3Regulatory alignment
19.A key question in negotiating our future relations with the EU is in which sectors the UK wishes to maintain regulatory alignment with the EU. Ministers have explained that when we leave the EU, the UK will be free to choose the areas in which we diverge, those we maintain alignment, and those we seek to maintain the same regulatory goals but by different means.31 In this context, we sought to examine the extent to which the Government should seek to diverge from EU standards in the aerospace sector, or whether there would be advantages in seeking to achieve similar regulatory objectives by different means.
The European Aviation Safety Agency
20.The EU regulatory regime in aerospace is highly integrated. The European Aviation Safety Agency (EASA) is responsible for developing technical aviation rules, issuing initial and ongoing type certification of aircraft and components, harmonisation in aerospace across the EU and EASA’s non-EU members, and engagement with international stakeholders. EASA also has responsibility for aviation licencing, air traffic management and aerodromes. National aviation authorities—in the UK’s case the Civil Aviation Authority (CAA)—enforce compliance with EASA’s rules in the member states under its oversight.32
21.EASA membership facilitates the free movement of aerospace goods throughout the EU. EASA issues Design Organisation Approval and Production Organisation Approval to UK companies, allowing them to operate freely in Europe, and Authorised Release Certificates that allow components to be used in manufacturing across the EU. Firms working in repair and maintenance also require EASA approvals, which allow UK-based organisations to maintain aircraft registered in any EU Member State and vice versa.33
22.At a global level, the International Civil Aviation Organization is a UN agency that works with its member state aviation agencies to build consensus on Standards and Recommended Practices for global aerospace regulation.34 However, it does not issue certifications, nor enable trade across borders. In practice, EASA and its US equivalent, the Federal Aviation Authority (FAA), set product standards that are widely accepted and replicated globally.35
23.EASA membership is also instrumental in giving UK aerospace access to extra-EU markets. Most importantly, EASA has agreed Bilateral Aviation Safety Agreements with the FAA and its counterparts in Canada and Brazil that enables them to recognise one another’s certification with a significant reduction in paperwork and assessments, and has created a four-way Certification Management Team that aims to further harmonisation.36
24.EASA has only existed since 2002, and reached full competency in 2008. However, reversing the creation of EASA and returning to its predecessor cooperation-based Joint Aviation Authorities would not be straightforward. According to ADS “the world has moved on in the way in which industry works… you had to have a variety of certifications between individual member states and places you might want to sell to… The expertise required to oversee those major certifications does not sit in individual member states; it now sits in Cologne within the European Aviation Safety Agency.”37
25.We have not heard any complaints from the industry about the closely harmonised regulatory regime that EASA has developed since 2002. The Royal Aeronautical Society told us:
Aviation is safer than it has ever been by orders of magnitude. That is because of the work of the collaborative environment and common standards between, in particular, the FAA and EASA… It is demonstrably the case that aviation safety has accelerated as a result of the formation of EASA.38
Divergence
26.If the UK were not a member of EASA after Brexit, it could seek to diverge its regulatory standards in aerospace. However, none of the oral or written evidence submitted to this inquiry has identified any benefit of doing so. The UK Trade Policy Observatory describes divergence as “utterly self-defeating”, since “the civil aerospace industry has long been globalized along American standards via the FAA and the European Aviation Safety Authority… and there is effectively no scope for divergence.”39 BEIS states that “It will be in the interests of both sides in the negotiation to maintain closely integrated aviation markets”.40
27.The industry wants to avoid double certification, by which it means having to submit its products to certification procedures and compliance inspections both by UK authorities and by the authorities of the markets it wants to export to.41 The most straightforward way for UK aerospace to avoid double certification after Brexit would be for the UK to remain a member state of EASA and its network of Bilateral Aviation Safety Agreements.
28.Some of the evidence submitted to this inquiry raised the prospect that the balance of costs and benefits from remaining closely aligned to EU regulation in given sectors may change in future. Stephen Booth from Open Europe told us that: “We also need to distinguish between the snapshot of the day after we leave the European Union… [and] years down the line. It is quite possible to imagine the EU coming up with regulation that is very costly to business, which not the entire sector would want to sign up to in the future … I have sympathy with those arguing that we cannot forever be rule-takers in these sectors and that we need to have flexibility in the future.”42 Nonetheless, for the time being the benefits of retaining close alignment in aerospace given the balance trade-offs in the sector are clear. Mr Booth also said:
For EASA, it is very obvious why that is the case. It is very important in developing the technical standards. The UK has provided lots of input into that in the past. We are clearly not going to create a separate aviation market to that of the EU.43
It may be in the UK’s national interest to reassess its degree of regulatory alignment with the EU in the aerospace sector in future, in a predictable way that provides certainty for the industry. However, the evidence submitted to this inquiry decisively favours maintaining a high degree of alignment after Brexit.
