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Focus on Regulation

Implications of European Commission’s proposal for a Regulation to modify existing EU rules to allow manufacturers to apply for new approvals in 27 EU Member States to replace their UK type-approvals following Brexit

On 4 June 2018, the European Commission adopted a proposal for a Regulation to modify existing EU rules to allow manufacturers of vehicles to obtain new approvals from the 27 EU Member States who will remain post-Brexit to replace their existing UK-type approvals.

Although the proposed Regulation focuses specifically on vehicles it could be interpreted as an indication that the European Commission has begun to focus on the practical steps to address the consequences of Brexit for certificates of type approval issued by UK authorities on the basis of EU laws. The proposal appears to suggest that the European Commission anticipates that, at least in the short term, there will be no mutual recognition of certificates between the UK and the EU.

The Explanatory Memorandum of the proposal provides that, subject to any transitional arrangement that may be contained in a possible withdrawal agreement, EU legislation will no longer apply to the UK from 30 March 2019 (the date when the UK will withdraw from the EU) and the UK will then become a “third country”.

The current EU legislative framework governing type-approval leaves to manufacturers the choice of the EU Member State authority from which they request type-approval. This type-approval permits manufacturers to place products on the market in all EU Member States. The withdrawal of the UK from the EU will mean that manufacturers will no longer be permitted to rely on certificates of type-approval issued by UK authorities to access the EU market (or vice versa). Consequently, manufacturers who obtained approvals in the UK in the past will need to obtain new approvals, effective immediately upon Brexit, from the competent authorities of the 27 EU Member States to ensure continued compliance with EU legislation. This requirement will include products already in production. This is because the VCA (the UK’s type-approval authority) will cease to be an EU type-approval authority and will no longer be able to fulfil any of the powers and obligations of a type-approval authority under EU legislation.

The European Commission’s proposal is intended to address the related consequences by permitting manufacturers to rely on test reports, previously presented to the VCA, for the purpose of obtaining the replacement approvals from other EU authorities, rather than requiring them to repeat their testing. The Commission proposes to modify, temporarily and in a targeted manner, the existing rules to allow manufacturers to obtain new approvals from the competent authorities of the 27 EU Member States to replace their existing UK type-approved products. The proposed Regulation intends to complement the four EU legislative acts governing type-approval: Directive 2007/46/EC concerning the type-approvals of motor vehicles and trailers (to be replaced by a Regulation which will be applicable as from 1 September 2020), Regulation (EU) No. 168/2013 concerning the type-approval of two- and three- wheeled vehicles and quadricycles, Regulation (EU) No 167/2013 concerning the type-approval of agricultural and forestry vehicles and Regulation (EU) 2016/1628 concerning the type-approval of engines for use in non-road mobile machinery.

Although the proposed Regulation enables type-approvals to be based on test reports already presented for the purposes of obtaining the approvals in the UK, the European Commission provides the competent authorities of the 27 EU Member States with discretion to require new tests for any element of the approval they see fit before issuing a new certificate.

To ensure that there remains a responsible authority within the EU for post-type-approval monitoring, the European Commission has also proposed that manufacturers should be required to request that the competent authorities of the 27 EU Member States approving a type previously approved in the UK should assume obligations regarding recalls, repair and maintenance information and in-service conformity checks.

According to the European Commission, the initiative will allow manufacturers to continue producing their products in compliance with EU applicable legal requirements without interrupting their existing production, which could have a significant social and economic impact. The proposed Regulation would specifically cover the situation in which a manufacturer with a UK-issued type-approval wishes to retain access to the EU market, and would not otherwise affect the validity of the four legislative acts governing type-approval.

The European Commission claims that this proposal is fully consistent with the Council mandate for the negotiations with the UK on its withdrawal to the EU. The European Commission explains that, given that the proposed Regulation defines specific rules to address a very specific and one-off situation, the proposed Regulation will, exceptionally, not modify these four legislative acts, but will rather apply as a stand-alone Regulation for a limited duration. In the view of the European Commission, a Regulation is the only adequate form of legislative act since it will allow EU Member States to deviate from the otherwise applicable relevant general rules. The European Commission further adds that a Regulation also best responds to the urgency of the matter.

The proposal will reassure the automotive industry that the European Commission is considering how to mitigate the effects of Brexit for manufacturers with UK type-approvals. However, the Regulation falls short of answering industry calls for mutual recognition of type approvals issued before the UK’s withdrawal from the EU. Additionally, the UK Government has not yet set out its own view on how type-approvals issued by the competent authorities of the 27 EU Member States will be treated in the UK after Brexit.

It will be interesting to see if, in the near future, the European Commission will adopt similar proposals with regard to other products which are subject to similar EU market approval mechanisms.