee 31 on Equipment for Explosive Atmospheres of the European Standardisation body CENELEC, vice-chair of the European Notified Bodies Group for the ATEX Directive, and a former chair of the Test and Assessment Group of IECEx, the International Electrical Commission’s system for conformity assessment of equipment used in explosive atmospheres.

I mention Sinclair’s international credentials in support of SGS Baseefa’s own claim to be a world leader in the field.  As of 7 September 2016, it reported having issued several hundred ATEX certificates already this year, and more IECEx certificates than any other certification body in the world. It was preferred as the Notified Body (no. 1180) under the ATEX Directive for pressure transmitters (2016) from Minnesota,  an HF isolator (2015) and Repeaters (2016) from Germany, electrical motors from the large Brazilian company WEG, flameproof horns (2012) from Bosch Security Systems in the Netherlands, and so on.

A need for transitional arrangements

If I have laboured the point somewhat, it has been to give an impression of the extent to which UK Notified Bodies are employed globally by exporters to the EU. If EC Certificates were to lose their validity immediately the day after Brexit, the disruption would not be limited to the UK but would be global. Apart from the loss and inconvenience to both exporters and importers, there would be a danger of retaliation against EU exports to the affected countries. My second argument then, against a sudden cut-off of the validity of certificates, is its sheer impracticability.

Moreover, and this is my third argument, such a measure could not be justified on the basis of safety, which is the original objective of the legislation. The products will not suddenly become less safe on the day that Britain leaves the EU. Indeed, some of the UK-based certifiers have been chosen worldwide because of their international reputation for excellence.

That said, if the previously notified body were unable to continue with its ongoing supervisory role, then there would be genuine safety concerns in the longer term. It seems to me therefore, that there would need to be transitional arrangements, of which I can see two possible kinds. One would be to require that a new Notified Body was found to take over the responsibilities of the previous one within a certain time limit, a year for example.

A proposal

Another would be to allow the formerly notified body to fulfil its ongoing responsibilities until the expiry of the certificate. Most of the UK Notified Bodies have been accredited by UKAS (the United Kingdom Accreditation Service) as competent to undertake conformity assessment under the relevant EU Directive or Regulation. UKAS is a signatory to both the ILAC (International Laboratory Accreditation Cooperation) MRA (Mutual Recognition Arrangement) and the IAF (International Accreditation Forum) MLA (Multilateral Recognition Arrangement). The aim (p. 5) of ILAC is ‘a product tested or inspected once, accepted everywhere’ and the motto of IAF is ‘Certified Once, Accepted Everywhere’. The EA (European cooperation for Accreditation), which is the body responsible for the European accreditation infrastructure under Article 14(6) of Regulation (EC) 765/2008, has recognised that:

attestations of conformity issued in accordance with the requirements of ISO/IEC 17011 under accreditation bodies signatories to the ILAC MRA and IAF MLA but … not complying with all the requirements of the EU regulation are considered to be equally reliable from a technical point of view to those issued within the EA MLA and BLAs. 3

ISO/IEC 17011 is the international standard laying down ‘General requirements for accreditation bodies accrediting conformity assessment bodies’. It is the standard employed by ILAC and IAF in assessing by peer review applications for membership in their MRA and MLA. So long as UKAS continues to meet this standard, and so long as a formerly notified body in the UK maintains an accreditation with UKAS, the r-EU will be able to accept as reliable, from a technical point of view, the certificates they have issued. This seems to me to be a reasonable basis on which to allow previously issued certificates to retain their validity in the EU until their expiry.

The legislation allows Notified Bodies to grant approvals to modifications made to a previously approved type, by means of additions to the existing EC Certificate (Decision 768/2008/EC):

consideration

For example, amendments to the EC Certificate were required for additions to the colour range of the industrial bump caps manufactured in Sweden and certified by BSI:

bump

colour

If the previously notified body were to be allowed to continue its supervisory role until the expiry of the certificate, it would seem sensible to allow amendments of this sort.

Another possibility would be to allow previously notified bodies to continue to certify a particular product type not only until the expiry of the certificate but, permitting renewals, until manufacture ceased.

Conclusions

The conclusions reached in part 2 are as follows:

  • Upon exit from the EU, Module A products would continue to be accepted as before.
  • In the absence of an agreement on mutual recognition of conformity assessment or other arrangement to allow continuation, UK Notified Bodies would lose their notified status.
  • Such bodies would no longer be able to issue new certificates for new products.
  • A remarkably high proportion of existing EC Type-Examination Certificates, worldwide, have been issued by UK Notified Bodies, with mention having been made here of BSI Group, Intertek and SGS UK.
  • For this reason, as well as because of stated periods of validity, and because of the lack of a basis in actual safety considerations, it would seem impracticable for the EU to end the validity of EC Certificates immediately after Brexit.
  • Nevertheless, because of the wording of the certificates, and because of the ongoing supervisory role in the legislation of the Notified Body that has issued them, some more or less explicit agreement or arrangement would be necessary for confidence to be retained in their continuing validity.
  • One possibility might be to allow the previously notified bodies to continue their supervisory role so long as they were accredited by UKAS (and so long as UKAS remains a signatory to the ILAC MLA and the IAF MLA, which seems certain). Then, perhaps, the certificates could be allowed to maintain their validity until expiry, or even until manufacture ceased of the product type concerned.

Two questions raised by Tyrie and North remain to be answered. First, if UK Notified Bodies were to lose their notified status, would product samples have to be sent to the EU for testing as Tyrie suggested (see part 1)? I will show in part 3 that products are already routinely tested in third country laboratories, under the supervision of EU Notified Bodies, who also issue the certification. Accordingly, there is no reason why products cannot be tested in the UK after Brexit.

Second, would products be ‘automatically detained’ at the border, as North suggested? I have shown that for Module A products, which are the majority, their CE Mark would continue to be valid, so that there would be no basis for automatic detention. For NB products, if my argument is accepted that arrangements will have to made for existing certificates to retain their validity, then again there would be no basis for automatic detention. It remains to ask how much disruption there could be from occasional conformity checks at the border, and I will endeavour to address this point in a later post.

A third matter of potential concern is the impact of the loss of notified status, under the WTO option, on testing, inspection and certification companies established in the UK. I will argue that through a combination of subcontracting and the use of subsidiaries or other parts of the same company based in r-EU, it would probably be possible for companies to retain the same testing services, even if the certificate itself had to be issued from the Union. The apparent ability of the American Underwriters Laboratories to perform EU Notified Body work worldwide, which I drew attention to in a previous post (section entitled ‘subsidiaries’), gives some indication of the possibilities.

The photograph shows a less painful way of testing helmets than that portrayed in my last post.

 

Notes:

  1. In Modules C1 and C2, the manufacturer has a choice between using a Notified Body and using an in-house accredited body. As explained in a previous footnote, the status of the in-house accredited body will also become open to question after Brexit.
  2. For it being wholly owned, see SGS Annual Report 2015, pp. 2, 201. Link.
  3. Commission, ‘CERTIF 2008-03 Impact of the EU accreditation framework at international level’ (November 2008) p. 4, n. 8. Link.

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