On 24 December 2020, the UK Government reached an agreement with the EU on the highly anticipated Trade and Cooperation Agreement (TCA). The TCA was ratified by the UK Parliament on 30 December 2020 and will be applied provisionally in the EU from 1 January 2021, pending ratification by the EU Parliament in early 2021.
The TCA contains minimal provisions to enable the UK and EU to cooperate on the regulation of products placed on both markets and therefore most businesses will need to address EU and UK product compliance separately.
For most types of products, the TCA does not provide for mutual recognition of conformity assessment procedures, approval bodies, nor product markings or labelling. This means that most businesses will have to comply with two different regulatory systems in the UK and EU, if trading in both jurisdictions. Under the post-Brexit regime, products being placed on both the UK and EU markets will need to display the UKCA mark in addition to the CE mark. To allow businesses time to adjust, the CE marking can continue to be used in the UK market until 1 January 2022 for most products, a list of which can be found here. Authorised representatives and responsible persons will now also need to be based in the UK for products that are being placed on the UK market.
For a more detailed explanation of these rules, please see our previous client alert, which summarises the UK Government’s guidance on placing manufactured goods on the market in Great Britain from 1 January 2021. The full guidance issued by the Department for Business, Energy and Industrial Strategy can be viewed here.
The TCA does contain notable exceptions to the above: motor vehicles, medicinal products, organic foods and wine will all benefit from substantive mutual recognition measures.
In this alert, we summarise the key provisions, from a product regulatory perspective, contained in the TCA.
Summary of the TCA’s key provisions
1. Sanitary and Phytosanitary (SPS) measures
The SPS framework generally concerns food safety measures, along with any other measures intended to protect human, plant and animal health.
The TCA does not provide for the mutual recognition of SPS measures in the UK and EU. Instead, the TCA allows for the UK and EU to maintain fully independent SPS rules.
The SPS measures envisaged by the TCA largely reflect World Trade Organisation (WTO) rules in this area, for example requiring transparency and measures which are neither arbitrary nor non-discriminatory, and which are proportionate to risk.
Despite the absence of mutual recognition, the TCA does provide for cooperation and dialogue between the UK and EU on SPS measures. Any issues arising out of the implementation and application of SPS measures can be discussed by the Trade Specialised Committee on SPS, one of the 10 Trade Specialised Committees set up under the TCA.
2. Technical Barriers to Trade
The TCA allows both the UK and EU freedom to regulate goods in the way most appropriate for their own market, subject to the relatively weak WTO Agreement on Technical Barriers to Trade (which aims to ensure that technical regulations, standards and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade).
Specifically, the TCA requires:
- the UK and EU each to carry out impact assessments of planned technical regulations and assess the regulatory and non-regulatory alternatives
- the UK and EU each to aim to use relevant international standards as a basis for technical regulations if appropriate
- conformity assessment procedures to be proportionate to the risks involved
- mandatory marking or labelling of products be limited to that which is relevant for consumers or users of the product or information that indicates that the product conforms to the mandatory technical requirements
- the UK and EU to cooperate and exchange information in the area of non-food product safety and compliance, which may include, in particular, market surveillance and enforcement activities and measures, and coordinated product recalls or other similar actions
- the UK and EU to aim to establish, preferably within six months, an arrangement for the regular exchange of information between the UK and EU rapid alert systems for unsafe non-food products
3. Sector-specific annexes
Although, as mentioned above, the TCA does not provide for the mutual recognition of regulations concerning most products, it does contain a number of sector-specific annexes that seek to promote cooperation and tackle barriers to trade in the automotive, chemical, pharmaceutical, organic products and wine sectors.
Motor vehicles, equipment and parts
The UK and EU must each accept products on their market that are covered by a valid UN-type approval certificate as compliant with their domestic technical regulations, markings and conformity assessment procedures. No further testing or marking to verify compliance with any requirement covered by the UN-type approval certificate will be required.
The TCA allows for the mutual recognition of Good Manufacturing Practice (GMP) inspections and certificates with respect to medicinal products for human use and veterinary use. This means that manufacturers do not need to undergo separate UK and EU inspections.
Under the TCA, the UK and EU each commit to implementing the United Nations Globally Harmonized System of Classification and Labelling of Chemicals (although both have already implemented this). The UK and EU also commit to ongoing cooperation and information exchange between one another in this area.
The TCA provides for an equivalence agreement between the UK and EU, which means that products certified as organic in one market will be recognised as organic in the other. In other words, the EU will accept the placing on the EU market of an agreed list of products that meet UK laws and are accompanied by a certificate of inspection issued by a recognised UK control body, and vice versa. Organic products may bear the EU’s organic logo, any UK organic logo or both logos.
The TCA provides for simplified certification, documentation, labelling and packaging requirements for the imports of wine produced in the UK or EU into the other market.
Issues that need attention
The TCA unfortunately falls short of providing substantive measures to mitigate Brexit’s implications on the existing product regulatory framework in the UK. This is particularly evident from the lack of mutual recognition measures with regard to most products. Therefore, unless the products a business manufactures or supplies fall under one of the sector-specific annexes, if a business plans to continue trading on both the UK and EU market, it will now need to comply with two sets of rules. Businesses must therefore think carefully about their updated approach towards conformity assessment and product labels, and also ensure that their authorised body or responsible person is located in the UK.
How can we help
At Baker McKenzie, we have a team of specialists ready to help you navigate the guidance and any other Brexit-related issues. To discuss Brexit and the implications for your company, please get in touch with your usual Baker McKenzie contact or, alternatively, a member of our team listed on this page.