Brexit update: consumer products and a ‘no-deal’

18.10.2018

In April we wrote about the impact of Brexit on the product industry[1] and evaluated guidance from the European Commission in the form of a Notice to Stakeholders[2].

Six months on we can now assess the other side of the equation in the form of the UK Government’s recently published ‘no-deal’ notices. Four of these relate to consumer products:

  1. trading goods regulated under the ‘New Approach[3]
  2. trading under the mutual recognition principle[4]
  3. appointing nominated persons to your business[5]
  4. consumer rights[6]
Trading goods regulated under the ‘New Approach’

The EU has, since 2008, adopted a ‘New Approach’ (or ‘New Legislative Framework’) that aims to “to improve the Internal Market for goods and strengthen the conditions for placing a wide range of products on the EU Market”[7]. As part of the ‘New Approach’ the EU introduced legislation around conformity assessment, CE marking and market surveillance, and aligned product specific legislation with the new framework. Products affected include toys, construction products, boats and low-voltage electrical equipment. The full list of product specific legislation is included in Annex A to this UK Government notice. This notice does not cover cars, chemicals, medical devices, pharmaceutical products and aerospace for which separate notices have been issued.

The notice outlines the current regime on how manufacturers can meet essential safety requirements and the use of the CE mark to demonstrate compliance. There is a particular focus on the role of third-party notified bodies in performing compliance testing.

The notice then sets out the changes that will occur in the event of a ‘no deal’ Brexit. The notice confirms the guidance in the European Commission’s Notice to Stakeholders that products certified by a UK notified body can no longer be sold in the EU. Such products will have to be re-assessed by, or have the files transferred to, an EU recognised organisation. Products requiring third-party testing have to be marked with the notified body’s four-digit number. Therefore those products will have to re-marked with the new notified body’s number.

By contrast the UK will adopt a softer approach. Goods already placed on the EU market (whether in the UK or elsewhere) can remain in circulation, and for a limited time period, goods meeting EU requirements can be put on the UK market. That time period is of unspecified duration, save to say that businesses will be given sufficient notice before it comes to an end. All notified bodies based in the UK will automatically transition onto a new UK database and become an ‘approved body’. These approved bodies will assess products against the UK essential requirements, which under the terms of the European Union (Withdrawal) Act 2018 will initially be identical to the EU requirements. Whether these will subsequently change is unknown.

The UK Government will design new conformity markings to affix to conforming products, the details of which will be released later this year.

Trading goods under the mutual recognition principle

Some goods not covered under ‘New Approach’, such as furniture, textiles, and bicycles are subject to national, rather than EU legislation. Currently, the mutual recognition principle allows such goods to circulate freely across the EU. Member States can only restrict circulation on grounds of public safety, policy and morality[8].
After Brexit the mutual recognition principle will no longer apply to the UK. For businesses exporting to the EU this means they must consider the national requirements for the EU country their products first arrive in. Therefore the goods’ ultimate destination is irrelevant. Businesses importing goods into the UK from the EU must ensure they meet the UK requirements.

Appointing nominated persons to your business

This notice applies to goods covered by the ‘New Approach’ which require the manufacturer, the importer or a ‘nominated person’ to conduct certain activities and hold certain responsibilities in relation to those goods. For the purposes of the notice the UK Government is grouping together those referred to in the relevant EU legislation as an ‘authorised representative’ or a ‘responsible person’ under the general heading of ‘nominated person’. The notice does not apply to pharmaceuticals, chemicals or medical devices, for which separate notices have been published.

Generally a ‘nominated person’ will be appointed where the manufacturer is not based in the EU and the importer does not want to take on such responsibilities. A notable exception of this is for cosmetics, where there must be a ‘responsible person’ who ensures that the product is safe for human health[9]. That ‘responsible person’ can, and most often will be, the manufacturer or importer.

Under the current rules the ‘nominated person’ must be situated somewhere in the EU, but this will change in the event of a ‘no deal’ Brexit. If the ‘nominated person’ is based in the UK, they will no longer be recognised under EU law. This means that UK based companies selling into the EU need to appoint a ‘nominated person’ in the EU.
The UK Government is set to adopt a similar approach to that set out above[10] by allowing a time-limited period whereby existing ‘nominated persons’ based in an EU country would continue to be recognised in the UK. Once again the duration of this period is left open. New ‘nominated persons’ will have to be in the UK, and ultimately all the existing ones outside the UK will have to be transferred too.

However the regime for cosmetics will have no such transition period and therefore businesses wanting to place products on the UK market will need a UK-based ‘responsible person’ immediately after Brexit in the event of no deal. This is due to “specific legal duties assigned to the responsible person and their importance on ensuring the safety of products placed on the market”[11].

Consumer rights

The latest notice, published as part of the 12 October batch, is far-ranging, covering consumer and cross-border protection, dispute resolution, package travel and timeshares, and the labelling of textiles and footwear. Those areas affecting consumer goods are explored in more detail below.

