EU Exit & Trade Update – January

Please find below the second EU Exit and Trade email update. We’ve covered Driving in the EU after 29 March,  Construction Products Regulation, REACH, Horizon 2020, Making Tax Digital HMRC pilot (a non EU Exit item) and Trade Agreement Continuity. If you have any questions on the below or anything else please do get in touch.

Regulatory changes for businesses who manufacture or import construction products in a ‘no deal’ scenario – The Construction Products Regulation (CPR) is EU regulation that is directly applicable in the UK. It removes technical barriers to trade by laying down harmonised rules for placing a construction product on the single market. Where a ‘harmonised standard’ exists for a product, mandatory rules apply including submitting a declaration of performance and affix the ‘CE’ mark on the product.

Changes required

  • The European Union (Withdrawal) Act 2018 will preserve the CPR, as it stands at the point the UK leaves the EU, in UK law. However, because it is an EU regulation, several aspects of the CPR won’t work once the UK is no longer an EU Member State. In preparation for a ‘no-deal’ scenario, on 18th December 2018 the government laid legislation for this contingency. Once approved by Parliament, it will come into force on 29th March in the event of a no deal scenario.
  • The UK Government published guidance on the arrangements and implications that would apply in the event of a ‘no deal’ scenario on the 24 January.
  • The European Commission has published a Notice to stakeholders on the implications for UK manufacturers placing goods on the EU market after exit day.

What does this mean for businesses?

  • Immediately following a ‘no deal’ exit, existing European harmonised standards will become ‘designated standards’ in the UK. This will mean that immediately after exit UK and European standards will be the same. Notified bodies based in the UK will be granted new UK ‘approved body’ status and will be able to assess products for the UK market against UK essential requirements. A UK marking will be published to enable manufacturers to affix a ‘UK mark’ to demonstrate that products comply with the relevant UK requirements.

Key headlines include:

To maintain access to the UK market:

  • For products subject to conformity assessment by a UK approved body, manufacturers will be required to affix a ‘UK Mark’ to the product to demonstrate compliance with requirement.
  • Where CE marking is affixed without the need for third-party involvement, manufacturers have the choice to use either use to continue CE Marking (for a time limited period) or to affix a new ‘UK Mark’ (or both).
  • Where products are subject toconformity assessment by an EU27 Notified Body and bear CE Marking, these can continue to be placed on the UK market for a time-limited period.
  • Distributors who bring products in from the EU to the UK will in most cases now be classified as ‘importers’ bringing in products to the UK from a third country. This change in status will bring new obligations such as a requirement for importers to label their products with their name and address.

To maintain access to the EEA market:

  • Products which were previously assessed by a UK-based notified body will need to be reassessed by an EU-recognised conformity assessment body before placing on the EU market. Alternatively, manufacturers can seek to arrange for their files to be transferred to an EU-recognised notified body pre-exit to allow certificates of conformity to continue to be valid.
  • Where manufacturers use the CE marking without the need for the involvement of a notified body this can still be used when exporting goods to the EU.

Driving in the EU after 29 March – Currently, road hauliers can travel anywhere in the EU with a Community Licence.  If the UK leaves without a deal, UK-issued Community Licences will no longer be valid in the EU, meaning that EU authorities could prevent UK lorries from travelling.  The European Commission has adopted a proposal for a Regulation to allow UK operators to temporarily (for nine months from 29 March) carry goods into the EU, provided the UK confers equivalent rights to EU road haulage operators and subject to fair competition conditions.  Member States are yet to decide upon this recommendation but the UK Government is following this closely.

Should UK-issued Community Licences not be recognised in such a way, the UK would instead have to rely on an older treaty that gives it European Conference of Ministers of Transport (ECMT) permits for travel.  Following an application process which closed on 18 January, hauliers will soon find out how many permits they have received.  If you have concerns about the availability of road freight for your products, please contact your freight provider to find out how your business could be impacted and also to discuss which routes your imports and exports take and any changes they anticipate to delivery times.  If you have applied for an ECMT permit or otherwise want more information about the process, you can find out what happens next here: ECMT international road haulage permits: Next Steps.

The latest general guidance on driving in the EU after EU Exit is available here: Prepare to drive in the EU after Brexit.

 

REACH update – we emailed a fortnight ago about steps businesses need to take in relation to REACH. In a no-deal scenario, the UK and the EU regulatory agencies would operate independently from each other. If companies are supplying and purchasing substances, mixtures or articles to and from the EU/EEA and the UK, they will need to ensure that the substances, or substances within a mixture/article, are registered with both agencies (ECHA and the UK Agency, i.e. the HSE) separately in order to maintain or gain access to both markets. Further information can be found here.

Trade Agreement Continuity – DIT published a technical notice in October 2018 (updated 19 December 2018) informing businesses that they were leading a programme to replicate existing EU trade deals as UK bilateral deals. Work is ongoing to try and transition over these FTAs at the point we leave the EU. Given recent media reports it would be helpful to understand key exports markets for sectors and individual companies. Please let us know which markets you already trade with and any plans you have to open trade with new markets.

Horizon 2020 funding – The UK and the EU’s intention is that UK researchers and businesses will continue to be eligible to participate in Horizon 2020 for the remaining duration of the programme.  UK Research and Innovation (UKRI) is asking recipients of Horizon 2020 grants to input basic information about their awards into a bespoke portal. This will ensure that UKRI can keep UK researchers and businesses informed of the next steps if the government needs to underwrite Horizon 2020 payments.  If you receive grants, please enter your details into the portal.

Making Tax Digital (MTD) pilot: update from HMRC – Making Tax Digital (MTD) becomes mandatory for all VAT-registered businesses from April 2019.  HMRC recently published the following update, which indicates that the pilot, which started with a small number of businesses, is now open to all mandated businesses

The Making Tax Digital (MTD) VAT pilot to partnerships and Flat Rate Scheme users, is now open to all customers who will be mandated to use the MTD service from April. HMRC want as many eligible businesses as possible to join the pilot ahead of the mandating of the service in April (although for the majority who file quarterly, their first return won’t be due until 7 August 2019 at the earliest). Increased pilot participation will allow more businesses to get used to the service before they are mandated to use it as well as giving us assurance that the service works for a range of different customer types. It will also give us the confidence that customer’s experience of the MTD service, and the support we put in place around it, matches expectations. Further details can be found in the updated guidance for businesses, updated guidance for agents and the stakeholder partner packs on GOV.UK.

 If you have any questions in relation to EU Exit, please email dominic.king@beis.gov.uk if you would appreciate talking to a member of the team

Businesses and citizens should ensure they are prepared for EU Exit and visit gov.uk/euexit for guidance.