Beyond Brexit: trade in goods Contents

Chapter 4: Technical barriers to trade

The TCA’s provisions

86.The EU’s harmonised approach to goods regulation meant that, until 31 December 2020, UK goods could be traded within the Single Market, of which the UK was a part, in both directions without inspection, as all were produced under the same set of regulations. By leaving the Single Market, the UK has now formed a separate regulatory territory and can apply its own, potentially divergent, regulatory standards.

87.Conformity assessment is the procedure for ensuring a product meets necessary regulatory requirements before it is placed on the market. In negotiations, the UK unsuccessfully sought mutual recognition of conformity assessments, which would have enabled UK and EU certifying bodies to certify that products produced in one territory met the regulations of the other.119

88.In the absence of mutual recognition of conformity assessment, goods exported from one territory will have to be confirmed by bodies of the importing territory as meeting their regulations.120 Self-certification of conformity with regulatory requirements is allowed in some sectors, but these are for low-risk products and only where this arrangement had existed prior to the TCA.

89.Sectoral annexes provide specific measures designed to ease trade in the automotive, chemical, pharmaceutical, organic products and wine sectors. These provide mutual recognition of some practices or international regulations which in some cases remove the need for separate inspections, and in others simplify the required paperwork.121

90.There is also provision for cooperation and ongoing discussion, notably through the Trade Specialised Committee on Technical Barriers to Trade and those cooperation mechanisms established under the sector-specific annexes.122

Verifying conformity

91.Neither Party is now able to rely on goods from the other Party meeting its own regulations. In many cases, testing for regulatory compliance will have to be duplicated. UK bodies which had previously been able to perform conformity assessment tasks for EU product legislation (Notified Bodies) cannot now perform those tasks; these Notified Bodies must now be based within the EU.123

92.The SMMT told us that the requirement for testing for two sets of regulations would lead to “duplication, additional costs and productivity losses” in the automotive sector. It estimated that additional costs for vehicle type approval (which confirms that production samples of a type of vehicle, vehicle system, component or technical unit meet specified performance standards)124 would be between £30,000 and £100,000 for a single type, and could extend to £250,000–£500,000 for a completely new model type, and into the millions for a high-performance type.125 In some cases, it will be sufficient for a representative to witness testing, but this too will incur costs.

Divergence

93.Aside from one suggestion from the RSPCA on the labelling of animal products,126 most witnesses saw few opportunities in regulatory divergence. We were instead told that international trading partners “want to avoid a separate market in the UK that has a completely different set of requirements, and a completely separate set of rules to comply with, to service the EU market”.127 Liam Smyth from the British Chambers of Commerce told us that “if we start to diverge, businesses will be faced potentially with producing the same thing in two or three different versions, each of which will have to meet the conformity assessment in two or three different jurisdictions … you need a really good reason for wanting to do that.”128

94.UK businesses wishing to sell products into the EU will need to ensure that these products comply with EU regulations on a rolling basis. Christophe Bondy told us that this would “pose legal compliance challenges as UK-based manufacturers will need to remain mindful of the evolving regulatory environment in the EU”.129

95.The sense from our evidence was that, given that businesses are already overwhelmed with concerns relating to COVID-19 and Brexit, few will have the resources to horizon-scan for possible causes of divergence. Anna Jerzewska of Trade and Borders told us: “We are really in firefighting mode at the moment. It seems like companies are getting ready for the next thing to come as it comes.”130

96.Fergus McReynolds of Make UK indicated a “gap in understanding” as to how businesses would be able to feed into decision making on divergence.131 We heard many calls for engagement, and for businesses and stakeholders from all sectors to be fully involved in discussions regarding regulation and receive early warning of any future divergence.

97.The failure to agree mutual recognition of conformity assessment will cause duplication of testing of certain products, for which businesses will incur significant costs. The Government should develop comprehensive consultation mechanisms to enable businesses and trade bodies to regularly feed into, and remain informed of, regulatory policy.

