EU Exit Update May 2021

UPDATED MAY 2021

EU EXIT UPDATE 2021 Update on major areas of impact for the trading standards landscape now that the EU-UK Trade and Cooperation Agreement is in place

WWW.EU-EXIT.UK

ANIMAL HEALTH AND AGRICULTURE The EU (Withdrawal) Act 2018 is designed to transpose all directly applicable regulations into UK law, with the intention of ensuring no cliff edge and a functioning statute book from the day the UK left the EU. Existing EUderived legislation will remain in place and be transposed into domestic statute via a number of EU Exit amendments.

THE SITUATION IN 2021 In the main, the legislation for animal health and feed is not going to change immediately. It is suggested that the biggest risk to the UK will be the impact on business where there is a reduction or loss of direct funding to support the more vulnerable sectors of the agricultural industry.

WHAT HAS CHANGED?

ISSUES TO BE RESOLVED

n Agri-food goods traded from Great Britain into Northern Ireland will face additional border controls depending on whether the goods are for onward consignment into Europe.

n There may be an increase in people keeping animals to beat any potential increase in shop prices. This could create risks for management of any notifiable exotic animal disease outbreak.

n The Direct Payments to Farmers (Legislative Continuity) Act 2020 has been introduced and EU legislation governing the 2020 CAP direct payment schemes is part of domestic law.

n With the phasing-out of direct funding for support to the farming industry, there may be a rise in the number of complaints that local authorities receive relating to animal welfare.

n The UK will be responsible for ensuring risk analysis functions previously undertaken by the European Commission and the European Food Safety Authority (EFSA) continue in the UK.

n The UK agricultural industry employs many EU residents for harvesting of crops. Consideration must be given to the impact should a business no longer be able to obtain labour.

n The UK is no longer a member of the Rapid Alert System for Food and Feed (RASFF) network.

n Animal health and feed law is a devolved function; therefore, there are similar and parallel provisions for the legislation across the whole of the UK. There is level of uncertainty around the threats that the UK may be exposed to however.

n The UK has replaced the Trade Control and Expert System (TRACES) with its own Import of Products, Animals, Food and Feed System (IPAFFS).

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

CROSS-BORDER ACCESS TO JUSTICE Consumer rights in civil law were previously defined in a complex web of both EU and UK national law. Thanks to the EU Single Market, UK consumers were able to shop across EU borders with the same rights as when they shop within their own country. That is no longer the case.

THE SITUATION IN 2021 The free movement of goods has ended, and the legal infrastructure to allow this free movement and the enforcement of consumers’ rights has been removed.

WHAT HAS CHANGED?

n The UK International Consumer Centre (formerly the UK ECC) is no longer part of the European Consumer Centre network, although it can still handle UK/EU disputes concerning purchase of goods and services. n European Small Claims Procedure (ESCP) judgments are no longer recognised or enforceable in the UK. n The EC’s online dispute resolution (ODR) platform is no longer available to UK consumers. n UK-departing passengers will no longer be covered by EU consumer protection legislation. However, it has been transposed into UK legislation so UK passengers will not notice any immediate difference, although there is a risk of divergence in the longer term. n The UK’s choice to leave the EU and be a third country outside of the Single Market effectively means that it also leaves the EU’s judicial cooperation in civil matters.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

ISSUES TO BE RESOLVED

n We are waiting to hear about the UK’s participation in international conventions, which might allow, amongst other things, the enforcement of judicial decisions cross-border. n We currently do not know if the government will replace the EC’s ODR platform with a new instrument. The ODR platform is still active for all other citizens from the EU member states. n The UK has no obligations to implement EU directives, although it may choose to do so voluntarily in certain instances.

e-COMMERCE

What we know from the Trade Deal (TCA) •

“Hard Brexit”: UK is out of the EU single market and customs union

•

Deal focuses on goods, so significant implications for UK online buyers and sellers

•

Tariff-free exports and imports if goods meet “rules of origin” – a boost for e-Commerce

•

Digital Trade section deals directly with e-Commerce consumer protection matters

Unfinished business from the TCA • • • •

“Grace periods” mean many customs checks not yet fully implemented: impact on e-Commerce hard to judge Changes to Product Standards regime deferred till next year: will impact e-Commerce at that time when businesses face new hurdles to trade No agreement yet on data sharing, which is fundamental to e-Commerce No substantial agreement on services or digital content

