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:

North has the same view, saying that in these (WTO option) circumstances the UK Notified Bodies will be removed from a list in the Official Journal. We are in agreement therefore on ‘the continued recognition of UK bodies after a sudden withdrawal by the UK’.

Status of existing certificates issued by Notified Bodies

Where North and I differ to some degree is on the likelihood that EC Certificates that had already been issued by UK Notified Bodies would lose their validity. He quotes correctly from my summary of my assessment of the situation in part 1 of the series, but doesn’t seem to engage with my discussion of the matter in part 2. There I give two reasons why these certificates might lose their validity:

  • EC Certificates generally refer to the certifier as a Notified Body, which they would no longer be, and give their name and number, which they would no longer have;
  •  the legislation provides for an ongoing role for the Notified Body, which it would no longer be able to fulfil.

Then I give three arguments for the continuing validity of the certificates:

  • Many EC Certificates have stated periods of validity;
  • EC Certificates issued by UK Notified Bodies are held by companies all over the world, including in the EU. A sudden cut-off of their validity would affect all these companies, not only those based in the UK;
  • Such a measure could not be justified on the basis of safety, which is the primary purpose of the product safety legislation. The products would not suddenly become unsafe on the day that the UK left the EU.

I might have added a fourth argument:

  • Some of the major UK Notified Bodies, such as SGS UK, SGS Baseefa (Swiss), UL UK (American), and TÜV Sud BABT (German), are subsidiaries of foreign companies, who might arguably be expected to lobby their governments to favour of the continued validity of the certificates issued by their subsidiaries.

North’s argument for loss of validity

North provides a useful reference to a passage in the ‘Blue Guide‘ (p. 87) giving the procedure that is to be adopted when a Member State withdraws the notification it has issued to a Notified Body. As is apparent from the heading of the relevant section (5.3.4) in the Guide, the primary reason why a notification might be withdrawn is a lack of competence. There might be some cause therefore to doubt the safety of the products that had been certified by such a previously notified body. Despite this potential concern, the Commission’s guidance is, as North points out, to allow previously issued certificates to retain their validity:

The procedure specified, as North also points out, involves action by the notifying Member State. Since the UK would no longer be a Member State, ‘it is hard to see’, as North puts it, ‘how the conditions could be satisfied’. He seems to find this a decisive argument for certificates losing their validity.

In response, first of all, this is the procedure to be followed when a Member State withdraws a notification. The Blue Guide does not specify the procedure to be followed when a Notified Body loses its notified status not because of any lack of competence of its own, but simply because of the change of status of the country which notified it. Guidance documents cannot cover every eventuality, and it is perhaps not too surprising that the Commission had not laid down procedures to be followed in the circumstance of an Article 50 withdrawal.

Second, it seems to me that, if anything, this guidance from the Commission shows that the general policy is to find ways to allow certificates to retain their validity. This case differs from the one they are giving guidance for in two ways. First, there would be no Member State to supervise the files of the formerly notified body, making the situation harder. But secondly, on the other hand, there would not be the concern about the competence of the previously notified body, making the situation easier.

In the UK, it is the general practice that UK notifying authorities notify bodies that have already been accredited by UKAS for the relevant competences. I propose in Part 2 (section entitled ‘A Proposal’) that existing certificates be allowed to retain their validity so long as the formerly notified body retains its UKAS accreditation (and so long as UKAS remains a signatory to ILAC and IAF). This would I think provide a reasonable reassurance that the body remains competent to ensure the continuing safety of the product concerned.

Danger of a sudden cut-off

North criticises my statement that if it did come to pass that certificates lost their validity on Brexit day, ‘it would certainly be known about in advance, and UK exporters would then take the necessary steps to obtain valid certificates before they sent their goods to the border’. He retorts that there would be no advance warning, so that we would face ‘a “sudden death” scenario’.

Proposal: set an earlier cut-off date for negotiations to end

I rather agree with North that it would be dangerous to allow negotiations to continue up to the end of the 2 year withdrawal period. If we had to walk away from the negotiations as the hour struck midnight, and our membership of the EU ended, there would undoubtedly be all sorts of serious difficulties, as the Treaties ceased effect.

In the event that there are FTA negotiations parallel to the withdrawal negotiations, I think it could be good for the UK to insist on an end date sufficiently early to allow, if necessary, for UK companies to prepare for WTO trading, and for arrangements to be made for a myriad of matters, of which EC Certificates serve as an example. I would have thought we should set the date sufficiently early to allow also for the possibility of the European Parliament rejecting the FTA.

My own view, for what it is worth, is that we might, when we issue the Article 50 notification, offer the EU an FTA, with negotiations to start, say, three months later, and end after not more than 9 months (or a year, say). That would give plenty of time to agree on the continuation of zero tariffs, on the mutual recognition of conformity assessment bodies, and on a multitude of other arrangements which would foster free trade and good relations with the EU. No doubt technical committees could be set up to deal with matters where there had been insufficient time to iron out all the difficulties. It seems to me that business on both sides might well prefer a relatively simple FTA which came into force on Brexit day than a more complex one at some indefinite distance in the future.

I am not of course assuming that the EU would agree to such a proposal, but I think they might. EU, American, Japanese and other companies with subsidiaries in the UK might help create pressure on the EU (if pressure were needed) to negotiate during the Article 50 withdrawal period. The EU’s own founding treaties create an obligation upon it to contribute to the harmonious development of world trade (Article 206 TFEU):

The precedent of the 1972 EEC-EFTA FTAs

When it became clear in late 1971 that the UK and Denmark were joining the EEC, there was concern in various quarters about a consequent loss of free trade between these two countries and their former EFTA partners. To avoid this result, a series of FTAs were concluded between EFTA states and the EEC to come into force on 1 January 1973, the day of the UK and Denmark’s accession, so as to achieve a seamless continuation of free trade. The negotiations with Austria, Iceland, Portugal, Sweden and Switzerland began in December 1971 and were concluded in July 1972, seven months later:

It seems to me that these negotiations were most likely completed more quickly than usual because there was a deadline to meet.

After Norway rejected EEC membership in a referendum in September 1972, it began negotiations with the EEC on a similar FTA in February 1973 and completed them two months later:

I do not know whether tariffs were reimposed between Norway on the one hand and the UK and Denmark on the other 1 between 1 January 1973 and 1 July 1973 when the FTA came into force, and would be interested to find out. I suspect they were not and that the FTA was completed very quickly to avoid this happening.

There are of course many differences between these early FTAs and the type of FTA we might seek to agree with the EU. One quick point that I think may be worth making is that where there are a large number of different areas to cover, there may also be a correspondingly large number of negotiating teams working on each one. So while there would certainly be a lot to do, there would also be many hands set to the task.

Andrew

 

The image is of the first lines of an EC Certificate issued by UL UK in 2011 under the Construction Products Directive to the Liechtenstein multinational Hilti Corporation for a Penetration Seal whose purpose is to reinstate fire resistance where a wall or floor has been penetrated by a plastic pipe.

Notes:

  1. Corrected 13 January 2017

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