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EU proposals could hit £9bn UK machinery exports

29 June 2021

The UK machinery industry that exports £9bn of equipment to Europe could be hit by draft EU legislation that aims to toughen the bloc’s product safety regime, according to a new report by the European Scrutiny Committee.

If passed, the EU Machinery Regulation would likely increase the costs of doing business with Europe for producers and could see British-built equipment face new barriers to sale in Northern Ireland if the Government chooses not to align with the new rules.

Under the current rules, known as the Machinery Directive, ‘high-risk’ goods - those that require careful health and safety consideration from lawnmowers to robots used in car-making - can often be safety checked by the firms that built them if they are made in line with EU standards. Only those that are not produced to EU standards undergo an independent assessment for a fee.

The new proposals, which could be in place by 2024, would require all high-risk machinery products to have these independent checks carried out before entering the European market. This could place a significant financial and administrative burden on machinery manufacturers exporting to the EU and their supply chains. The proposals would also change the EU’s specific safety requirements for different types of goods.

Goods to NI blocked & backdoor access to UK market

Another potential UK/EU flashpoint would come across the Irish Sea, according to the Report. Under the Northern Ireland Protocol, a compromise allowing for an open border on the island of Ireland, Northern Ireland has to follow EU regulations over a raft of goods including mechanical goods. All goods produced in or imported into Northern Ireland must abide by these rules, even where brought in from or destined for England, Scotland or Wales.

While this is not a problem while EU and UK rules remain the same, when they are not, they drive a complex regulatory wedge between two parts of the UK. Goods built in Great Britain to British standards could be blocked from entering NI if they do not meet the new EU regulatory standards.

Meanwhile, the Internal Market Act and Government guarantees that Northern Ireland would have ‘unfettered access’ to the Britain’s market in the wake of Brexit could create a backdoor for European goods, allowing them to legally avoid the UK’s own regulatory standards and checks. The Act was designed to ensure products imported to or produced in one part of the UK could be sold in any other part of the UK.

The Chairman of the Committee, Sir William Cash, has written to the Minister for Small Business, Consumers and Labour Markets, Paul Scully, to ask how the Government will prevent EU businesses using Northern Ireland to bypass the UK’s regulatory regime.

Artificial Intelligence Act

The Committee also raised concerns with Digital Infrastructure Minister, Matt Warman, about separate draft EU legislation on the use of artificial intelligence (AI), that will present similar problems to the proposals on machinery.

The proposed EU Artificial Intelligence Act would call for products with AI installed for a safety-critical function to undergo checks by an independent ‘notified body’, for example, on accuracy, cyber-security, transparency, and traceability of the systems, potentially impacting anything from drones to automated vehicles.

Anything not meeting the EU’s design standards could not be sold in the blocks and British manufacturers exporting to the EU would need to test the conformity of their product to EU and UK standards separately. Whether or not the EU’s new AI rules would apply to goods for sale in Northern Ireland under the Brexit Agreement remains unclear.

The Act would also restrict some uses of AI, such as facial recognition technology in public spaces or making automated decisions in recruitment and access to financial products like insurance.

The AI proposals come at a time when the world’s biggest players, including the UK, are jostling to set global benchmarks in regulating the industry.

More analysis from the Committee

The Committee regularly publishes reports covering proposed EU legislation across all legal and policy areas– usually on a Tuesday at 11.00. Also included in this week’s report:

  • Fishing Opportunities: The Committee appraise the outcome of negotiations on fishing quotas with the EU, Norway and the Faroe Islands.
  • Feeding animal protein to animals: New EU proposals would drop laws created following the BSE outbreak of the 1980s and 1990s banning the feeding of certain kinds of meats to specified animals, for example, feeding chicken-based feed to a pig. Given EU goods can enter NI the Internal Market Bill in this case would prevent such feed from entering the rest of the UK on the grounds that it is unsafe by UK standards.
  • Exports controls on ‘dual-use’ items’: Continued scrutiny of proposed changes by the EU of the definition of ‘dual-use’ items’ – items that can be used for both civil and military purposes.

Further information

Image: CCO