Temporary working arrangements

98.The general retention of EU law means that most EU product regulation in the UK remains as it was at the end of the transition period. Some of our evidence suggested that this should facilitate an automatic assumption of compliance. The Chartered Institute of Logistics and Transport said:

“If [the new paperwork] was not needed on December 31, it should not have been needed on January 1, when nothing regarding the products themselves had changed … [aside from rules of origin] UK goods could be held to be equivalent to EU goods and thereby automatically compliant with the relevant import documentation.”132

99.Though neither Party can rely on regulations remaining the same, the TCA exempts those products which were on the market before the end of the transition period from the requirement to be assessed by EU bodies. Effectively calling for an extension of this provision, the ADS Group suggested temporary working arrangements to enable fulfilment of contractual obligations which had existed before the end of the transition period.133

100.The Government must further consider temporary recognition arrangements to enable pre-transition contractual obligations to be fulfilled. It should raise this issue with the EU in the Trade Specialised Committee on Technical Barriers to Trade.

Future cooperation

The TCA’s sector-specific annexes

101.The TCA contains annexes relating to the automotive, chemical, pharmaceutical, organic products and wine sectors. In some cases, these provide for mutual recognition of some standard-setting bodies. Will Hayter, Director of the Transition Task Force at the Cabinet Office, gave the example of the annex on medicinal products, which contains “measures on mutual recognition of good manufacturing practice for medicines, which avoids duplicating steps, making trade easier for the pharmaceutical sector”.134

Cooperation between regulatory authorities

102.We heard evidence that there was potential for mutual recognitions between specific national regulatory authorities. Two such authorities could be the UK Civil Aviation Authority (CAA) and the European Union Aviation Safety Agency (EASA). The CAA automatically recognises some maintenance-related certificates authenticated by EASA, but this recognition is not reciprocal. The ADS Group called for an agreement to be reached between the two for automatic acceptance, which would: “remove the asymmetry from the agreement”.135 It is far from certain, however, that EASA is empowered to make the decision to reciprocate recognition.

103.David Thorneloe suggested that “there could be ways we can chip away [at barriers] by forming agreements to cooperate between different regulatory authorities.”136 Christophe Bondy told us that this kind of issue management was “endemic” in free trade agreements.137 Where there is potential to negotiate agreements between regulatory authorities for certain sectors, this should be fully explored.

104.Continued cooperation on technical barriers to trade is critical. While continuing to seek mutual recognition of conformity assessment, the Government must engage with businesses and regulatory authorities to identify areas where regulatory cooperation can be improved, and seek agreement to empower specific regulatory authorities from both Parties to recognise standards set by, and products approved by, the other.


119 This recognition of testing bodies is distinct from mutual recognition of product standards themselves.

120 This does not apply to goods which were already on the market prior to the end of the transition period.

121 Trade and Cooperation Agreement, 24 December 2020 (Annexes TBT-1, TBT-2, TBT-3, TBT-4 and TBT-5)

122 Trade and Cooperation Agreement, 24 December 2020 (Articles TBT-11, TBT-13; Annexes TBT-1, TBT-3, TBT-4 and TBT-5)

123 Responsible persons, where relevant, will now also need to be based in the EU or European Economic Area (EEA). European Commission, Withdrawal of the United Kingdom and EU rules in the field of industrial products (13 March 2020) p 5: https://ec.europa.eu/info/sites/info/files/notice_to_stakeholders_industrial_products.pdf

124 Vehicle Certification Agency, ‘What is Vehicle Type Approval?’ (January 2021): https://www.vehicle-certification-agency.gov.uk/vehicle-type-approval/what-is-vehicle-type-approval/ [accessed 4 March 2021]

125 Supplementary written evidence from the SMMT (FUU0020)

126 Written evidence from the RSPCA (FUU0008)

127 Q 24 (Fergus McReynolds)

128 Q 34 (Liam Smyth)

129 Supplementary written evidence from Christophe Bondy (FUU0018)

130 Q 42 (Dr Anna Jerzewska)

131 Q 24 (Fergus McReynolds)

132 Written evidence from the Chartered Institute of Logistics and Transport (FUU0003)

133 Written evidence from ADS Group (FUU0015)

134 Q 48 (Will Hayter)

135 Written evidence from ADS Group (FUU0015)

136 Q 12 (David Thorneloe)

137 Supplementary written evidence from Christophe Bondy (FUU0018)




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