Documents considered by the Committee on 12 September 2018 Contents

13Commission Brexit preparedness proposal: Vehicle type approvals

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Transport Select Committee and the Exiting the European Union Committee.

Document details

Proposal for a Regulation of the European Parliament and of the Council complementing EU type-approval legislation with regard to the withdrawal of the United Kingdom from the Union.

Legal base

Article 114 of the Treaty on the Functioning of the European Union (TFEU); ordinary legislative procedure; qualified majority voting

Department

Transport

Document Number

(39857), 9716/18, COM(18) 397 final

Summary and Committee’s conclusions

13.1To place vehicles on the EU market, they must be certified under the EU vehicle type approval framework, which permits reciprocal recognition of approvals issued by the national type-approval authorities (TAAs) of the EU Member States.

13.2The European Commission has previously set out the legal consequences of the UK’s departure from the European Union for vehicle type approvals in a technical notice to stakeholders:114 in summary, when the United Kingdom ceases to be an EU Member State the UK approval authority (the Vehicle Certification Agency, or VCA) would cease to be an EU type-approval authority, meaning that UK-issued EU type-approvals (with the exception of the proportion of approvals which have been harmonised at UN level) would cease to be valid in the EU. The draft Withdrawal Agreement115 currently being negotiated between the UK and the EU excludes the issue of vehicle type approvals from its scope.

13.3Were no further action taken, EU exit would have disruptive effects on automotive manufacturers which had used the UK type approval authority to place goods on the EU market. From the moment that EU law ceased to apply to the UK it would cease to be possible to market VCA-approved vehicles within the EU. Manufacturers of road vehicles, agricultural vehicles, motorcycles and non-road mobile machinery with UK-issued approvals—many of which are not UK companies—would have to undertake costly and time-consuming retesting and redesign work to reapprove vehicles with a EU27 approval authority prior to exit to be certain of remaining in compliance with EU rules.

13.4On 4 June 2018, in order to address some of the uncertainties created by this situation, the Commission published a proposal for an EU Regulation116 which would modify existing EU type-approval legislation in order to temporarily enable holders of UK vehicle type approvals to apply for new type approvals with EU27 TAAs for the same types, on the basis of the documentation and test reports presented in the context of the earlier UK type approvals.

13.5The proposal would modify several provisions in the current approval frameworks, in order to (i) allow the transferal of approvals and test reports between TAAs, (ii) allow the new approval to be issued on the basis of the standards to which the vehicle was originally approved, rather than current standards, and (iii) require the new TAA to be responsible for the conformity of production and in-service conformity of products already in circulation in the EU, as well as any necessary recalls of these vehicles on grounds of non-conformity with safety or environmental standards.

13.6The receiving authority may charge fees to cover other costs of transfer, such as administration costs, and the receiving authority takes on all responsibility for overseeing the approval including monitoring in-service conformity and taking action against non-conformities. The UK would play no further role in the ongoing maintenance of transferred approvals.

13.7The manufacturer must also ensure that an EU authority takes responsibility for approvals for vehicles that are no longer in production where vehicles are still in circulation. This aspect is limited to approvals from 2008.

13.8The proposal is time-limited, and the application to transfer must be made before EU law ceases to apply—i.e. 30 March 2019, in the event of a non-negotiated exit, or, if the draft Withdrawal Agreement is concluded, the end of the implementation period (31 December 2020).

13.9The Government submitted an Explanatory Memorandum to the Committee on 20 June 2018.117 In it, the Parliamentary Under Secretary of State at the Department for Transport (Jesse Norman) emphasised that if there is a negotiated exit, the implementation period provided for in the draft Withdrawal Agreement will mean that the VCA would remain a valid EU type-approval authority for the duration of that period, allowing “businesses to continue to trade on the same terms as now until the end of 2020”.

13.10The Minister states that the proposal “will reassure the UK’s manufacturing community that there is a solution, in the unlikely scenario in which no mutually satisfactory agreement on the Withdrawal Agreement or Future Economic Partnership can be reached.” Without the proposed approach, and in the absence of a negotiated exit, the Minister notes that manufacturers with a UK-issued type-approval “would be required to repeat all the EU regulatory approval tests and additionally comply with requirements that might otherwise only apply to new products”, which industry estimates indicate to be in the region of £350,000 to £500,000. The Minister considers that this could lead to manufacturers “being forced to end production of some models rather than incur additional costs of testing and redesign, thereby reducing consumer choice and potentially increasing their costs too”.

