UK: Brexit – Standards And Innovation: What's Ahead?

This article is the second in an ongoing series of blog posts by Foley & Lardner LLP on the implications of the June 23, 2016 referendum decision in the United Kingdom ("UK") to exit the European Union ("EU"). The first blog post reviewed briefly developments leading to the Brexit vote, the negotiating process that is now unfolding, possible alternative/outcomes and the likely implications as the UK resets its relationship with the EU. The first article reviewed potential implications for competition policy/procedure suggesting likely increased costs, complexity and uncertainty.

This post focuses on Brexit risks and uncertainty related to standardization and innovation. As with the issues relating to competition policy/procedure, questions on standardization and innovation remain to be answered as the terms and timing of the UK Brexit are played out and as businesses, governments and individuals take their own actions – whether large or small, intentional or inadvertent.

Suffice to say, there will likely, over time, be divergences and penalties that will not only change the "rules of the game" but as well undercut important drivers for product development, innovation, consumer welfare and economic progress. Even in the best of cases (whatever that may be), inevitable divergent paths presages difficult times ahead for the UK, the EU and its trading partners – less transparency, less consensus, greater costs and increased uncertainty. However dead the US/EU TTIP free trade agreement may be in this political season, Brexit is one of the nails in the TTIP coffin.

It is useful to reiterate, as said before, that the EU was created to merge "essential" interests of previously rivaling nations and to build a foundation for an economic community of "destinies henceforth shared." Critical to the achievement of such goals was considered the harmonization of trading terms and conditions and promotion of economic progress through innovation. Brexit undercuts such lofty goals and underscores continuing differences, prejudices and suspicions. While such terms may have an emotional element, they pose serious real practical costs.

For issues of standardization ("harmonization") and innovation, the outcome of the Brexit process will have important implications. As explained in more detail below, harmonized standards across as wide a trading area as possible produces substantial economies of scale and efficiencies. In a similar fashion, innovation is best stimulated in an environment of expanding demand opportunities and through easily-accessed funding opportunities. Brexit threatens the UK and even the EU with risks on both counts. To the extent that divergence between standards applicable in the UK and the EU emerge, companies will face reduced market opportunities, reduced scale economies, increased costs and inefficiencies. In the same vein, innovation thrives in the freest and largest markets possible. As important, potential innovators need ready access to funding for their projects. Brexit threatens both a diminution of opportunities and resources available to fund such activities.

While it is premature to predict the outcome of the Brexit endgame, there a number of templates that have varying impacts on product standards and innovation. Among the choices facing the UK and its former EU counterparts are potential worlds in which the UK is 1) a member of the European Free Trade Association ("EFTA") (e.g., Switzerland), 2) a member of the European Economic Area ("EEA") (e.g., Norway, Iceland and Lichtenstein; 3) a member of a newly negotiated or already existing free trade customs union with the EU (e.g. Morocco, Tunisia, Israel and Turkey, etc.); 4) a member (albeit, a continuing one, of the World Trade Organization ("WTO") and the European Patent Convention ("EPC"); or 5) a variant of some or all of the above. Obviously, the UK cannot dictate the outcome alone. Brexit is a negotiation likely to be affected by political, economic and cultural tensions.

The implications of these choices will have important outcomes on questions of product standardization and innovation. These outcomes will, of course, vary. First, on the one hand, whatever the Brexit outcome may be, the UK will still have a substantial body of EU-generated (uniformed, harmonized) laws and regulations on its books which will continue in full force and effect in the UK, unless repealed. There would not seem to be any substantial rush, logic or incentive to change them. At least in the short term, there would appear to be continued convergence, not immediate divergence.

On the other hand, if Brexit takes the form of an EFTA or EEA, there will be, going forward, no automatic direct effect of new EU legislation within the UK. Importantly, the UK will no longer have any direct say in such new laws and policies. Assuming no EFTA- or EEA-like EU relationship, the UK can always fall back on its WTO rights through WTO enforced agreements (to which the UK and the EU are signatories). The WTO Agreements on Technical Barriers to Trade and Sanitary and Phytosanitary Measures are two examples with obvious relevance to standardization. Nevertheless, any of these alternatives carry potentially risks, financial implications and process inefficiencies, when compared to the EU regulatory process (however cumbersome it may appear).

In addition, however desirable free/harmonized and tariff-free movement of goods and services may be, such benefits may be impacted if not linked with free movement of people and capital that seems likely to be lost through Brexit. As noted below, this will be particularly the case with innovation, which depends on available capital as well as bright inquiring minds.

