Brexit impact on businesses for EU and UK companies

Despite the fact that Brexit having been delayed to April 12th if the UK deal is not passed, or to May 22nd if the Parliament accepts Theresa May’s deal, it still remains unclear what the consequences of Brexit will be for UK and EU businesses. Companies are still trying to understand what is going to happen after the final deadline, whenever it will be. In this post, we share some of the guidelines issued by official organizations about how to deal with Brexit. They are particularly relevant for businesses in the industrial sector. We also make some observations on the future use of the English language in the EU.

As you know, Brexit is a term that has been created by fusing the words “British” / “Britain” and “exit” following the result of the 2016 referendum, in which the British people voted in favor of the withdrawal of the United Kingdom from the European Union. Since then, there have been ongoing attempts to negotiate a withdrawal agreement between the UK and the EU, although no such agreement – or “deal” – has been reached so far. At the moment, it therefore appears that the UK will leave the EU in a ‘no-deal’ scenario, which is likely to impact UK and EU companies. At this point, businesses need to be prepared for this eventuality.

Official organizations have already started to provide guidelines and to explain what a no-deal Brexit will entail, particularly for certain sectors. If you are a manufacturer or deal with industrial products, if you work in the medical sector or with intellectual property, and if that somehow involves relations with the UK, then this article is for you. We’ll focus mainly on the consequences of Brexit for companies that deal with industrial products, medicines, medical devices and clinical trials, and intellectual property in the event of a no-deal Brexit. In the final part of the article, we’ll cover other possible implications connected to the internationalization of companies that work with the UK market.

Brexit consequences: the EU guidelines on industrial products

The European Union has tried to provide answers about some consequences of Brexit by issuing a series of guidelines in the form of a Q&A document, published on 1 February 2019, related to industrial products and to the legislation that will have to be applied if the UK becomes a “third country” on the withdrawal date, without a ratified withdrawal agreement (“no-deal Brexit”).

The aforementioned EU guidelines focus on a series of concepts that have also been summarized in a publication on the consequences of Brexit by Qarad, a Belgian company specializing in Regulatory Affairs and Quality Systems for the IVD and Medical Device industry, in an attempt to shed some light on the issue in view of the approaching deadline. Here are the main points highlighted by both documents:

 Goods placed on the EU market before the withdrawal date, that is, goods distributed in the EU, manufactured in the EU, imported into or manufactured in the EU and delivered on or after the withdrawal date, will continue to be available without undergoing any modifications, as they were placed on the market before that date;

 Regulatory compliance: agents or representatives based in the UK, with responsibility for EU regulatory compliance, will cease to have any authority on the date of the UK’s withdrawal. Regardless of when products were placed on the market, manufacturers will have to appoint a new representative based in the EU. Goods to be placed on the market after the withdrawal date will have to be re-labelled in compliance with EU legislation; goods placed on the market in the 27 remaining EU member countries (EU-27) before the withdrawal will be considered correctly labelled;

 Importers (of products imported via the UK and placed on the EU market before or on the withdrawal date): according to guidelines published by the EU, UK-based importers and manufacturers will no longer be EU operators as of the withdrawal date. So those receiving goods from UK manufacturers or UK-based importers will become importers, and will no longer be distributors, if they make a product available in the EU for the first time;

 Transfer of Notified Bodies certificates: CE certificates issued by a UK Notified Body (NoBo) will no longer be valid, and a CE certificate issued by an EU-27 Notified Body will be required. Economic operators must either apply for a new certificate with an EU-27 NoBo or arrange for a transfer of the file and the corresponding certificate to an EU-27 NoBo before the withdrawal date. After withdrawal, the EU declaration of conformity and the NoBo certificate will have to be updated.

 Accreditation services (that is, the verification, issued by a national accreditation body, that a conformity assessment body meets the requirements to carry out a specific conformity assessment activity): accreditations by the UK Accreditation Service will no longer be valid or recognized in the EU-27 as of the withdrawal date.

