KTP0007 - Evidence on The impact of UK- EU arrangements on wider UK trade policy

BSI written evidence to the International Trade Committee inquiry into the impact of UK-EU arrangements on wider UK trade policy

Executive summary

A key aspect of both the EU and UK regulatory approach is the co-regulatory model where regulation is expressed in terms of high level performance requirements and where voluntary standards are used as a means to demonstrate conformity with the provisions of the regulation.
A major component of market confidence in both the EU and the UK in the use of standards is the simplicity for businesses, consumers and the enforcement community that comes from there only being one standard for any one product. This is known as the ‘single national standard’ model.
This trust and confidence among our stakeholders and their ability to easily influence the standards development process would be jeopardized if, through trade discussions, the UK were forced to recognize standards in the national catalogue which conflict with those already adopted through ISO and IEC.
BSI’s stakeholders overwhelmingly support the UK’s continued attachment to both the co-regulatory model that involves business and consumers in the definition of standards in support of regulation and the single standard model.
BSI welcomes the commitment of the Government to the current regulatory model of performance-based regulation underpinned by voluntary market-driven and consensus-based standards and the maintenance of the single national standard model as stated in the July 2018 White Paper on the “Future Relationship between the United Kingdom and the European Union”.
The UK’s participation in the European Standardization System through BSI’s membership of CEN and CENELEC and the direct influence of UK experts on market access conditions for 33 European countries depends on the UK maintaining the single national standard model.
In considering the future arrangements between the UK and EU after the date of Brexit and their impact on trade agreements, the Government and Parliament in scrutinizing new trade agreements should consider the impact of any future agreement on the UK’s regulatory model, especially with those countries that have a different, more prescriptive regulatory model with a different approach to the use of standards to enable regulatory compliance.
Notably, with regard to standards, it is important to ensure that any trade agreement negotiated does not make provision for the mutual recognition of international standards for regulatory compliance, especially in the case of the US, where standards may be in conflict with standards already adopted in the UK’s national catalogue.
The recognition of standards in conflict with standards in the UK’s national standards catalogue, adopted under the single standard model, would fracture the market, adding confusion to business as to which standard to use and crucially would hamper the ability of trading standards enforcers to monitor compliance.
Recognizing conflicting standards within the national catalogue would also make it harder for UK business to influence the development of standards present on the UK market in a straightforward manner through the NSB, as they would have to participate in multiple bodies which are designed primarily to serve a national market. The UK government would also lose oversight of the robustness and quality of the standards development process.

Background

BSI (the British Standards Institution) is making this submission as the National Standards Body (NSB) for the United Kingdom. BSI has a public function in support of the UK economy and society. We bring together stakeholders (including industry, consumers and government) and facilitate the development of consensus-based standards that show business good practice. Our robust standards development process requires open and full consultation with stakeholders. This gives standards the legitimacy and degree of market acceptance to be used for public policy purposes.
Within the terms of reference for this inquiry, we will provide material that addresses the following bullets in broad terms:

How would UK-EU arrangements pertaining to the regulation of goods affect wider UK trade policy?
How would UK-EU arrangements pertaining to the regulation of services and investment affect wider UK trade policy?
How would UK-EU arrangements pertaining to cross-cutting regulatory issues – including data protection, competition policy, consumer protection and social and environmental legislation – affect wider UK trade policy?

Standards play a key role as an enabler of trade in both the existing relationship the UK has with its partners in the EU/EEA but also as a passport for trade within new trade agreements.
The vast majority of standards have no link to regulation; they are good practice solutions for business. Within the European Union, only around 16% of European standards are used to enable regulatory compliance. Where they do support regulation in the UK and the EU, standards are still voluntary but offer a presumption of conformity with applicable legislation.
The stated policy of the UK Government is to maintain a high degree of regulatory alignment with the European Union after the date of the UK’s departure from the European Union. This is important when it comes to considering the UK’s involvement in the European Standardization System.
In approaching new trade agreements, BSI encourages the Government to fully understand and recognize the role of international standards in breaking down barriers to trade and increasing access to new markets but would also underline that any agreement with new trading partners should not come at the cost of the access and the ability of UK stakeholders to influence international standards development activities.
In this submission we refer to standards for voluntary use developed through a multi-stakeholder consensus-based process, rather than ‘regulatory standards’, for example the kind produced by the United Nations Economic Commission for Europe (UNECE) on motor vehicles, compliance with which is mandatory.
To provide additional background information to the Committee, we append the response we submitted on 26 October 2018 to the Department for International Trade on new trade agreements with Australia, New Zealand, the USA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)- see appendix 1.