29.The evidence we have received from aerospace businesses, unions and academia is unanimous in support of the EU continuing its membership of EASA. Close global regulatory alignment in aerospace has resulted in benefits in terms of safety, the ease of global trade and efficiency, while it is unclear that there are any benefits from divergence at this time. Accordingly, the Committee notes and welcomes the Prime Minister’s statement in her Mansion House speech on 2nd March 2018 that the Government will explore with the EU the terms on which the UK could remain part of EASA, with the consequent appropriate financial contribution.44
Maximising influence
30.EASA regulations already allow third-party non-EU countries to be EASA member states.45 Third-party member states, which currently include the four EFTA countries,46 have broadly the same obligations as full member states, including the acceptance and implementation of EASA rules and financial contributions on the same basis. However, third-party countries do not have voting rights on the EASA management board.47
31.Britain’s ability to influence EASA decisions goes well beyond its right to vote at management board. The UK provides around a quarter of all safety data gathered by EASA, around two-thirds of all of EASA’s safety rule-making and UK nationals make up around 8 per cent of EASA’s regulatory workforce.48 Third country member states are able to propose regulations and participate in their development, and since EASA takes a consensus-based approach, in practice regulations are voted on only on rare occasions.49
32.The industry would prefer that the UK remains a full member state of EASA with voting rights. Airbus told us:
Another option is… we would be a secondary member like Norway and Switzerland. They can manage to do that, but then that comes back to… how much influence we would have. This is where I… would rather [the UK] had full influence in this body.50
Nonetheless, in the case where that option were not available, we did not receive any evidence suggesting that the UK would face an unacceptable loss of influence, given the benefits of EASA membership, or gain any practical influence on global aerospace regulation from outside EASA. According to the Royal Aeronautical Society:
It is very widely recognised that UK expertise is hugely influential; therefore, we are able to shape the global regulation regime to suit the UK… it is really hard to see how we would sustain that same level of influence were we to become national.”51
The Prime Minister has emphasised an intention to continue to work with the EU regulators,52 something which is clearly in the interests of both the UK and EU.
33.In its negotiations with the EU, the Government should prioritise maintaining the UK’s EASA membership, while retaining as much influence within EASA as possible. At present, EASA’s regulations preclude the UK retaining its voting rights as a non-EU member state. The Government should seek a deal to retain those voting rights; however, even without voting rights, the UK is likely to retain greater influence on global aerospace regulation from within EASA than without.
European Court of Justice jurisdiction
34.The European Court of Justice (ECJ) has ultimate jurisdiction over EASA rulings. In the case of third country member states, ECJ jurisdiction operates indirectly through arbitration committees. If the ECJ decided that a EASA ruling was inapplicable or had to be modified, EASA would abide by the ECJ’s decision, and a third country member state would have to accept EASA’s modified rules.
35.However, in practice the ECJ has played no role in the work of EASA. The Government has identified only one infringement case involving aerospace that has been brought against the UK in 38 years, and the ECJ has never issued a ruling on an EASA decision.53 ADS told us “From a day-to-day perspective, the ECJ is not a constant in our lives or a concern that we have.”54
36.In practice, ECJ judgements have not been an issue for the aerospace sector. In her Mansion House speech on 2nd March 2018, the Prime Minister acknowledged that “the decisions of the ECJ will continue to affect us” after Brexit and said that if “the UK should continue to participate in an EU agency the UK would have to respect the remit of the ECJ in that regard.”55 This is preferable to the alternative of securing an escape from ECJ jurisdiction at the cost of influence in EASA. The Committee welcomes the Government’s pragmatic approach, which is especially suitable for the aerospace sector and regarding ECJ jurisdiction over EASA.
31 Prime Minister, evidence to the Liaison Committee, 20 December 2017, Q13
32 GAMA, (BRS0007) and European Scrutiny Committee, 14 EU Aviation Safety Agency (EASA), 21 February 2018
34 ICAO website, About ICAO, accessed 1 March 2018
44 Prime Minister’s Office, ‘PM speech on our future economic partnership with the European Union’, 2 March 2018
46 European Free Trade Area (Norway, Iceland, Liechtenstein and Switzerland).
47 European Scrutiny Committee, 14 EU Aviation Safety Agency (EASA), 21 February 2018
49 Committee on Exiting the European Union, DExEU Aerospace Sector Report, December 2017
52 Prime Minister’s Office, ‘PM speech on our future economic partnership with the European Union’, 2 March 2018
53 BEIS, Supplementary evidence, Court of Justice BEIS Cases and European Scrutiny Committee, 14 EU Aviation Safety Agency (EASA), 21 February 2018
55 Prime Minister’s Office, ‘PM speech on our future economic partnership with the European Union’, 2 March 2018
Published: 19 March 2018