Early experiences • • • • •

Some UK e-Commerce buyers facing extra charges from import VAT, customs duties based on tariffs and the high cost of returns UK businesses facing significant hassle and costs from import/export formalities Actions taken by EU businesses include refusals to sell to UK Some early evidence of jobs moving from UK to EU and of reduced investment in UK from EU-based companies Problems and opportunities for businesses and consumers in Northern Ireland

LEGAL DIVERGENCE

n Could lead to UK businesses having to deal with two systems: costly and confusing. n Early test for UK Government in relation to issues tackled by the EU “Omnibus Directive”, including online reviews, status of seller on online marketplace and secondary ticketing. n The regulation of Fulfilment houses in relation to goods imported from the EU will also have a significant impact on UK e-Commerce.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

WHAT’S NEXT?

n Will early experiences continue or are some merely “teething problems” that will improve? n Will the end of freedom of movement affect the ability of UK businesses to operate effectively and fairly? n Will Trading Standards enforcers get the powers needed to effectively regulate modern e-Commerce? n Will there be effective international enforcement co-operation to replace the UK’s membership of the EU Consumer Protection Cooperation partnership (CPC)? n Will the “level playing field” and dispute resolution threaten e-Commerce?

FAIR TRADING

UK fair trading legislation maintains a balance between the principles of subsidiarity and EU maximum harmonisation restrictions. It is fair to say that the UK has had a major influence on EU consumer policy and our legislation has historically been a mixture of EU and UK consumer protection policy.

WHAT HAS CHANGED?

n The UK is no longer party to the EU’s Digital Single Market strategy. However, it is possible that UK law could be changed to ensure that businesses are not put at a disadvantage when trading in the EU. n Part I of the Consumer Protection Act 1987 (CPA) makes a manufacturer, ownbrander or importer into the EU liable for any injury or harm caused by a product they sell.

THE SITUATION IN 2021 Because the majority of EU consumer protection is found in UK domestic legislation, there appears to be little imminent impact on the actual legislation.

However, many technical amendments have been made. These changes are primarily to remove references to the EU.

ISSUES TO BE RESOLVED

n The so-called “Omnibus Directive” has been used to tidy up and modernise existing consumer protection directives. Many of the proposed changes are not at odds with areas that the Government considered in their Green Paper, “Modernising Consumer Markets”, and we hope that the long-awaited White Paper may give us some indication of their approach to consumer protection in the UK, following EU exit. n EU Member States are required to implement two new directives on consumer rights when they buy goods and (for the first time) digital content. These new directives, due to be implemented by October 2021, will set maximum standards for consumer’s rights. We wait to see whether Government sees any benefit in making changes to the Consumer Rights Act 2015. n Following early issues with additional delivery and VAT charges for consumers buying goods from outside the UK, it will be interesting to see whether the lack of cross-border enforcement arrangements will mean that action cannot taken against EU businesses who continue to mislead consumers regarding additional, or fictional, charges. n Many UK businesses that buy from businesses elsewhere in the EU may still not be aware that they may now be responsible for any injuries caused by their product.

Effectively they will be treated as though they made the goods, when the manufacturer is outside of the UK. It is vital that they have professional due diligence systems in place and have taken out appropriate insurance cover.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

FOOD STANDARDS Staying as close as possible to EU food standards will help address issues of cost, safety, quality, certainty, consumer confidence and trade relationships. There is an opportunity for the UK to establish a new Food Act that clearly sets out the vision for better food, farming and fishing. However, this could be hindered by devolution and the division of responsibility for food standards.

THE SITUATION IN 2021 The deal announced in December 2020 is best summarised as a ‘Canadatype’ deal, with no tariffs but border checks still taking place. There is also provision for the application of tariffs should the agreement be breached. Northern Ireland remains subject to EU rules and border issues may arise.

WHAT HAS CHANGED?

n The UK is now free to determine its own imports control system. An effective and robust system will need to be in place to minimise the risk from food scares and incidents. n The Trade Control and Expert System (TRACES) is no longer part of the UK’s information-sharing toolkit and will be replaced with the Import of Products, Animals, Food and Feed System (IPAFFS). n Defra has issued guidance outlining allowances for food products sold in the UK to be non-compliant for a limited time and these should be referred to when giving advice. n The new Trade and Agriculture Commission will review prospective deals and advise the government about what issues it may raise relating to standards.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

ISSUES TO BE RESOLVED

n The internal markets legislation attempts to address the potential issues of divergence within the UK but raises political concerns. n The position with regard to many of the practical implications of the Northern Ireland protocol is still unclear. n There are some short-term provisions, for example regarding the continued use of organic logos, which need to be finalised. n The UK government has decisions to make on which standards to apply in order to trade most effectively.

