Brexit from the Perspective of Business Operators in the ... webinar... · Brexit from the Perspective of Business Operators in the Food Contact Field ... Functioning of the European

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Brexit from the Perspective of BusinessOperators in the Food Contact Field

25 October 2016

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Preliminary Word

The information provided in thispresentation is drawn entirely from publicinformation. The views expressed in thispresentation are the authors’ alone and notthose of the authors’ clients.


Presenters

Hazel O'Keeffe, CounselKeller and Heckman LLP

Brussels Office+32 (0) 2 645 5076

[email protected]

Rachida Semail, PartnerKeller and Heckman LLP

Brussels Office+32 (0) 2 645 [email protected]

mailto:[email protected]



Agenda

State of play until exit from EU effective

• Need to invoke Article 50 TFEU

Future relationship between UK and EU?

• Possible models for EU-UK future agreement

Implications for the Food-Contactlegislation

Free movement of FCMs between the UKand the EU

Would it be possible for the UK toinfluence the EU activities after Brexit?


A few facts (1)Proportion of Total UK Tradewith the EU, Aug. 2016

UK exports to top 5 countries,Aug. 2016

UK imports from top 5 countries, Aug. 2016

Source: Securing the Future - Priorities for the UK PlasticsIndustry in a new UK-EU Relationship, September 2016


A few facts (2)

The British Plastics Federation (BPF):“The UK plastics industry is heavily shaped by EU legislation. Inorder to maintain cost-effective access to the single market,regulatory equivalence between the UK and the EU is highlyimportant.”

BPF Europe Taskforce: BPF Europe Taskforce: “a special committeeto address the industry's needs in the wake of the vote to leave the EuropeanUnion”

Securing the Future - Priorities for the UK Plastics Industry in a new UK-EU Relationship, September 2016(Available at http://www.bpf.co.uk/media/download.aspx?MediaId=2500)

http://www.bpf.co.uk/media/download.aspx?MediaId=2500


A few facts (3)

British Printing Industries Federation (BPIF)

Research conducted prior toreferendum on 23 June 2016

BPIF is currently conducting new researchentitled “Brexit impact on your business”


Business as usual for the time being• The TFEU and all EU Regulations and national

legislation implementing EU Directives, EUprinciples such as mutual recognition remain ineffect

This, until exit is formalized andbecomes effective

“Until the UK leaves the EU, EU lawcontinues to apply to and within the UK,both when it comes to rights andobligations.”

European Council Statement, 29 June 2016

State of play until exit from EU effective


Need to invoke Article 50 TFEU (1)1. Any Member State may decide to withdraw from the Union in accordance with its own

constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention.In the light of the guidelines provided by the European Council, the Union shall negotiate andconclude an agreement with that State, setting out the arrangements for its withdrawal,taking account of the framework for its future relationship with the Union. That agreementshall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of theEuropean Union. It shall be concluded on behalf of the Union by the Council, acting by a qualifiedmajority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force ofthe withdrawal agreement or, failing that, two years after the notification referred to inparagraph 2, unless the European Council, in agreement with the Member State concerned,unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Councilrepresenting the withdrawing Member State shall not participate in the discussions of the EuropeanCouncil or Council or in decisions concerning it.

5. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on theFunctioning of the European Union.

6. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to theprocedure referred to in Article 49. [Criteria for application and membership]


Need to invoke Article 50 TFEU (2)

Obligation of notification of intention to withdraw

“No negotiations without notification”

President of the European Council, 13 Sept. 2016

Timing for notification under Article 50?

• UK Prime Minister’s statement of 2 Oct.2016:

"There will be no unnecessary delays in invoking Article 50. We will invoke itwhen we are ready. And we will be ready soon. We will invoke Article 50 nolater than the end of March next year."

Agreement for withdrawal: 2-year negotiations period

• Extension may be granted

Reportedly, EU wants UK out before EU elections in June 2019 andbefore talks on EU’s next 7-year budget cycle start (current cycle willend in 2020)

• Some thus claim that it is unlikely that a time extension be granted


“Any agreement, which will be concluded with the UKas a third country, will have to be based on a balanceof rights and obligations. Access to the SingleMarket requires acceptance of all four freedoms”

European Council Statement, 29 June 2016

“I want it to involve free trade, in goods and services. Iwant it to give British companies the maximumfreedom to trade with and operate in the singlemarket - and let European businesses do the samehere.”