A comprehensive analysis of potential risks for product standardization is beyond the scope of this post. However, fundamental to the standard setting process are agreements on mutual recognition of standards through conformity assessment procedures. Within the EU, these principles have been central to the creation of the European common market from the outset – "elimination as between member states of ... quantitative restrictions on the import and export of goods and all measures having equivalent effect." Outside the EU, there are many examples. Such mutual recognition/conformity assessment procedures lie at the heart, for example, of the WTO Technical Barriers to Trade Agreement, referenced above. These principles have served well the mutual interests of the United States and the European Union (among others). However, such a system, as noted above, would, relatively speaking, never be as cohesive as the EU's system in which the UK participated since joining in 1973.

With Brexit, the UK will no longer be able to influence directly the standards setting process that results in EU legislation – e.g., regulations – that are binding and have direct effect in EU member states. Brexit poses risks in other sectors where EU regulation provided uniform, EU-wide market direction and procedures. Brexit will make standard setting more cumbersome, more costly and more likely to create differences and tensions.

That said, it should be recognized that standard setting as well is often undertaken on a sectoral basis. There are many examples of industries in which standards are set not on an EU or a national basis but on a multinational or even global basis. This is true, for example, in the motor vehicle sector in which efforts at harmonization of vehicle regulations have long been undertaken through organizations like the United Nations Economic Commission for Europe. Outside this sector, there are as well myriad European focused organizations like the European Committee for standardization ("CEN") and the European Telecommunications Standards Institute ("ETSI") that promote harmonized standards. Thus, for standards, Brexit may prove to have an uneven effect depending on the particular issue and the particular sector. For the UK and for companies doing business in the UK, Brexit will, on balance nevertheless, produce uncertainties, less transparency, less leverage, greater complexity, delay and increeased costs.

Brexit poses similar issues and concerns for innovation. Innovation depends on idea creation. Idea creation does not exist in a vacuum. It depends on a structure facilitating creativity that is dependent on funding (whether one likes it or not), free exchange of ideas and structures/vehicles for product development. The UK has long had a tradition of educational excellence and research. Brexit does not so much threaten extinction of such values as it threatens the UK with a diminution of available funds, reduced opportunities for collaboration and free exchange of ideas among creators of innovation and loss of a critical seat at the table where policies and priorities are determined. As a member of the EU, the UK participated fully as an EU member not only in the funding available from programs like Horizon 2020 (which has nearly €80 billion in funding available) and the EU framework programs (funding so-called "networks of excellence" in critical areas like breast cancer research). Brexit will substantial diminish UK involvement in the creation and guiding of the programs in the first instance.

There is debate about what the exact amount of the loss of funding with Brexit will be (in monetary and percentage terms). Some say that the EU has accounted for less than 5% of UK R&D. Opponents of Brexit counter that the EU provides funding for more than 15% of UK science grants (up over 70% since 2007). Whatever is the correct way to evaluate the impact of Brexit, no one can dispute that UK research and innovation institutions/centers/universities will be net losers as a result of Brexit. While non-EU members can participate in programs like Horizon 2020 (and any follow-on programs after 2020), such participation by the UK would be as an associate member. As an associate member, its participation would appear to be limited to only certain "pillars" (e.g., "Excellent Science" but not "Industrial Leadership" and "Societal Concern"). The UK would not receive any EU funding if as an associate member the UK's GDP is above a certain level (almost surely the case for the UK) and if, as was the case with Switzerland recently, the associate member would be deemed to hinder free circulation of people.

Alternatives for the UK outside the EU to have the same level of participation in and influence in the development of European innovative ideas will clearly be diminished. Some argue that UK should turn its attention on innovation opportunities in countries like the United States, Australia and Canada. While clearly those destinations have and will continue have cutting-edge research and development opportunities, they enforce visa restrictions that the UK did not face with the EU before Brexit. Equally important is the potential loss, while hard to measure and quantify, of diminished intellectual exchange and dialogue that will come as a result not only from the restrictions on EU students and scientists studying/working/innovating in the UK but as well the barriers UK students and scientists will face when seeking to study/work/innovate in EU institutions/laboratories and universities.

As noted above, future articles will provide updated reports on the status of the exit negotiations and the ramifications in important areas such as international trade, export controls, intellectual property, data privacy and government contracts.

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
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 you may opt out by clicking here

    Terms & Conditions and Privacy Statement (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

    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’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.


    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.


    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.

    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 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.


    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.


    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.


    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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

    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

    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

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

    By clicking Register you state you have read and agree to our Terms and Conditions