[ Focus: Brexit special ]
Brexit provides uncertainty for technical standards By JIM O’NEIL, ECA Technical Director
T
he economic and political backdrop facing building services engineering firms has become much more uncertain since June’s landmark vote for the UK to leave the European Union. Although the International Monetary Fund still expects the UK to have the fastest growing economy among the G7 this year (a 1.8 per cent GDP increase), the global economics body predicts this will fall sharply in 2017 (to just 1.1 per cent). Furthermore, with sterling recently hitting a 31-year-low against the US dollar, this is likely to have a material impact on the cost of importing materials to the UK from abroad. Of course, things could conceivably change, either way, in the months ahead. Depending on whether the UK seeks a ‘hard’ or ‘soft’ type of Brexit, there is also considerable uncertainty about how the UK will be able to work with technical regulations and standards.
Technical standards
Despite the confounding example of at least one key British Standard being commonly referred to as a ‘Regulation’ (notably BS7671), standards are not the same as regulations. The House of Commons Library says that the standards used within the European Single Market follow World Trade Organisation definitions which differentiate between mandatory technical regulations and voluntary standards.
What effect will Brexit have on our sector in the next five years technical standards Very positive Slightly negative
11%
Regulations, Decisions and Directives
At present the EU has various powers to develop three different types of legislation which affect UK businesses, specifically: ■ Regulations – similar to national laws, but they are directly applicable across all EU member states. ■ Decisions – deal only with a specific issue, or particular organisations or people. ■ Directives – setting out general rules and requirements, to be transferred into domestic law by individual member states, as appropriate. Various EU regulations and decisions are directly incorporated into UK law without further legislation by the UK parliament, while some (or parts) have been voluntarily brought into UK law. Directives, on the other hand, have been implemented through UK law and they will continue to be part of UK law, immediately post-Brexit. What happens next will be influenced by the UK’s ability and wish to change laws which originated from the EU.
30 ECA Today Winter 2016
Slightly positive Very negative
No change Don’t know
15%
4%
There are four types of standards used within the UK, which contractors and installers may be familiar with, specifically: ■ ISO – Internationally agreed standards ■ IEC – International Electrotechnical Commission standards (internationally agreed standards applicable in the electrotechnical sector) ■ BS EN – The British version of (Euro Norm) harmonised European (CEN/CENELEC) standards ■ BS – A British standard – eg BS 7671 (widely referred to as the ‘Wiring Regulations’) The British Standards Institute (BSI) says that approximately one-quarter of European standards are developed following requests from the European Commission. The remainder are created to meet other market needs, and include test methods, specifications for products and services, and guidance on good practice.
CEN and CENELEC
Standards across Europe are determined by the European Committee for Standardisation (CEN) and its electrotechnical sub-body CENELEC, both of which are separate organisations from the EU. Like all EU member-states and other countries that are part of the European Single Market, the UK is a full member of CEN and CENELEC. However, a relevant ISO or IEC standard trumps a European standard. The above two European standards bodies are believed to have created some 19,000 standards, which consequently led to the withdrawal of around 160,000 conflicting national standards, according to the BSI. The CBI stated in November 2013 that over half of their member-companies (52 per cent) said they had directly benefitted from common EU standards, with only 15 per cent stating they had a negative impact. Fortunately CENELEC standards are becoming more and more absorbed into IEC standards.
Standards post-Brexit
9% 20%
41% Source: ECA/BESA/SELECT Brexit survey, August-September 2016
Following Brexit, UK businesses are still likely to be subject to harmonised European standards, unless the UK also leaves CEN and CENELEC. Membership of both organisations will likely depend on the UK’s intended relationship with the EU, post-Brexit. The BSI expects the UK to automatically remain CEN and CENELEC members should there be a ‘soft’ Brexit (joining the European Free Trade Association). Should the government decide on a ‘hard’ Brexit (relying on World Trade Organisation rules), then UK membership of CEN and CENELEC would depend on the other members agreeing to change rules in the interests of Britain. Given that membership of both standards committees is reliant on member-states adopting identical standards to each other, the UK would probably need to adopt all European standards on a voluntary basis, to retain its CEN and CENELEC membership.
Loss of influence
Regardless of future arrangement post-Brexit, UK businesses seeking to export to the EU will still need to comply with many product standards determined by Brussels (potentially in a similar manner to Switzerland). It’s worth noting of course that the UK does already have certain opt-outs to technical standards, with the most well-known being electrical plugs and sockets – hence the need for the use of travel adaptors when using UK electronic equipment in mainland Europe (and vice-versa). However, this British capacity to shape and influence new or developing technical regulations could reduce post-Brexit, without the UK having a seat at the table and voting rights in the EU institutions.
Regardless of future arrangement post-Brexit, UK businesses seeking to export to the EU will still need to comply with many product standards determined by The ECA’s Brexit Survey Despite the above issues, when recently asked for Brussels
their views on Brexit by the ECA, firms across the building services engineering industry had a broadly positive outlook. In terms of the impact on technical standards, three-quarters of respondents (75 per cent) said they believed Brexit would have a positive or neutral impact on the sector. While over two-thirds (67 per cent) said that Brexit would bring about positive change or have no impact on technical innovation. However, among the largest businesses with turnover over £20 million per year (and perhaps more likely to export goods and services) the results were mixed, with Brexit equally predicted to have both positive and negative implications for technical standards and innovation.
‘Hard’ or ‘Soft’ Brexit
To provide some assurances to businesses, the UK government has pledged to move across all existing EU regulations and laws into UK law, via legislation described as the ‘Great Repeal Bill’. This is planned to come into effect immediately after Brexit, which the government hopes will be by the end of March 2019. However, the UK government is currently taking a tough stance against freedom of movement (one of the four EU ‘freedoms’, alongside goods, services and capital). This could well lead to a ‘hard’ Brexit, with limited access to the EU Single Market (outside of the EFTA) and the UK exiting both CEN and CENELEC. Even with a ‘soft’ Brexit, the UK would probably move to a Norway-style situation whereby parliament is required to implement many European technical regulations and standards, but with diminishing influence over what goes into them. The ECA will continue to work in the interests of members to seek an outcome which minimises disruption to business, and ensures the UK maintains some of the highest levels of technical standards and regulations across the globe.
Winter 2016 ECA Today 31