UK Prime Minister’s Statement, 2 Oct. 2016

Future relationship between UK and EU?


Possible models for EU-UK future agreement

“It is not (…) a negotiation to establish arelationship anything like the one we havehad for the last forty years or more. So it isnot going to a 'Norway model'. It's notgoing to be a 'Switzerland model'. It isgoing to be an agreement between anindependent, sovereign UnitedKingdom and the European Union.”

Prime Minister’s Statement of 2 Oct. 2016


Model 1: European Economic Area (EEA)

Model 2: Bilateral Trade Agreement withSwitzerland

Model 3: Customs Union

Model 4: World Trade Organization rules

Other?

Note: the overview of the models is notintended to be comprehensive, but is simplyintended to highlight some points that webelieve are relevant to FCMs



EEA = Iceland, Liechtenstein, Norway + EU MemberStates

Required to ensure domestic law complies with any EUlegislation that forms part of the EEA Agreement

Agreed to notify draft national technical regulations to theEuropean Commission

Partial access to EU Single Market linked to obligations

No Customs Union

No representation and no vote in the EU

• Limited influence over decisions made by the EU:

– Can contribute to expert views

– Can be consulted over new EU laws

Model 1: European Economic Area (EEA)


Over 100 individual agreements with the EUcovering different areas

– Aim of agreements is to reduce barriers to cross-border trade

Again, partial access to the Single Market linked toobligations

Not required to ensure that domestic law complieswith/reflects certain EU rules

• but, in practice, must comply with EU food-contactlegislation to access EU market

Unlike UK, significant national food contactlegislation e.g. Swiss Printing Inks Ordinance

– major revision of food-contact legislation currently underway

Model 2: Bilateral Trade AgreementsSwitzerland – a case study


Model 2: Bilateral Trade AgreementsSwitzerland – a case study

Draft Swiss food-contact texts notified to theEuropean Commission in 2015

• The Commission and Member States had theopportunity to comment on the draft texts

Other points of note:

• No Customs Union must conclude its owntrade agreements

• No representation and no vote in the EU– Limited influence over EU decisions possible only

through diplomatic contacts or internationalorganizations


Decision No. 1/95 of the EC-TurkeyAssociation Council establishing the CustomsUnion.

Partial access to the EU Single Market forproducts covered by the agreement with theEU• Rules that are equivalent to EU legislation in areas

where it has access to the EU Single Market areenforced, but without having a vote on thatlegislation.

• Turkey can conclude its own trade agreements(but tariffs with third countries must be the sameas EU tariffs!)

Model 3: Customs UnionTurkey: a case study


Model 3: Customs UnionTurkey: a case study

Turkish business operators must complywith EU laws in order to trade with theEU Member States

No contributions to EU spending

Limited, indirect influence over EUdecisions possible only throughdiplomatic contacts or internationalorganizations

Turkey agreed to notify draft technicalregulations to the European Commission


Model 4: World Trade Organization

Default model if no FTA

No preferential access to the EU SingleMarket ↔ the fewest obligations to the EU

UK business operators would have tocomply with EU laws in order to trade withthe EU Member States

No contributions to EU spending

Limited, indirect influence over EUdecisions possible only through diplomaticcontacts or international organizations


Other?

Tailored bilateral agreement?

Canada/EU CETA (potential!) agreementa good model?.....



None of the existing models canoffer the UK the same advantagesand influence it enjoys as an EU

Member State


Implications for the Food-Contact Supply Chain

What would be the implications ofBrexit for business operators of the

food-contact sector?

Obviously this would be dependent onthe terms of the agreement that

will be agreed upon between

the EU and the UK


EU Food-Contact Legislation (1)

Directly applicable in ALL EUMember States, incl. UK

Have been implemented intonational laws in All EU Member

States, incl. UK

EU Regulations

Framework Reg. 1935/2004

GMP Reg. 2023/2006

Plastics Reg. 10/2011

Recycled Plastics Reg. 282/2008

Active & Intelligent Packaging Reg.450/2009

Epoxy Derivatives Reg. 1895/2005

Future BPA Reg.?