13.11The Minister also notes that the proposal concerns EU type approvals issued by the VCA, and that approvals to international UN regulations, which make up a large proportion of the standards specified in EU frameworks, are unaffected by EU exit. We have produced a separate report on the significance of UN Regulations on vehicle type approvals.118

13.12Manufacturers would like a quick outcome to negotiations to allow them sufficient time to complete the transfer process in the event of a no-deal outcome, which suggests that rapid progress will be made on the proposal in the coming months. We understand from officials that a further Council working party is expected to take place in September, making it difficult to envisage the legislative procedure being concluded before December 2018.

13.13We have taken note of the Minister’s Explanatory Memorandum.

13.14The Commission’s draft Regulation establishes a time-limited contingency measure which would enable manufacturers with approvals issued by the UK type-approval authority (the VCA) to request to transfer them to a EU27 approval authority, on the basis of existing UK test reports.

13.15In the absence of a measure of this kind it would not be possible for vehicles with UK approvals to be marketed in the EU immediately after a non-negotiated exit. In such a scenario, the Minister states, manufacturers “would be required to repeat all the EU regulatory approval tests and additionally comply with requirements that might otherwise only apply to new products,” which industry estimates indicate to be in the region of £350,000 to £500,000 per type. This could lead to manufacturers “being forced to end production of some models rather than incur additional costs of testing and redesign”.

13.16The Commission’s proposal will limit immediate disruption to UK and EU manufacturers with VCA-issued type approvals at the moment of exit; however we note that it does not address this issue in the longer term, because:

13.17This situation could be addressed by provisions in the future relationship between the UK and the EU. To date, only the EFTA countries participate fully in the EU vehicle type-approval system. Some EU FTAs with third countries (such as the EU-South Korea FTA) contain provisions on mutual recognition of conformity assessments, but these are limited to UNECE approvals, and would therefore not significantly mitigate the negative implications outlined in the EU notice and the Minister’s Explanatory Memorandum, which relate principally to the EU whole vehicle type approval system. Without taking a view on the overall merits of ‘Chequers’, the economic relationship proposed in the Government’s White Paper “The future relationship between the United Kingdom and the European Union” would ensure continued mutual recognition of UK and EU27 type approvals and protect existing integrated supply chains in the automotive sector specifically.

13.18We have been informed by officials that the Government will soon present a domestic counterpart of the Commission’s proposal, under which operators with EU27 approvals would be able to secure UK approvals on the basis of the documentation and testing conducted in the EU27, which would ensure the continued supply of vehicles with EU27 approvals into the UK in the event of a no deal outcome. We also understand that this arrangement would not be time-limited, meaning that new EU27-issued type approvals could be converted to UK type approvals without any additional testing on an ongoing basis; but that this arrangement would end if there were to be regulatory divergence, at which point UK-specific testing would become necessary. We await the detail of these proposals with interest.

13.19We ask the Government:

13.20As, under the draft Regulation, applications to transfer existing VCA-issued type-approvals must take place before EU law ceases to apply to the UK, the proposal, to achieve its purpose, will have to be operational in advance of March 29 2019. Clearly this will require rapid progress to be made in the coming months. We therefore anticipate that the Government will seek clearance of the proposal in its next update.

13.21In the meantime, we retain this document under scrutiny. We draw it to the attention of the Transport Select Committee and the Exiting the European Union Select Committee.

Full details of the documents

Proposal for a Regulation of the European Parliament and of the Council complementing EU type-approval legislation with regard to the withdrawal of the United Kingdom from the Union: (39857), 9716/18, COM(18) 397 final.

Previous Committee Reports

None.


114 Notice to stakeholders—Withdrawal of the United Kingdom and EU rules in the field of type-approval of motor vehicles (29 January 2018).

115 European Commission, Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (19 March 2018).

116 Proposal for a Regulation of the European Parliament and of the Council complementing EU type-approval legislation with regard to the withdrawal of the United Kingdom from the Union COM(2018) 397.

117 Explanatory Memorandum from the Minister to the Chair of the European Scrutiny Committee (20 June 2018).

118 See chapter in this Report on UNECE type approvals (39142).

119 European Commission, Internal preparatory discussions on framework for future relationship: Regulatory issues in context (15 February 2018).




Published: 18 September 2018