Business Regulations and Brexit

6 th March 2018

Regulations affecting sectors from finance to cosmetics face an uncertain future, heard the latest Brexit Forum

The Chamber welcomed Geoff Skingsley, Chairman, L'Oréal UK and Olivier Morel, Partner & Head of International at Cripps, Vice President of Marcalliance and Vice President of the French Chamber of Great Britain, to speak on the topic: The potential outcome of business regulations within the UK: Convergence or Divergence?

The Forum is co-chaired by Angela Hepworth, Corporate Policy and Regulation Director, EDF Energy, and Neil Sherlock CBE, Partner, Corporate Affairs, PwC. The Forum announced its new sponsor, the ESCP Europe Business School.

The big picture

Olivier Morel, Partner at Cripps, provided an overview of the current state of the legislative and political process of the UK withdrawing from the EU. The future regulatory environment in the UK is an unknown quantity, because the EU and the UK are still negotiating the terms of the separation, not the terms of our future relationship.

As part of that process, Parliament is currently examining the European Union (Withdrawal) Bill 2017-19: the objective of the legislation is to repeal the 1972 European Communities Act, which took Britain into the EU.

Once that Bill becomes law, all EU legislation will be transferred across into domestic law in the UK.  Afterwards, Parliament can alter, cancel and create new legislation independently of the EU.

If the UK wants access to the Single Market, it will have to abide by the same rules and regulations as the EU, albeit without having an influence on the law-making process – it will be a rule-taker with no say on drafting the legislation. The EU has insisted that access to the SM is inseparable from the 4 freedoms – free circulation of goods, people, services and capital.

The expectation is that the UK and the EU will sign a trade agreement, but there is uncertainty about what form it will take and how long negotiations will last.

Case study: cosmetics

Geoff Skingsley, Chairman of L’Oréal UK, reported that current EU guidelines in the cosmetics industry are seen as setting the world standard for best practice. They guarantee product security and ensure customer safety. They also set compliance standards on labelling and advertising and promote good practices in development and manufacturing of products.

Specific to the cosmetics industry, this means standard product definitions and safety evaluations, ingredient definitions, post-market surveillance and in-market control and enforcement.

Other global cosmetics markets including UEA/Saudi Arabia/Gulf States, ASEAN countries and MERCOSUR countries (including Brazil) use European guidelines as a reference.

Skingsley reported that the industry believes that the best way forward would be for the UK to continue to operate to current EU legislation. However there is uncertainty if this will be possible, as regulations are subject to the political negotiation process.

Ideally, the deal should be negotiated which would allow the UK to have the status of ‘being established in the European Community,’ irrespective of the UK’s eventual status as EU/EEA member or not.

« Changes from the current regulatory framework would result in significant additional costs and complexity, both for UK companies trading in the EU and EU companies trading in the UK, and would have no benefit to consumers »

Changes from the current regulatory framework would result in significant additional costs and complexity, both for UK companies trading in the EU and EU companies trading in the UK. Crucially, these additional costs and complexities would have no benefits to consumers, inside the UK or in the remaining EU27 countries.

The cosmetics industry has lobbied the government to keep EU regulations, as have the chemicals and pharmaceuticals industries.

This article was originally published in INFO magazine, March/April 2018

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