UK: Brexit: Product Regulation And Safety—Some Initial Considerations For Importers

Following the speech given by UK Prime Minister Theresa May at the Conservative Party Conference in Birmingham, England, a timeline for Brexit is beginning to emerge.

Mrs May indicated that she intends to begin the formal process of the United Kingdom's withdrawal from the European Union (by invoking the now-famous Article 50 of the Lisbon Treaty) no later than the end of March 2017.

Since Article 50 requires, on its face, withdrawal to be completed within 24 months, that gives, for the first time, an anticipated (albeit not guaranteed) exit date of sometime around March 2019.1

In this Commentary—the first in what will become a series of guides for importers—we begin to comment on the possible effect of Brexit upon tariffs, to look at the background of product safety and regulation in the EU, and to consider the consequences should regulation in post-Brexit UK and the EU begin to diverge.

What Will Brexit Mean for Importers into the UK and EU?

There are at least two important perspectives.

Recent headlines have centred upon tariffs. Will goods manufactured in the UK continue to enjoy tariff-free access to the European market? This is an extremely important question both for "home grown" manufacturers and for the large number of foreign companies that have established their EU bases in the UK and whose business models assume tariff-free access. We have already seen one such major investor—auto manufacturer Nissan—indicate that it might delay investment at its plant in Sunderland in the North of England until the position is clear.

"Important investment decisions will not be made in the dark", Carlos Ghosn, Nissan's CEO, is reported to have said at the recent Paris Motor Show.2

Investment decisions of major overseas companies that have made the UK their home, such as Nissan, are extremely important for the British economy. The company's Sunderland plant (established more than 30 years ago), for example, is the largest such factory in the UK. Its 7,000 employees produce more than 500,000 cars annually,3 more than 75 percent of which are exported to the EU.4

Shortly after his comments at the Paris Motor Show, it was reported that Mr Ghosn had received assurances from the UK government that trading conditions for Nissan will not change post-Brexit.5 According to subsequent reports, the company has since confirmed that its Sunderland plant will be producing the successor to its highly acclaimed Qashqai SUV.6

Does this pattern of events signify an intention on the UK government's part to protect certain sectors of the country's economy from the effects of Brexit?

If so, this would herald a shift to a more interventionist approach from government than the UK has been used to in recent decades and would constitute significant political change.

We will follow these developments and provide comment insofar as is appropriate, but the subject of this Commentary is product regulation and safety.

Coinciding with the last meeting of the G20 Group of industrialised and emerging nations (in Hangzhou, China) Japan's External Trade Organisation, known as "JETRO", took the rather unusual step of issuing a memorandum commenting upon an overseas political development—specifically Brexit. Their 15-page document was titled "Japan's Message to the UK and the European Union".

As well as addressing concerns over future investment, the memo touched upon regulation and revealed that, after tariffs, the main concern amongst the Japanese companies polled was the risk, post-Brexit, of regulatory divergence as between the UK and the remaining 27 EU Member States. Some 67 percent of the companies polled expressed concern over this issue.7

Present Regulatory Position

Before 1985, all EU Member States—or more correctly, members of the European Economic Community ("EEC"), as the EU was then known—had their own national laws regarding liability for defective consumer products. These national laws were generally grounded on faulted-based contract or tort liability principles.

There was concern at EEC level, however, that divergence amongst different nations' laws might distort competition, affect the movement of goods within the Common Market (as it was then known) and afford inconsistent degrees of consumer protection country to country as against defective products.

Thus in 1985, Council Directive 85/374/EEC (the Product Liability Directive, or "PLD") was passed, introducing a common scheme of strict liability. This directive was duly incorporated into UK law, beginning with the Consumer Protection Act in 1987 ("CPA"). The CPA thus represents the law in England, Wales, Scotland and Northern Ireland quite independent of the PLD, and this will remain the case unless and until the CPA is repealed or revoked post-Brexit. There is currently no suggestion that it will be, nor, in our view, any reason that it should be. Quite the reverse: the UK government's start point seems to be that, at least at first, post-Brexit UK law should mimic EU law on all fronts.

In addition to the PLD, European Directive 2001/95/EEC on General Product Safety ("GPSD") aims at ensuring that only safe consumer products are sold in the EU, and it establishes the general safety requirements in the EU.

The GPSD provides for a set of legal obligations with which "producers" (which includes manufacturers, any person affixing his name, trademark or logo on the product, and non-EU manufacturers' authorised representative or importer in the absence of an authorised representative) and distributors must comply.

