What Brexit holds for construction equipment manufacturers – The Future Regulatory Landscape

Whilst there have been many uncertainties about what Brexit holds for construction equipment manufacturers, one thing has become certain; the current transition period will definitely end on 31st December 2020 and will not be extended. Dale Camsell, the CEA’s senior technical consultant explains the complex and ever-changing situation that is Brexit and the possible impact on the CE sector…

From 1st January 2021, the UK’s trade with the EU will either be governed by the terms of the free trade agreement (FTA) that is currently being negotiated, or it will be governed by World Trade Organisation (WTO) rules. If it’s the former then product compliance requirements will be entirely dependent on the agreements made within the FTA, whereas if it’s the latter, a so-called hard Brexit will occur and each party will be free to determine its own product compliance requirements.

Five of the most significant challenges facing UK manufacturers of construction machinery if a hard Brexit occurs.

The Route to Safety Compliance
In order to provide businesses with advice as what the UK product compliance requirements would be should a hard Brexit have occurred on 31st January 2020, the UK government published a series of guidelines. The government’s position was that it would implement a so-called “continuity period” immediately after the UK departed the EU and a hard Brexit commenced. During this continuity period, the UK would carry on recognising the EU “CE mark” and any certificates that had been granted by EU based third party approval bodies. Whilst the duration of the continuity period was never disclosed, its intention was to allow manufacturers the time to fully grasp the new UK specific requirements and set up their compliance activity such that machinery would be fully compliant with the UK requirements in time for the end of the continuity period. As it transpired, a hard Brexit was averted and the UK left the EU under the terms of the Withdrawal Agreement. As a result of this soft exit, on 30th January the government withdraw all of its published guidance but, at this moment in time, it has not provided any formal published guidance on what the requirements will be should an FTA fail to be agreed and a hard Brexit occurs at the end of this year.

The government has recently offered informal advice and is recommending that manufacturers prepare themselves to be fully compliant with the possible new UK requirements as from 1st January 2021. The government’s new position is that it will not offer any continuity period if a hard Brexit occurs on 1st January 2021, meaning that manufacturers will only have the remainder of this year in order to prepare for the new UK requirements.

One of those recommendations is that manufacturers should start planning to incorporate the new “UKCA” mark, which will replace the EU CE mark, on machines that are to be sold into Great Britain from next year. However, since manufacturers don’t currently have sight of the proposed new UK regulation, nor even a draft, there is understandable concern that manufacturers are being asked to declare that their machinery complies with a law that doesn’t currently exist.

Additionally, from the practical perspective, modifying a machine’s ID plate to incorporate this additional mark is more complex and trickier than it sounds and can take several months to realise. This is resulting in considerable concern that manufacturers might not be ready to UKCA mark machines in time for the 1st January 2021 implementation date.

Another closely related time-based challenge is that in order to comply with EU safety or environmental legislation, manufacturers sometimes obtain third party certifications from independent approval bodies. Under EU law, these service providers can be based anywhere in the EU. However, the UK government has advised that in order to comply with UK law after the transition period has ended, manufacturers will need to obtain these certificates from UK based approval bodies. Two challenges arise from this situation; firstly, these approvals cannot be granted until 1st January 2021, hence manufacturers are concerned as to how they can access the market if they aren’t in possession of the required certificates on 1st January 2021; secondly, since every manufacturer that sells into Great Britain will be similarly affected, regardless of where they are based, there will be an enormous demand placed on the UK approval bodies. Manufacturers therefore wonder how the approval bodies will cope with this demand on their services and deliver the necessary approvals in a timely manner.

Uncertainty
In order that they remain compliant with new legislation, manufacturers of construction equipment require time to implement any changes to product design or certification procedures. New regulations are normally years in development and are usually introduced with a delay in order to allow for manufacturers to accommodate the necessary changes.

As has already been mentioned, the UK’s published guidance was recently withdrawn, leaving manufacturers struggling with an information void. It is understood that the UK will provide formal published guidance on post-transition period compliance requirements during July, which will be very welcome since the currently lack of certainty is of grave concern to manufacturers.