The international and European standards systems

BSI is part of an international standardization system which has national and regional (e.g. European) elements. The ultimate goal for this international standardization system is to develop a single standard on any given issue which, although remaining voluntary, is then adopted worldwide into the catalogues of national standards bodies. We call this the ‘single national standard model’.
In the UK and Europe, ‘international standards’ are considered to be those developed under the national delegation principle through the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC). BSI is a member of both ISO and IEC and plays a full and active role in both organizations.
BSI is also a full member of the European Standardization Organizations (ESOs), namely the European Committee for Standardization (CEN) and the European Committee for Electrotechnical Standardization (CENELEC). CEN and CENELEC are private organizations, independent from the European Union, made up of the national standards bodies of 34 countries in Europe.
CEN and CENELEC have recently agreed a plan that will enable BSI to continue as a full member of CEN and CENELEC regardless of the outcome of withdrawal negotiations between the UK and the EU, during a transition period while a permanent solution is developed.
British, European and international standards interact in a coherent way, as they are all part of this international system, the single national standard model, with the European and international standards being adopted into the national catalogue. All standards within this international system are developed by the market players in response to market needs. BSI is the ‘curator’ of this process for the UK.
The most advanced part of this international system is the European Standardization System. The rules of CEN and CENELEC stipulate that, when work beings on a new European standard, members enact a standstill on all conflicting standards development, that the resulting European standard is adopted identically into the national catalogue of every member and that, after a transition period, any conflicting national standard is withdrawn. This ensures that there is only one single standard for any given issue right across 34 European countries.
Irrespective of membership of the European Union, BSI’s membership of CEN and CENELEC together with the participation and decision-making power of UK stakeholders in the work of CEN and CENELEC technical committees, is a key way for UK stakeholders to retain influence in defining market access conditions for 33 other countries in Europe.
The single national standard model is valued by BSI’s stakeholders as it facilitates and enhances the influence of UK stakeholders in the international standards development process as UK stakeholders only need to participate in one set of work at national level, through the NSB, in order to define the national position at both international and European level.
BSI, through the work of the UK experts in our committees, has had great success over many years in having British Standards adopted as international standards. Some of the world’s most successful standards started as British Standards, such as ISO 9001 on quality management systems and standards on information security and building information modelling.

UK and EU: the use of standards in support of regulation

The UK’s regulatory model for the placing on the market of products, as is the case in the rest of Europe, is based on the adoption of high level performance requirements set down in technical regulation with standards, used voluntarily, set out technical specifications that can be used to meet those requirements. In the model used in the UK, Government trusts standards developing stakeholders through the BSI process to deliver good practice that is sufficient to meet the requirements of the law.
Within the EU, this approach is the known as the ‘New Legislative Framework’ where ‘harmonized standards’ are used to provide manufacturers with a presumption of conformity with the relevant product directives. These standards too remain voluntary and other means are available to industry to demonstrate compliance with the applicable legislation.
As a member of CEN and CENELEC, BSI has adopted into the UK national catalogue nearly 4,000 harmonized standards that enable regulatory compliance as above.
The European Union (Withdrawal) Act (2018) incorporates the body of European law into domestic law on the date of the UK’s exit from the European Union. In the field of the New Legislative Framework this involves over twenty EU directives and regulations that are supported by harmonized standards. Statutory Instruments (SIs) are currently in the process of being drawn up to ensure regulatory continuity in a situation in which the UK leaves the EU without a deal.
These SIs make provision for the entirety of those harmonized standards already adopted in the the UK’s national standards catalogue becoming ‘designated standards’ in the UK after the date of Brexit. What is crucial to note here is that the model of standards supporting regulation will not change.
The Government, in its July 2018 White Paper entitled ‘The Future Relationship between the United Kingdom and European Union’ (Cm 9563) reiterates the Government’s commitment to the single standard model as part of its general approach regarding the convergence of rules and standards for goods after the UK is scheduled to leave the European Union.
BSI welcomes the Government’s commitment to the single national standard model as stated in the White Paper and earlier support to BSI’s participation in the European Standardization System from the Secretary of State for Business, Energy and Industrial Strategy Greg Clark, in the form of a letter to BSI dated 06 June 2018.

