Life sciences and the EU-UK Trade and Cooperation Agreement

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5 min read

A post-Brexit trade deal – the Trade and Cooperation Agreement (the TCA), was finally pinned down on 24 December. In this article we will summarise the areas of the TCA most relevant to life sciences businesses.

For an overview of the TCA, see Brexit: what did we get for Christmas?

Points to note

  • Close regulatory alignment between the EU and the UK remains in the short term, although mutual recognition is not on offer. Divergence is now a real possibility, although with mechanisms set up to promote cooperation and adherence to international standards where possible.
  • Close cooperation and consultation on many different areas is planned with a range of committees and working groups to be set up. This is likely to maintain a degree of information exchange and some coordination, although falling far short of pre-2021 arrangements.
  • Tariff and quota free market access are available, although this will depend on compliance with relatively generous rules of origin. This may require a rethinking of international supply chains where production relies on substantial amounts of imported parts or material.

Tariffs, quotas and rules of origin

These rules apply to imports and exports between the EU and the UK. We will refer to these as Parties, as in the TCA. To benefit from the zero tariff and zero quota rules in the TCA, products are required to be:

  • wholly obtained in the exporting Party,
  • produced in the exporting Party with materials from that Party or
  • produced in the exporting Party with materials satisfying Annex ORIG-2.

Annex ORIG-2 breaks out products by type based on the international Harmonized System codes. It set out thresholds for non-originating inputs in relation to each product type, and will need to be analysed on a case by case basis.

Cumulation of origin will apply. This will allow inputs and processing in the EU to be counted as UK input in UK products exported to the EU, and vice versa. Production activities, other than simple processes such as basic packaging, can contribute towards value.  These rules will make it easier for producers to satisfy the origin requirements even where products include some elements from outside the EU and the UK. However, it may be appropriate for producers, particularly of medical devices, to consider sourcing components from within the EU or the UK in order to meet these rules.

Exporters are permitted to self-certify with a statement on origin.

Accounting segregation methods are possible where originating and non-originating products are used, avoiding the need for physical separation.

Regulation

The close regulatory ties between the UK and the EU will fall away and life sciences businesses will need to understand and comply with the rules applicable in each territory.

Regulatory requirements will apply separately in the UK and the EU, and products must meet the relevant requirements for the market in which they will be sold. However, the TCA includes provisions to facilitate trade by identifying and eliminating unnecessary technical barriers.

Where new technical regulations are planned these should be based on international standards, unless the Party developing them can demonstrate that this would be an ineffective or inappropriate means to meet its legitimate objectives. Consultation on new regulations should be open to stakeholders in the other Party, and a high degree of transparency on new regulations is required.

Conformity assessment procedures will also have to be developed in a transparent and consultative way. They should be proportionate to the level of risk involved and, where possible, allow self-declaration by the manufacturer. Where third party conformity assessment is required, rules govern how conformity assessment bodies are accredited.

Where unique identification numbers are used (as, for example, with medical devices) these must be issued promptly and without discrimination to businesses based in the other Party.

Cooperation mechanisms will be established for information exchange and interaction, both in relation to technical barriers to trade, and regulatory cooperation.  

The TCA deals with mutual recognition of GMP inspections to avoid duplicative certification of pharmaceuticals manufacturing facilities. There are processes to deal with situations where either Party plans to change its GMP rules.

Otherwise, regulation applying to medicines and medical devices is not addressed, and there will be no mutual recognition of each other’s regulatory systems.

Market surveillance

Arrangements for information exchange and cooperation between regulators on product safety and compliance is set out in the TCA. This will mean that issues arising in the UK are likely to be shared with EU authorities, and vice versa.

Intellectual property

The TCA includes extensive provisions on intellectual property. These require the EU and the UK to maintain strong levels of protection across most categories of rights. Most of this, however, focuses on the standards required by existing international treaties. Some of the provisions look closer to EU standards, for example in relation to trade marks and trade secrets, but there is still ample room for divergence in approach.

There are requirements to maintain protection of regulatory data as well as patent term extension for pharmaceuticals and plant protection products. However, the details of how these will work is left to the EU or UK to decide.

Research programmes

UK researchers will be able to participate in the Horizon Europe research programme. This will require funding from UK Government calculated according to a detailed formula.

Data protection

A transitional provision offers some comfort to organisations around data flows. A temporary extension of up to six months will allow personal data to be transferred from EEA countries to the UK - hopefully giving enough time for an adequacy decision to be put in place. 

More on that here EU-UK Trade and Cooperation Agreement: data protection and related aspects.

 

Learn more about our life sciences sector services.

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