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Laws and regulations

Brexit: “We need to get ready for a no-deal exit”

The scenario of the separation between the United Kingdom and the European Union is more than uncertain. As the planned divorce date, March 29, 2019, is approaching, negotiations are intensifying, but the hard-Brexit hypothesis, i.e. a no-deal exit, is no longer excluded. The French Federation of Beauty Companies, FEBEA, and the Cosmetic, Toiletry & Perfumery Association (CTPA) have warned the cosmetics industry about the need to get ready for the worst-case scenario.

For cosmetics companies, there is an urgent need to prepare for the worst-case scenario. Photo : © Lucian Milasan / Shuttedstock

For cosmetics companies, there is an urgent need to prepare for the worst-case scenario. Photo : © Lucian Milasan / Shuttedstock

The UK’s exit is enacted. The question is, will there be an agreement with a transitional period or a brutal separation? The first solution would give everyone more time,” explains Virginie D’Enfert, FEBEA’s VP of Economic, International, and Environmental Affairs.

Since Article 50 of the Treaty on European Union was implemented, on March 29, 2017, the UK and the EU have been trying to agree on the terms of their separation scheduled for March 29, 2019.

Deal or leap into the void?

In the event of a deal, an 18-month transitional period will allow for a “soft” exit, since the EU law will apply in the UK until December 31, 2020. Unfortunately, if many points are resolved, a number of issues are still preventing a final compromise, in particular the Irish border. If these difficulties are not overcome, there will be no deal (“Nothing is agreed until everything is agreed"), and there will be no transitional period. And as D-Day is approaching, this hypothesis is getting more and more plausible.

Companies should get ready for a possible hard Brexit, which would definitely not offer any period of adaptation,” warns Olivia Santoni, Director of Regulatory and International Services of the CTPA.

Of course, an extension of negotiations can be considered, but this additional period of time would be short: it would not go beyond the May 2019 European elections.

“A third country”

As soon as the divorce is pronounced, the UK will become a “third country”. Starting from March 29, 2019, in the event of a hard Brexit or at the end of the transitional period, if there is a deal, the European regulations will no longer apply in the UK, which will also be out of the Customs Union.

As a result, for cosmetics companies [1], there is an urgent need to prepare for the worst-case scenario, i.e. for:

  • The obligation to appoint a Responsible Person in both the EU and the UK.
  • Updating labels to feature the two Responsible Persons’ addresses and the exact product origin since the UK will be a third country. Let’s remind that “made in EU” is not accepted by customs authorities outside the Union.
  • Re-making notifications on the CPNP (Cosmetic Product Notification Portal), since those made via the UK will no longer be valid (it should be possible to create drafts).
  • Making notifications on the future British portal.
  • Having to pay customs duties on materials and goods crossing the Channel one way or the other.
  • Increased transit costs and complexity, and delays due to customs procedures all along the supply chain.

Beyond the European Cosmetics Regulation, other regulations will have to be translated into English law, including REACH and CLP.

Divergences and duplications

However, Brexit will create no legal vacuum. At first, the British will use the original European legislation by replacing the words “European Union” by “United Kingdom”, where needed, as soon as 2019, in case of a no-deal Brexit, and at the end of the transitional period, if there is a deal.

But once this phase is over, the UK will regain control of its legislation – which is what Brexit supporters want. No doubt they will copy the better part of the European legislation, but in the long run, there will be inevitable divergences.

Ideally, cosmetics manufacturers on both sides of the Channel would have preferred deals specific to their own sector to maintain British participation in a few European agencies, like ECHA, the European Chemicals Agency, and avoid any duplications.

But the details of the future relationship between the UK and the EU will only be discussed after a deal on the exit – which just cannot be found yet. Right now, the negotiation process is horizontal, not sector-based, and unsurprisingly, both parties have opposed ambitions and interests. When the British seek a tailor-made status that best meet their interests, the Europeans try to avoid cherry-picking, which would lead to the UK only taking part in – and financing – the agencies and policies they are interested in.

As the third cosmetics market in the EU, behind Germany and France, and ahead of Italy, the UK is also one of France’s major trading partners: in 2017, France exported 996 million cosmetics across the Channel (the UK is the French industry’s third client, after the US and Germany). This issue is obviously not trivial.

Vincent Gallon

Footnotes

[1] See detailed on factsheet # 7 (“The Impact of a No Deal Brexit on the Cosmetics Industry”) produced by the CTPA and more generally its page dedicated to Brexit

© 2018 - Premium Beauty News - www.premiumbeautynews.com
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