International standards for trade

Standards enable market access by creating a ‘common language’ for potential trading partners. They support businesses by lowering barriers to trade, reducing production costs and offering opportunities for economies of scale. The simplest way that standards can reduce barriers to trade and encourage market access is through the adoption of international standards.
As the UK considers new trade agreements after its departure from the EU, it should be conscious of the role of international standards, which is enshrined in the WTO TBT agreement. BSI encourages Government to seek to promote the use of international standards wherever possible both in and in support of future agreements and to promote the international standards system and the development of standards through the recognized international standardization bodies of ISO and IEC as a means of promoting the interests of UK exporters and increasing the UK’s competitive advantage in international markets.
The single national standard model is adopted worldwide through national members of ISO and IEC, as well as within the European Standardization System. It relies on the development of standards, wherever possible, at international level within ISO and IEC. Regional or national standards are only developed in the absence of a relevant international standard and if there is a market demand for their development. One of the advantages of using a single standard is that there is no need for multiple production lines for different markets.
The legitimacy of standards development work in ISO and IEC comes from the governance of those bodies and the involvement of stakeholders at national level through the national delegation principle.

Other regulatory models and their bearing on standards

The USA has a different definition of international standard to that commonly accepted in Europe and other parts of the world. This model conflicts with the single national standard model as it accepts standards as being international provided they meet certain criteria and irrespective of whether the organization developing them is international. This enables US standards developers to say that their standards are international, whereas in fact they are national standards developed with the involvement of experts outside the US.
BSI’s view is that, to be truly international, standards must have a certain legitimacy. Part of that legitimacy comes from robust governance, and the rest hinges on the representation of national interests in their development. It is a necessity that the body representing the member country can and does reflect the national interest and crucially, oversees the national standards in that country that relate to market access. It is only by combining this national representation with that of other countries that a standard can be considered truly international.
The danger of this to UK stakeholders is that an insistence on the use of US standards as international standards would mean that UK business and consumers would then be using standards they had not helped to develop.
In the United States, regulatory requirements often make direct reference to specific standards, in whole or in part, sometimes more than one standard. This model is known as incorporation by reference and it tends to make compliance with the selected standard mandatory.
It is a multi-path model in that US regulators may choose standards from any developer and may incorporate them in such a way as they see fit.
Rather than working to develop a single standard as happens in the UK and EU, standards developing organizations can challenge legislation by claiming that their standard would also meet the requirements and should be referenced as well.

The mutual recognition of standards in trade agreements

In the context of a future trade agreement with the US the US request has, in the past, been to recognize US standards as providing conformity with UK regulation; to say that where there is a European standard that can be used to obtain presumption of conformity, a US standard should also be given that status. This is referred to as the mutual recognition of standard.
This poses a problem for BSI’s stakeholders and the enforcement community when it comes to standards adopted to support regulation as the presence on the market of conflicting standards to those already in the UK’s national catalogue will lead to confusion as to which standard needs to be applied. It also undermines the existence of the single national standard model, the model chosen by UK stakeholders as the one best serving their needs in terms of influencing the content of standards used throughout the world.
Additionally, the US request for the mutual recognition of its standards for compliance with UK regulation is one that cannot be reciprocated. As the US is not a single market, with different market access laws between states for example, the federal government cannot guarantee that its national recognition would have the same market access effect as the UK recognition.

Background on BSI

BSI is the UK’s National Standards Body, incorporated by Royal Charter and responsible independently for preparing British Standards and related publications and for coordinating the input of UK experts to European and international standards committees. BSI has over 115 years of experience in serving the interest of a wide range of stakeholders including government, business and society.
BSI represents the UK view on standards in Europe (via the European Standards Organizations CEN and CENELEC) and internationally (via ISO and IEC). BSI has a globally recognized reputation for independence, integrity and innovation ensuring standards are useful, relevant and authoritative.
BSI is responsible for maintaining the integrity of the national standards-making system not only for the benefit of UK industry and society but also to ensure that standards developed by UK experts meet international expectations of open consultation, stakeholder involvement and market relevance.
British Standards and UK implementations of CEN/CENELEC or ISO/IEC standards are all documents defining best practice, established by consensus. Each standard is kept current through a process of maintenance and review whereby it is updated, revised or withdrawn as necessary.
Standards are designed to set out clear and unambiguous provisions and objectives. Although standards are voluntary and separate from legal and regulatory systems, they can be used to support or complement legislation.
Standards are developed when there is a defined market need through consultation with stakeholders and a rigorous development process. National committee members represent their communities in order to develop standards and related documents. They include representatives from a range of bodies, including government, business, consumers, academic institutions, social interests, regulators and trade unions.
BSI is committed to supporting the work of the Committee, and we would be pleased to provide further evidence in person, or to give any additional information as required.