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Brexit – trading in a no-deal scenario

Brexit – trading in a no-deal scenario

If the UK and the EU fail to agree the terms of our withdrawal from the EU prior to March 2019, we will find ourselves in a “no-deal” or “cliff edge” scenario.

The UK Government is trying to prepare us for the worst by issuing technical notices.  These notices bring little comfort, highlighting the stark reality of some of the critical changes that will be required in this scenario.  While the Government might be considering stockpiling food to get us through these difficult times, the latest notices issued on trade show that serious preparation is required if businesses are to survive the fall intact.

Appointing nominated persons to your business if there’s no Brexit deal

For some products, it is necessary to appoint a nominated person to carry out certain tasks.

In the event of a no-deal scenario, UK based nominated persons will no longer be able to place products on the EU market.

Businesses who already have an authorised representative based in an EU country will be able to continue to place products on the EU and UK markets. This will be for a limited period only according to the guidance. It is assumed that that period is to allow businesses time to appoint a nominated person in the UK.

Going forward if there is no deal, businesses would need an authorised representative based in the UK to place products in the UK and an EU based representative to carry out the tasks on their behalf within the EU.

Trading under the mutual recognition principle if there is no Brexit deal

The mutual recognition principle allows goods which are subject to national rather than EU rules to be imported and exported to and from other EU countries.  If there is no deal, UK businesses exporting goods (or EU businesses importing UK goods) will need to make sure that they meet the legal requirements of the first EU country they arrive in. Equally UK or EU businesses importing goods into the UK will need to ensure that they meet UK requirements. This means businesses will no longer be able to take a uniform approach to their products. Time and money will need to be invested to research particular national requirements and to make the necessary changes in areas such as labelling and safety compliance.

Trading goods regulated under the “New Approach” if there is no Brexit deal

For many products, conformity with the EU rules is confirmed by the manufacturer affixing a conformity marking (CE marking). A conformity assessment is usually carried out by notified bodies.

In the event of a no deal scenario, UK businesses wishing to place products on the EU market will have to instruct an EU assessment body to re-test and re-mark the goods. In our update on 16 March, we touched on the impact that this could have on Scottish businesses who already experience difficulties in trying to instruct UK based notified bodies. These changes are likely to increase costs and time taken to place goods on the market.

For a limited time, goods that meet the EU requirements can be placed on the UK market after 29 March 2019, although the guidance doesn’t specify how long that period will be. The government intends to publish updated guidance dealing with a new UK conformity marking when that period comes to an end.

Businesses in the UK and the EU should be aware of the guidance in the technical notices and be prepared for increased costs and time involved in the event of no deal. If you would like to discuss your Brexit preparations please contact our Brexit team

By Joanna Fulton

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