The effect of no deal on regulated goods will be substantial. Much of the goods trade the UK does with the EU is underpinned by joint rules, processes and testing, which allows businesses to trade automatically into the EU. On day one of a no deal Brexit, UK exporters of regulated goods will immediately find requirements to export to the EU have changed, with non-tariff barriers being introduced across a wide range of sectors.
Key challenges for business
What will no deal mean for UK companies importing regulated goods from the EU?
UK companies which operate in highly regulated industries or frameworks such as consumer goods, construction equipment, pharmaceuticals and aerospace, will not see significant changes in the short term. Imports from the EU will be treated much as they are today, and assumed to be safe for use. That will change over time. For example, after 21 months, businesses selling food in the UK will need to have updated their labels including with a UK food business operator address, new UK health and identification marks, and will no longer be able to use the EU organic food label or label their food as of EU origin. The UK government will also consult on the future of marking of products, introducing a domestic replacement of the CE mark – the UKCA mark – in time.
What will no deal mean for UK companies exporting regulated goods to the EU?
Some UK goods already placed on the EU market will not need to be tested again, and the UK will continue to recognize the CE marking for certain products for an unspecified transition period. But products requiring third party testing like medical devices will have to be certified by EU based notified bodies from Day 1.
For some UK products, such as cosmetics, selling into the EU will also require a legal authorised person and address in the EU. These changes differ sector by sector, and as such it is important that businesses understand the changes for their industry in particular. Some of these, for example for the food industry and medical sector, are incredibly complex and burdensome.
What could happen if UK firms fail to take the necessary steps?
If regulated goods providers in the UK fail to take necessary steps, there is a risk of goods being seized or refused entry to the EU. The UK has chosen to take a lenient approach – at least for a temporary period of time – and as such if EU exporters make errors they are unlikely to face significant consequences.
Analysis of preparedness - RAG rating
Key questions for business to consider
Continuity plans for no deal will be unique to every organisation. However, there are some key questions your plan should answer, to ensure the major issues are covered.
- Will your legal responsibilities be changing, and do you understand what you need to do to meet them?
- Have you checked which process you need to follow?
- Do you need to appoint an authorised representative or responsible person in the UK?
- Do you use notified bodies to test your products, and as such need to look at EU notified bodies?
- Do you use the CE mark on your products, and taken into account the changes to your production processes needed for a UKCA mark?
- Have you checked whether you need licenses for sale in the EU as well as in the UK for your products?
- Do you have enough resources assigned to administrative and regulatory compliance to handle multiple sets of testing and licensing?
- Do you understand what labelling changes may be needed for the packaging of your goods now or in the future?
- Have you built in additional time for multiple testing into your production plans for new products?
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Preparing for no deal: the changes to goods and services regulation
Want the detail on how services will be impacted?
Other resources to help you plan
Banks and finance providers retain the capacity and commitment to support viable businesses and there is a wide range of advice, guidance and finance options available to firms. UK Finance has developed Let’s Talk Business guide which is a starting point for businesses looking for assistance.
If you are stockpiling you should speak to your insurer or insurance adviser to ensure you have sufficient cover in place.
Worried about travelling to the EU in a no deal scenario? The ABI has a useful guide.
If you’re concerned about travel and motor insurance, read the British Insurance Brokers’ Association advice here.
If you are a consumer or saver, read the Building Societies Association FAQ.
If you operate in financial services, check guidance from the Financial Conduct Authority here.
The Association for Financial Markets in Europe has a webinar on ensuring operational readiness for a no deal Brexit.
If you operate in financial services, read the government’s no deal technical notice for banking, insurance other financial services in a no deal scenario here.
Read about providing services in each of the EEA nations here.
If you manufacture in the chemicals sector, check out guidance for your industry here. The Cosmetic, Toiletry and Perfumery Association has a Brexit hub here.
How are other businesses preparing?
— A start-up cosmetics firm, South East England
To sell one of our products to the EU we will need to have two separate registrations. In early 2019 we took the decision to start the process of registering each of our products with the EU Commission, providing information on all ingredients, manufacturing processes, animal testing data and a whole host of other things. For a company of our size this was a significant undertaking.
— Medical device manufacturer, West Midlands
We increased the stock we hold between January and March this year by 50%, but had intended to run this down from March. Because no deal is still a risk, we’ve held onto the March stocks which has tied up cash. We know that we will have to write off some of this eventuality because business needs change even over the short time of 6 months, and the logistics of managing this much stock was very tough. We’re very nervous about the challenge of regulations of our goods after no deal. We have to prove our products are made to the highest standard and there’s legal confusion about CE markings and notified bodies which are essential to us being sold. Our competitors could challenge the validity of our products with our customers.
— Company with a manufacturing base in the South West
Our goods are highly regulated and we need the correct licenses to trade them with the EU. It could take between 60 to 90 days to get a license after no deal occurs and this simply isn't workable for us. We cannot plan for any delays at or behind the border. One-week delay in delivery for one of our products costs us £200,000 in liquidated damages. The uncertainty means suppliers and customers have different opinions on what no deal looks like so we can’t agree terms and conditions. It’s very difficult to manage this.