However, with 1st January 2020 now being less than half a year away and with the UK government indicating that there will be no continuity period after the transition period ends, manufacturers will have precious little time to implement whatever changes are needed in order to remain compliant in the UK next year.

It has been encouraging to hear that both sides of the FTA negotiations have agreed to intensify the trade talks in the coming weeks/months. However, negotiations might continue through till year-end, meaning that manufacturers might only be given a few weeks’, or possibly even days’, notice as to whether they’ll need to comply with compliance requirements as laid down by the FTA or as laid down by the UK.

Mutual Recognition of Conformity Assessments
Some product legislation requires that certain tests are performed with the involvement of independent third-party assessor’s approval bodies. In other cases, manufacturers voluntarily utilise the services of these assessors, perhaps in situations where they don’t possess the expertise or facilities.

If an FTA is not agreed, then the UK has made its position clear that it will no longer accept approvals that were gained from EU based approval bodies. Similarly, the EU’s position is that it will not accept approvals gained from UK based bodies. If that situation were to prevail, it would require that two separate sets of approvals would have to obtained, i.e. one from a UK body and one from an EU body, in order access both markets. This would be costly and add to the manufacturer’s compliance related burden. A ratified FTA could possibly help the situation, since it could include a requirement that tests conducted on one territory would have to be recognised in the other territory. Such a mutual recognition agreement could help reduce the additional burden, but it is not guaranteed that a ratified FTA would be include a mutual recognition clause. Manufacturers await the outcome of the negotiations with interest.

Chemical Legislation
Due to the previously mentioned withdrawal of the UK’s hard Brexit guidance, manufacturers also face a void when it comes to knowing what the UK regulatory requirements will be in relation to chemical legislation. The most notable of which is the regulation that deals with the registration, evaluation, authorisation and restriction of chemicals (REACH). This will be a particularly problematic regulation to “copy and paste” into a UK specific equivalent since the functionality of the regulation is based on the close integration between the European Chemicals Agency (ECHA) and the EU regulators. Since there is no UK equivalent of ECHA, manufacturers are not exactly sure how the UK equivalent will be structured.

Of immediate concern to manufacturers is that EU Waste Framework Directive introduces a requirement that companies supplying certain hazardous substances are required to submit detailed information on these substances into the so-called SCIP database. This database is administered by ECHA and goes live in October this year, with stakeholders having until 5th January 2021 in order to complete the input of information. Populating the EU database is already envisaged to be a daunting and time-consuming exercise. If this effort is required to be duplicated for a UK specific database within the same timeframe, manufacturers face a significant challenge.

The Unique Situation of Northern Ireland
Regardless of whether or not an FTA is ratified, one post-transition period certainty is that product compliance requirements will be different for Northern Ireland than they are for the rest of the UK.

The principles of the Northern Ireland Protocol were formally agreed as part of the Withdrawal Agreement that was ratified last October. Although the detail as to how it will be implemented still needs to be agreed, the product compliance implications are clear. In effect, Northern Ireland will remain part of the EU Single Market, meaning that machines sold into Northern Ireland will need to comply with EU regulations rather than those that apply in the rest of the UK. This will have a significant effect on manufacturers that put products on the Northern Ireland market. Implications could include additional product marking requirements and manufacturers based in Great Britain having to formally establish an importer in the legal sense.

Help is at Hand
In order to keep its members advised of the latest developments in this complex and ever-changing area, the Construction Equipment Association issues frequent updates to members informing them of the latest compliance related developments. The situation is dynamic, but members remain well informed, enabling them to take the necessary steps so that they can remain compliant after the transition period.

As the recognised trade association for UK construction equipment manufacturers, the CEA has frequent and open dialogue with UK government representatives, meaning that members’ thoughts and concerns are relayed directly to the heart of the government’s negotiation team.

For more information contact the CEA office – info@thecea.org.uk