EU Directives

Ceramics Directive 84/500

Regenerated Cellulose FilmsDirective 2007/42

N-nitrosamines and N- nitrosatablesubstances Directive 93/11/EEC


Materials not regulated by specific EU-widemeasures and for which no specific national law

currently exists in the UK:

• Adhesives• Cork• Rubbers• Glass• Ion-exchange resins• Metals and alloys• Paper and board

• Printing inks• Silicones• Textiles• Varnishes and

coatings• Waxes• Wood

EU Food-Contact Legislation (2)


How will the UK handle EU existing Regulations? (1)

The UK will have to determine which EU laws andEU-derived laws it wishes to retain, amend or

repeal

House of Commons:• “Can all of the directly-applicable Regulations that

currently apply to the UK be transposed into UK lawin a single Act of Parliament, should Parliament wishto retain them?” – 29 June 2016

Secretary of State for Exiting the EU:• A new Bill repealing the 1972 European Communities

Act “will convert existing EU law into domesticlegislation, while allowing Parliament to amend, repealor improve any law after appropriate scrutiny anddebate” (so-called: “Great Repeal Bill”); – 2 Oct. 2016


How will the UK handle EU existing Regulations? (2)

Given that many of the EU Regulationshave been in place for quite some time andhave been directly applicable in ALL EUMember States, incl. in the UK, it wouldappear reasonable to consider that theUK will introduce those Regulations, asthey are, for various reasons, notably:• Maintain the « acquis communautaire » and not

deny its 40+ years EU membership• Will not likely set stricter rules as these

would create reverse discrimination againstUK operators if required to apply mutualrecognition or if required to implement EU law


What about future EU Food-Contact legislation?

Unlikely that the UK will adopt in futurenational rules on FC M&A unless it is to

implement new EU legislation (newRegulations/Directives) into national laws


Free movement of FCMs between theUK and the EU ?

• Placing FCMs on the market in EU andUK

• Mutual Recognition

• Control system of FCMs on the EUmarket


Placing FCMs on the Union market (1)

UK business operators will have tocomply with EU laws in order to tradewith EU Member States

Exchange rate

Customs?

Others?

Quality/compositional requirements


Placing FCMs on the Union market (2)

At this time, UK products must eithercomply with other Member States’ lawsor rely on the mutual recognition principleto be lawfully placed on market in otherEU Member States


What is mutual recognition?

Basic right to free movement: Productslawfully manufactured and/or marketed ina Member State (MS) may be lawfullymarketed in other Member States, even ifthe imported products do not comply withthe national rules of the EU MS of import• Origin : Court of Justice of the European

Union (Food sector - Cassis de Dijon - 1979- Case 120/78)

Mutual Recognition – Overview


Mutual Recognition – Overview

Conditions of application

• Absence of full/complete EU harmonizationof national rules laying down technicalrequirements (e.g., compositionalrequirements, purity criteria)

• Cross border trade between two or moreMember States

• Compositionally identical products


Mutual Recognition – Limits

Not absolute right

• Restrictions to trade possible (e.g. ongrounds of the protection of public health)

• Conditions– Scientific justification required from MS for the

restrictions

– Must be necessary and proportionate


Products being imported from third countriesinto the EU

MR only applies to trade between EU MemberStates, non-EU countries in EEA (Norway, Icelandand Liechtenstein) and Turkey

MR principle may be applied to imported products(from outside EU/EEA/Turkey) if:• Import formalities complied with and customs duties

or charges that have an equivalent effect are paid(i.e., in “free circulation” in the EU)

• The product is lawfully marketed in a MS– MR may only be applied to compositionally

identical products– MS in which product is first lawfully

marketed should be a “genuine”market for MR to apply


Mutual Recognition with Non-EU countries

Switzerland: No mutual recognition clause inEU or Member State food-contact legislationfor FCMs lawfully manufactured or marketedin Switzerland

Mutual recognition clause in Swisslegislation (Art. 16a para 1 of RS 946.51)• For FCMs lawfully marketed in an EU Member

State that meet technical requirements inharmonized EU food-contact legislation/non-harmonized legislation, if applicable

• Reserves right to revoke this in certaincircumstances


During the negotiations for thewithdrawal:

• UK = EU MS and nothing changes

After the withdrawal agreement entersinto force

• UK = becomes third country

• However, UK operators will have tocontinue to comply with EU legislation tocontinue marketing in EU

What will Brexit mean from a practical standpoint?