The fundamental requirement is to undertake a safety assessment before a product is marketed, and to take "corrective action" including, for example, to withdraw or recall products from the market if, despite such assessment, it turns out that the products are unsafe. To this end, the European Commission operates a Europe-wide publicly accessible database ("RAPEX") upon which all unsafe products that present a serious risk and are subject to withdrawal (voluntary or not) are placed.

In the UK, the GPSD was given force of law by means of a piece of implementing legislation—the General Product Safety Regulation of 2005.8

Thus, as with product liability law, EU product safety rules are incorporated into and have become the law in England, Wales, Scotland and Northern Ireland. This position will not change on Brexit, and it will in fact remain unless and until repealed or revoked. The question becomes, therefore: will this law remain in step with the EU, or will it diverge?

Divergence?

As matters stand, it is perhaps difficult to see why the UK might want to fall out of step and apply a product safety regime that is either more or less stringent than at EU level. It is conceivable, however, that it may no longer, for example, wish or be allowed to participate in RAPEX—which is an EU construct—and/or that it might apply different interpretations of what constitutes a safe or unsafe product.

If this happens, inconsistencies will arise in relation to information about product withdrawals or recalls. In addition, a product withdrawn in the EU might not have to be withdrawn in the UK or vice versa, leading to increased uncertainty for operators. This is the case already, of course, when it comes to marketing products simultaneously in the United States and in the EU or Switzerland and the EU.

In addition, there is already a Proposal for a Regulation of the European Parliament and of the Council on consumer product safety, which would repeal the GPSD. The proposal is part of the "Product Safety and Market Surveillance Package" and aims at improving consumer product safety and strengthening market surveillance. When it enters into force as a regulation, it will apply directly in Member States of the European Economic Area ("EEA")9 without the need for national implementing legislation.

If the UK has by then left the EU (and not joined the EEA), then it will immediately be out of step with this important development.

We shall be looking at other possible areas of difficulty in subsequent Commentaries.

Prediction

"It's tough to make predictions—especially about the future", a famous American once said, and whilst he did not have Brexit in mind when he said it, the late Yogi Berra's oft-quoted dictum certainly applies.

As indicated above, however, it seems that we are now able to predict with a little more confidence the issue of timing.

Prime Minister May also gave some limited guidance recently on the mechanics of Brexit when she stated that whilst the 1972 UK European Communities Act—which gives direct effect to EU law in Britain—faces repeal, all existing EU laws will be transposed into domestic legislation via the so-called "Great Repeal Bill". The Prime Minister is reported as having said that she intended this announcement to give some certainty to business. It was also reported that she does not envisage that any future amendments to employment law in the UK would weaken employees' rights in comparison with the rights of their EU counterparts.10

EU Directives such as the PLD and GPSD are already part of UK domestic legislation, and as mentioned above, directly applicable EU regulations are seemingly to become enshrined into UK law on Day 1 by virtue of the Great Repeal Bill.

Beyond Day 1

Businesses obviously need to be able to look beyond Day 1, and this is where it gets more difficult. Whilst as we have seen the UK government has now given some indication as to the likely future of UK employment law, no such guidance has been offered in the products sphere.

Will manufacturers, importers and distributors find themselves with two sets of regulations to deal with—one for the UK and one for the 27 remaining EU Members?

Most commentators so far seem to agree that in order to maximise the prospect of continued access to the single market, post-Brexit UK regulation (not just in the products sphere) will have to stay in line with regulation as it develops in the EU. As an aside, the UK's own manufacturers and producers will need to comply with the EU rules if they wish to sell products into the EU after the UK leaves, a task that may be daunting if the UK rules start deviating from EU rules. That said, doing business with EU and non-EU European jurisdictions can already involve such difficulties. The difference, perhaps, will be one of scale, given the size and importance of the UK's economy.

It is too early to say whether divergence will happen, or even in truth what would be the effect if it did or did not occur.

In this period of legal uncertainty, Jones Day's products lawyers worldwide are tracking and anticipating developments to help our manufacturing clients and contacts navigate the shifting obstacles of doing business in the UK and the rest of the EU. Our offices in London and Brussels are coordinating this effort, the aim of which is to help minimise disruption to the business of the Firm's clients and to continue to help facilitate the growth and success of those businesses.

Footnotes

1. Financial Times, 01 October 2016.

2. Financial Times, 29 September 2016.

3. Financial Times, 08/09 October 2016.

4. Financial Times, 15/16 October 2016.

5. Financial Times, 15/16 October 2016.

6. Sunday Telegraph, 23 October 2016.

7. Financial Times, 07 September 2016.

8. SI 1803.

9. The European Economic Area consists of the 28 Member States of the European Union together with Iceland, Norway and Liechtenstein.

10. Financial Times, 03 October 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.