Consumer and cross-border protection

Current consumer protection legislation ensures that a consumer can buy goods from across the EU safely in the knowledge that similar protections apply in every Member State. This is supported by a reciprocal cross-border consumer enforcement framework that allows a UK based consumer to seek redress in the UK courts and then enforce that judgment in another Member State.

In the event of a ‘no deal’ the consumer protection framework in each country will not immediately change, but over time the legislation may drift apart. Of more concern is that the ability to enforce UK judgments abroad could be significantly curtailed. This means that UK consumers seeking redress against a foreign company may have to do so in the company’s home court.

Dispute resolution

The Alternative Dispute Resolution (ADR) Directive[12] aims to ensure that consumers have access to ADR to resolve contractual disputes with traders across the EU. Each Member State is responsible for authorising ADR providers and keeping the European Commission up-to-date on the approval status of those providers. To aid in this for online purchasers the EU has also set up an online platform to handle complaints[13]. The EU also offers access to the European Consumer Centre Network (ECCN) for help and advice[14].

In the event of a ‘no deal’ Brexit the UK will ensure that an ADR process will remain in place for products bought and sold in the UK. UK based consumers can continue to request advice from the ECCN until the end of March 2020.

However UK consumers and businesses will no longer have access to the EU’s online platform, and consumers may no longer be able to use ADR providers to resolve cross-border disputes. The UK will no longer report on UK based ADR providers to the European Commission.

Labelling of textiles

EU Regulation 1007/2011 dictates that textiles must be labelled with their composition. The European Commission is responsible for approving new textile fibre names and manufacturing tolerances. The UK has enacted the Textile Products (Labelling and Fibre Composition) Regulations 2012 to give UK authorities the power to enforce the EU Regulation.

In the event of a ‘no deal’, the EU Regulation will be retained and amended as required for effective functioning by the European Union (Withdrawal) Act 2018. The notice sets out the proposed amendments, principally that the Secretary of State will take on the responsibilities currently borne by the European Commission. For businesses this means that applications to introduce new textile names or manufacturing tolerances into items destined for the UK should now be directed to the Secretary of State. The Government will publish guidance on this new application process in due course.

Labelling of footwear

Footwear must also be labelled with information about its composition. This is mandated by the UK Footwear (Indication of Composition) Labelling Regulations 1995, implementing Directive 94/11/EC. The Regulations impose different obligations on the ‘responsible person’ (the manufacturer, their agent in the EU, or the person who first makes the footwear available in the EU) and the ‘retailer’.

In the event of a ‘no-deal’, the regulations will be amended to reflect that they now only apply to the UK market rather than the whole EU. For example the responsible person will be the manufacturer, their agent in the UK or the person who first makes the footwear available in the UK. This means that UK businesses importing footwear from the EU, and therefore previously classified as a ‘retailer’ will now be the ‘responsible person’ and face different obligations. Principally a ‘responsible person’ must ensure that the label is in place and correct. The UK is not proposing to change any of the rules covering the actual label as a result of a ‘no deal’ Brexit.

Conclusions

The implications of these four notices go beyond purely shifting paperwork and oversight to a different business in a different country. Depending on the product, businesses will have to consider their distribution network and the route that imports and exports out of the EU might take. The ‘nominated person’ notice also necessitates further changes. For example, on cosmetic products the name and address of the ‘responsible person’ must be included on the label[15]. Businesses should therefore consider the full impact of a ‘no deal’ Brexit well in advance of 29 March 2019.

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[1] https://www.bristows.com/news-and-publications/articles/brexit-the-product-industry-where-are-we-now/
[2] https://ec.europa.eu/growth/content/brexit-%E2%80%93-guidance-stakeholders-impact-field-industrial-products_en
[3] https://www.gov.uk/government/publications/trading-goods-regulated-under-the-new-approach-if-theres-no-brexit-deal/trading-goods-regulated-under-the-new-approach-if-theres-no-brexit-deal
[4] https://www.gov.uk/government/publications/trading-under-the-mutual-recognition-principle-if-theres-no-brexit-deal/trading-under-the-mutual-recognition-principle-if-theres-no-brexit-deal
[5] https://www.gov.uk/government/publications/appointing-nominated-persons-to-your-business-if-theres-no-brexit-deal/appointing-nominated-persons-to-your-business-if-theres-no-brexit-deal
[6] https://www.gov.uk/government/publications/consumer-rights-if-theres-no-brexit-deal–2/consumer-rights-if-theres-no-brexit-deal
[7] https://ec.europa.eu/growth/single-market/goods/new-legislative-framework_en
[8] The governing legislation for this is Regulation (EC) 764/2008
[9] Article 4, Regulation (EC) 1223/2009
[10] See the section on trading goods regulated under the ‘New Approach’
[11] https://www.gov.uk/government/publications/appointing-nominated-persons-to-your-business-if-theres-no-brexit-deal/appointing-nominated-persons-to-your-business-if-theres-no-brexit-deal
[12] Directive 2013/11/EU
[13] https://ec.europa.eu/consumers/odr/main/index.cfm?event=main.home2.show&lng=EN
[14] https://www.ukecc.net/
[15] Article 19, Regulation (EC) 1223/2009

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