Between withdrawal agreement and newFTA → if no mutual recognition in place as a transitional measure• To benefit from free movement, UK products

will also have to comply with the nationalrequirements of the first EU Member State ofimport so as to thereafter benefit from MR in EU

• Given no specific requirements in UK and thiswill likely not change: EU products couldcontinue to be marketed in UK as compliantwith EU FC legislation

Once FTA in place: the situation will begoverned by that agreement

What will this mean from a practical standpoint?



After UK’s exit: Third countries’ products(e.g., from US) traditionally importedthrough UK to thereafter avail of MR inother EU MS, might have to be placed firston the market in an existing MS to avail ofMR

• Different if transitional period foreseen inwithdrawal agreement

• Terms of FTA (?) may or may not affect thissituation


Petitioning before EFSA• Need to go through an EU Member State• ANY operator regardless of where he is located,

even in a third country, may submit a petition forEFSA’s evaluation to the effect of requesting to theEC the listing of a new substance on the EUpositive lists or an amendment to existingauthorizations

• After the exit: Same rules should apply to UK-based operators

Petitioning in UK?• Currently: not needed in UK for non-harmonized

materials as no specific requirements in place• After the exit: ?



Control system of FCMs on the EU market

RASFF annual report 2015* “A small number of

notifications are triggeredby an official control in anon-member country.”

“Cooperation with non-member countries shouldbe enhanced so as toensure that global trade iscomplemented by globalexchange of information.”

* Available athttp://ec.europa.eu/food/safety/docs/rasff_annual_report_2015.pdf

Members of RASFF network

Source: http://ec.europa.eu/food/safety/rasff/members/index_en.htm

Rapid Alert System for Food and Feed (RASFF) notifications report on risksidentified in food, feed or food contact materials that are on the market in thenotifying country or detained at an EU point of entry at the border with an EU

neighboring country.

Can the UK be a member ofRASFF?

http://ec.europa.eu/food/safety/docs/rasff_annual_report_2015.pdf

http://ec.europa.eu/food/safety/docs/rasff_annual_report_2015.pdf

http://ec.europa.eu/food/safety/rasff/members/index_en.htm


Would it be possible for the UK to beinvolved in the EU activities after Brexit?

• EC Working Group(s) on FCMs• Other channels for influence on

the EC• Selection of experts assisting

EFSA


After exit: UK no longer part to the EU legislative process

Would it be possible for the UK to beinvolved in the EU legislative processafter Brexit?

• No vote on legislative acts adopted byEuropean Parliament (‘EP’) and/or byCouncil of EU or by EC

Would it be possible for the UKadministration/trade associations to beinvolved in EC FC working groups?


EC Working Groups on FCMs

Standing Committee on Plants, Animals, Food and Feed(SC-PAFF)

• Working Group on FCMs of the toxicological safetysection of SC-PAFF

– Members: Member State Authorities

– Observers: Norway, Iceland and Liechtenstein (i.e., the EEA, MemberStates) → NO other third countries

Technical expert group for FCMs

• Members: EU-based associations—whose members arenational associations—representing food contact materialmanufacturers and/or their supply chain → NO Non-EU based associations

• Observers: Member State Authorities → NO third countries


Involvement of British trade associations?

British Coatings Federation (BCF):

• “In the future, our members will have to continue toabide by EU regulations when they export,without the UK having a voice in the Europeanparliament or their supporting authorities. However,the BCF are very active on many CEPEcommittees, on which non-EU countries such asNorway and Switzerland also sit. Through CEPE,we will still be able to represent the UK’s interestsand do our utmost to ensure that neither the UKnor the EU coatings industry is adversely affectedby the vote.”