Consequences of Brexit for medicines, medical devices and clinical trials

In light of the guidelines provided by the EU, and of the changes that a no-deal Brexit implies,the UK government has worked on a series of amendments enabling UK rules to be fully operational in the event of a no-deal Brexit. In particular, for key items under the EU Medical Device Regulation (MDR) and IVD Regulation (IVDR), a set of modified rules known as The Medical Devices (Amendment etc.) (EU Exit) Regulations 2019 has been created. Compliance with these rules will be mandatory for anyone wishing to put medical devices on the UK market. The amendment has been cited in the Qarad report “No-deal Brexit impact.”

The UK government, specifically the Department of Health and Social Care, following up on the matter, recently published a note with further guidance on medicines, medical devices and clinical trials, and what will need to be taken into account in the event of no deal. The note was made available in January, in order to accelerate Brexit preparations because, although reaching a withdrawal agreement is still a priority, companies need to be ready for the no-deal eventuality. The Medicines and Healthcare Products Regulatory Agency (MHRA) will, according to the communication, plan for a consultation in early autumn 2019 on the regulation of medicines, medical devices and clinical trials. The aim of the consultation will be to produce a more complete technical document. The main points currently highlighted by the Department of Health and Social Care are:

 Medicines: after 29 March, and if there is no deal, the UK will no longer be part of the EU regulatory network and the MHRA will assume functions previously performed by the EU in the UK market until the UK law is changed. Such changes are likely to be informed by the autumn consultation.

 Medical devices: the UK will recognize medical devices approved for the EU market and bearing the CE mark. The UK will comply with all key elements of the Medical Devices Regulation (MDR) and the In Vitro Diagnostic Medical Device Regulations (IVDR), which will apply in the EU from May 2020 and 2022 respectively, although the UK will no longer be formally present at EU committees.

 Clinical trials: the 2004 Regulations have been modified to ensure they still apply to the UK after withdrawal from the EU. The new EU Clinical Trials Regulation (CTR) 536/2014 will not be effective in the EU on the date of withdrawal, and will therefore not be included in UK legislation on withdrawal day. However, the UK will align its legislation with the CTR after the withdrawal date, if possible.

Consequences of Brexit for industrial products: intellectual property, patents and trademarks

The ICEX, the Spanish institution for foreign trade, has recently released a statement on the consequences of Brexit for industrial property, which we would like to share with you. In the event of a no-deal Brexit, the EU regulations protecting these industrial property rights will no longer be effective, so any type of industrial property solely registered at the European Union Intellectual Property Office, and protected by geographical indication, will no longer be protected in the UK. If such property rights have previously been registered at the UK Intellectual Property Office, they will be protected. Therefore, the general advice is to start registering trademarks, patents and any type of intellectual property in the UK. The UK’s competent authority may require the payment of a tax in order for applicants to retain protection rights. This process could change in the future, depending on the commitment between the UK and the EU to cooperate in industrial property matters.

The EU language in the time of Brexit

This article chiefly addresses the consequences of Brexit for the industrial and manufacturing sectors, particularly the medical field. In all these areas, the UK will no longer play a role in EU decision-making. There are also other areas where the UK may lose power and influence, and one of them is language.

Doubts are already being raised about the role of the English language in the EU. Despite English being an official language in both Ireland and Malta, the first official languages of these countries are Irish and Maltese respectively. While English is far from being unused all over the world, the EU included, maintaining its official status as a language may contravene the spirit of the Lisbon treaty or lead to calls for non-nationalist changes, such as asking Ireland and Malta to switch to English as their first official language. This issue is explained in an article entitled “The fate of English in the EU after Brexit: Expected and unexpected twists.”

The article examines different ways of counting language speakers (proficient and not), and considers different possibilities for the EU languages, given the high number of native speakers of German (Germany and Austria combined total 90 million speakers) and French (with France and Belgium totaling 70 million) versus English with the UK population of 60 million.

The impact of Brexit will be significant on a number of levels, for example in the industrial sector, particularly the medical field, and for intellectual property. In this article, we shared some insights on what will happen in the event of a no-deal withdrawal, and some issues surrounding language, which might also affect new regulations post-Brexit.

English will certainly not disappear from use overnight, and trade between the UK and the EU will continue, because EU and non-EU companies work together every day. What is likely to change is the set of rules and regulations underpinning this work. The key is to be ready for what these changes will entail, language-wise too.