Jan 7, 2020

The British Prime Minister, Boris Johnson, won the most recent UK general elections with the slogan: “Get Brexit Done!” Now that he has achieved a comfortable majority in Parliament he wants to move on, and one of the first things he introduced was the ambition no longer to speak about ”Brexit” when referring to the process of the UK leaving the EU. Let’s help him and from now on refer to TIFKAB, The Issue Formerly Known As Brexit.

Brexit (TIFKAB) on January 31st, 2020

On January 31st, 2020 the UK will leave the EU. This will start the transitional period in which the UK no longer has voting rights in the EU, and it can start negotiating with other markets about trade agreements. The UK market will remain part of the EU Single Market, until a new agreement with the EU is reached or until the UK leaves without an agreement. This means that not much will happen in practice on January 31st. This situation is also referred to as BRINO (Brexit In Name Only).

Latest TIFKAB timelines

The EU will set up a negotiating team and a mandate for that team. This will take some time, so the EU will probably not be able to start before March 2020 with the negotiations. There is no information on the readiness of the UK negotiating team.

Time is critical, because June 30th 2020 is the last day the UK can decide to extend the transitional period. If an agreement is reached, this must be finalized by November 26th to get all in place by December 31st.  In practice this means there is a three-month timeframe for the negotiations to reach a point where negotiators trust there will be a positive result. The transitional period can be extended to a maximum of two extra years, but this means the UK will remain part of the EU for a longer period. The British Parliament has therefore supported the proposal for not using that extension. In the past we have seen the UK taking a firm position on those deadlines only to ask for extensions in the last minute. This is still possible. So far the UK did not want to jump into a no-deal scenario, and the EU did not want to push them off the cliff. But the current majority in the British Parliament may encourage players on both sides to do so now; the no-deal Brexit option is still a realistic option.

Future agreement

The future agreement between the UK and the EU could be relatively straightforward because the two entities’ legal systems are currently aligned. However, the EU only accepts a free trade agreement if that other market accepts many of the EU requirements regarding product safety, labor laws, environment, etc. Those restrictions remaining in place are not driving the UK to leave the EU. This means the negotiations will be far from easy and there will be some give and take on both sides. This also means that it is not likely there will be an agreement by the end of this year.

Prepare for "friction-hampered trade"

At this moment there is a frictionless trade agreement between the EU and the UK, and this will last at least until the end of 2020. The future deal will at best be a free-trade agreement, which means there are no tariffs and no quota, but there will be border checks. As mentioned, the no-deal scenario is still an option.

The most likely outcome is an arrangement between these two extremes. This will entail administrative efforts to keep delays at customs as short as possible for goods crossing the English Channel. Companies relying on cross-channel supplies now have to consider switching to other suppliers offering more flexibility. Firms may also have to consider the business continuity of those suppliers, whose economic viability may be negatively impacted by losing their cross-channel sales. This problem may be harder for UK-based companies as they will potentially lose clients in 27 Member States, while EU27 based companies lose client in only one Member State.

Other Brexit consequences

It is almost certain that Notified Bodies based in the UK will no longer be designated after the transitional period ends, and their certificates will be void from that day. The UK will be regarded as a “third country” from the EU perspective, which means that a UK-based manufacturer must appoint an EU Authorized Representative and use an importer to place devices on the European market. Current non-EU manufacturers relying on a UK-based Authorized Representative need to switch to an EU27 based Authorized Representative.

For placing devices on the UK market, the situation is less clear. The UK has drafted legislation that describes the roles of the importer and the UK Responsible Person, a role supposed to be similar to that of the EU Authorized Representative. However, if all requirements are taken together, it appears this role and that of the importer will always be combined. That would mean that current distributors may get a role imposed upon them that they don’t want, and manufacturers are forced to share detailed information about their devices with their importers. Although it is possible this legislation will be changed over the coming year, non-UK manufacturers should consider with whom they want to engage in order to place their devices on the UK market after the current transitional period ends.

Over the coming months Emergo by UL will inform you on the results of the negotiations and any changes in the timelines.

Related UK and European medical device regulatory resources from Emergo by UL:

 

Author

  • Ronald Boumans

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