Brexit Position Statement, 28 June 2016 (Available at http://www.coatings.org.uk/article/bcf-response-to-brexit-219.aspx)

http://www.coatings.org.uk/article/bcf-response-to-brexit-219.aspx

http://www.coatings.org.uk/article/bcf-response-to-brexit-219.aspx


Other channels for influence? (1)

Expert advice

• The EC “shall informally seek advice from experts ofthe EEA States” in the same manner as from the EUMember States (e.g., while working on a legislativeproposal in an area covered by the EEA Agreement)

Comments on specific issues (e.g., a legislativeproposal) or answers to a questionnaire

• An example of the EEA Model:– Member States deliver comments only on policy issues relevant

to the EEA Agreement

– Specific procedure coordinated by EFTA Secretariat → compromise between Norway, Iceland and Liechtenstein BUTfinalization of the joint comments is time-consuming whiledeadlines for comments are short


Other channels for influence? (2)

Contributions to public consultation• Stakeholders in Norway, Iceland and

Liechtenstein (i.e., the EEA Member States) –consumers, interest organizations, private andpublic sector alike – are encouraged to take part inpublic consultations

• Non-EU governments do not participate in EU-wide public consultation

• Private business operators may participate in theEU-wide public consultation open to non-EU via:

– Your Voice in Europe (when the EC starts working on anew policy initiative or revises existing legislation)

– Lighten the load - Have your say! (suggestions how tomake EU laws and initiatives more effective and efficient → REFIT Platform)


Selection of experts assisting EFSA (1)

Who are the experts assisting EFSA on itsscientific work on FCMs?• Citizens of:

– EU Member States– EFTA Member States Iceland, Liechtenstein,

Norway, Switzerland– EU Candidate Countries Albania, Montenegro,

Serbia, the Former Yugoslav Republic of Macedonia,Turkey

• “Experts from third countries (other thanthose mentioned above) may also apply but willonly be considered (…), if the required level ofexpertise cannot be found among nationals ofEU, EFTA or EU Candidate countries”

See Decision of the Executive Director concerning the selection of members of the Scientific Committee the Scientific Panels,and the selection of external experts to assist EFSA with its scientific work (Ref. No. REF. EFSA/SCISTRAT/DEC/01/2014)


EFSA’s considerations on the consequenceof Brexit on appointment of British expertsto EFSA Panels:“British experts are highly needed for thePanel. If necessary, the Management Board rulefor expert selection could be amended. EFSAcall for experts are open to all, and EFSA couldconsider expertise outside the EU. The specificexpertise of candidates is the most criticalelement in selecting experts for Panels andworking groups.”

73rd Plenary meeting of Panel onDietetic Products, Nutrition and

Allergies (NDA), 28-30 June 2016



EFSA FIP Scientific Network for risk assessmentof regulated food ingredients and food packaging“FIP Network” Subgroup on Food ContactMaterials

“The overall objective of the FIP Scientific Network isto provide a platform for discussion and consultationon the risk assessment activities and approaches forregulated food ingredients and food packagingsubstances that are of mutual interest to the 28 EUMember States, Norway and Iceland, Switzerlandand the EU candidate countries and EFSA.”

Terms of ReferenceV 3.09.2014



Brexit: What happens next?

Brexit? Maybe not?• “The only real alternative to a hard Brexit is no

Brexit, even if today hardly anyone believes in sucha possibility.”

(President of the European Council, 14 Oct. 2016)

Could there be a second Brexit referendum?


Abbreviations:

BCF British Coatings FederationBPF British Plastics FederationBPIF British Printing Industries FederationEC European CommissionEEA European Economic AreaEFSA European food Safety AuthorityEFTA European Free Trade AgreementEU European UnionEP European ParliamentFCMs Food Contact MaterialsMR Mutual recognitionMS Member StatesRASFF Rapid Alert System for Food and FeedSC-PAFF Standing Committee on Plants, Animals,

Food and FeedTFEU Treaty on the Functioning of the European Union


Washington, DC • Brussels • San Francisco • Shanghai • Paris

Keller and Heckman LLP

THANK YOURachida Semail, Partner

Keller and Heckman LLPBrussels Office

+32 (0) 2 645 [email protected]

Hazel O'Keeffe, CounselKeller and Heckman LLP

Brussels Office+32 (0) 2 645 5076

[email protected]



Documents

Brexit from the Perspective of Business Operators in the ... webinar... · Brexit from the Perspective of Business Operators in the Food Contact Field ... Functioning of the European