The UK could have different standards in play for different markets following other international models.

INTELLECTUAL PROPERTY Local authority trading standards services have a statutory duty to enforce the criminal provisions of the Trade Marks Act 1994 and the Copyright, Designs and Patents Act 1988, and also have enforcement powers in relation to criminal provisions of the Registered Designs Act 1949.

WHAT HAS CHANGED?

THE SITUATION IN 2021 The UK is no longer a member of the EU, but many existing EU rules and laws continue to have effect from January 1 2021, as they are now part of the ‘EU retained law’ in the UK.

THE POLITICAL DECLARATION

n The UK is no longer a member of the European registration system; however, UK subjects and businesses will still be able to register EU or Community Trade Marks (CTMs) by means of application to the EU Intellectual Property Office (EUIPO) in order to gain protection in the remaining 27 EU Member States.

This sets out the framework for the future relationship between the UK and the European Union. The key points are that the ‘Parties’ should:

n The UK has protected existing registered EU CTMs by creating comparable UK rights which have been granted automatically and free of charge.

n Provide IPR protection beyond WTO/ TRIPS/WIPO convention levels;

n The government has drafted a new trade mark regulation, The Trade Marks (Amendment etc.) (EU Exit) Regulations 2019.

n Preserve high levels of IP protection;

n International registered designs designating the EU also cease to offer protection in the UK. Accordingly, the UK has automatically created new ‘equivalent registered designs’ in order to ensure no loss of protection. n The ‘exhaustion principle’ in relation to goods imported from the EEA has effect.

However, the principle will cease to apply to exports from the UK into the EEA.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

n Maintain the freedom to establish UK/ EU regimes for the exhaustion of IP rights; n Establish a mechanism for cooperation and exchange of information on IP issues of mutual interest.

TRAVEL LAW The EU-UK Trade and Cooperation Agreement highlighted insolvency protection issues which will be in place from 1st January this year.

On one hand we have “Product Standards” regulation where there is an agreement for the mutual recognition of UK and EU Member State medicinal product inspections.

BUT for package holidays, there is no longer mutual recognition of insolvency protection.

What does that mean? n it means that prior to 1st January 2021, If UK Organisers tried to sell package holidays to EU citizens they could do so, and the insolvency protection would be the UK version n similarly, if an EU Organiser targeted UK citizens, then they need only comply with their own insolvency protection regime

NOW we’ve reverted to the situation before the deal was agreed.

Where EU organisers target UK consumers (mainly online with OTA’s) they will need to meet the requirements of UK insolvency protection regimes. ATOL for flight-inclusive packages. Bonding, insurance and trust accounts for non-flight packages.

Where UK Organisers target EU citizens, they will need to comply with the relevant insolvency protection in the Member State.

Travel Organisers will have to be aware of important issues; n when making sales online, over the telephone or through travel agencies, the relevant information provisions for pre- and postcontract information requirements must be met n when they combine travel services into a package or linked travel arrangement, they will need to provide insolvency protection n UK Organisers will also be responsible for the proper performance of the package and for insolvency protection for non-UK organisers they promote and sell

COVID-19 IMPACT?

The COVID-19 pandemic has raised questions about what happens if package holiday contracts cannot go ahead and are cancelled. The Trading Standards view, is that a refund would be due, in most cases, in compliance with Reg 12(7) of the PTR’s 2018. However, depending on the circumstances of each case investigated, there is a legal argument that the contract has been frustrated.

Frustration A contract will be ‘frustrated’ as a matter of law if, due to no fault of the parties, something happens after the contract was entered into which means it can no longer be performed at all or performance would be radically different to what was agreed. As a result, the contract comes to an end.

The Foreign, Commonwealth and Development Office (FCDO) provide travel advice and if a package holiday could be cancelled because of FCDO advice against non-essential travel to the relevant country (due to unavoidable and extraordinary circumstances, e.g. Covid-19,) then consumers should be entitled to a full refund.

For more information about how EU Exit affects trading standards, and to take the EU Exit training course, visit www.eu-exit.uk

Thanks to all of the Lead Officers who took the time to contribute to the following pages: Steph Young (Animal health & agriculture) Elisabetta Sciallis (Cross-border access to justice) David Mackenzie (E-commerce) Peter Stonely (Fair trading) David Pickering (Food standards) Gavin Terry (Intellectual Property) Bruce Treloar (Travel)