Policy paper

Mutual recognition of goods: general principles and relevant requirements

Updated 17 November 2020

This was published under the 2019 to 2022 Johnson Conservative government

What are we going to do?

We are establishing a system to ensure that compliance with requirements to sell a given product in one part of the UK enables that product to be sold in other parts of the UK.

How are we going to do it?

The market access principle of mutual recognition will underpin the operation of the UK internal market for goods. A good must meet the relevant regulatory requirements in the part of the UK it is produced in, or imported into, to qualify for mutual recognition.

This will allow the good to be sold in any other part of the UK without having to meet relevant regulatory requirements in that other part. For example, a jam producer in Wales won’t need to worry about meeting the Scottish requirements for jam when selling in Scotland, as long as the jam produced conforms to the Welsh requirements.

Regulations that will be disapplied under mutual recognition are known as relevant requirements. These are broadly those that relate to the good itself, for example requirements relating to the characteristics of the good, its presentation or the documentation that must be supplied alongside it. They include anything which must be done to or in relation to the good before it can legally be sold. For example, a requirement that jam can only have a particular amount of sugar is something that relates to the composition of the jam (that is a characteristic of the good itself). A requirement that the sugar content of the jam be printed on the front label in large bright type would also be covered by mutual recognition (that is the presentation of the good).

Mutual recognition relates to the sale of goods and for the purposes of the principle sale includes a wide range of supply-related activities. This includes ‘sales’ which don’t involve money (such as trial samples, free gifts or goods bartered) and those where goods are leased or hired rather than permanently transferred to a ‘buyer’.

Furthermore, the definition also covers various activities that might be undertaken with a view to selling or in preparation for a sale. These are things such as agreeing to sell, advertising or storing for sale. However, goods which are supplied to carry out a public function are not included (such as medical equipment provided by public health services).

It should be noted that activities which are not related to sale and in particular those which happen after sale are generally not captured. So, for example requirements as to how a product may or may not be used or those related to disposal at the end of a product’s life would not normally be in scope.

Requirements relating to the manner in which a good can be sold will not typically be ‘relevant requirements’ for the purposes of the mutual recognition principle. These types of requirements are dealt with by the non-discrimination principle. See policy statement on non-discrimination for further details.

For instance, a requirement that a certain good can only be sold to persons above the age of 18 would not be in scope of mutual recognition. By contrast, a requirement that a certain good could only be sold if it did not contain a certain component would be in scope. Requirements which are formulated as manner of sale as a way of bypassing the effect of mutual recognition would still be considered relevant requirements. So, for example, if jam was not explicitly banned but instead made subject to ‘manner of sale’ requirements which would in effect be a ban, these requirements could still be disapplied through the mutual recognition principle.

Background

On 1 January 2021, we will see one of the single biggest transfer of powers to the devolved administrations in history. The Bill will mean that businesses can continue to manufacture, produce, and trade goods unhindered across the UK.

For centuries, the UK’s internal market has been the cornerstone of our shared prosperity, and our proposals will help maintain this integrated market and ensure the free flow of goods. They will continue to protect the Union whilst safeguarding the devolved administrations’ right to regulate as they do now.

The goods proposals in Part 1 of the Bill will guarantee companies can manufacture, produce and trade goods unhindered in every part of the UK while we maintain world-leading standards for consumers, workers, food and the environment.

Mutual recognition of goods will ensure frictionless trade between the nations of the UK continues, avoiding the possibility of local regulatory divergence damaging trade after we leave the EU.

Why are ‘manner of sale’ requirements not considered to be relevant requirements for mutual recognition?

The mutual recognition principle is generally intended to capture requirements that relate to the good itself, such as the characteristics or presentation of the good. Requirements related to the circumstances or manner in which a good can be sold is not in scope of mutual recognition.

This means devolved administrations have autonomy to apply and enforce rules related to the manner in which a good can be sold, such as terms of sale or a minimum age restriction, provided they are not discriminatory and are not artificially designed to ban the sale of the good.

Won’t excluding some areas of regulation from mutual recognition create barriers to trade within the UK?

There are a very limited number of areas of regulation that are excluded from mutual recognition which have been tightly defined. The very limited exclusions allow, for example, specific environmental issues to be taken into account when authorising a pesticide for use in a part of the UK.

Our proposed exclusions are as limited as possible to avoid unnecessary barriers within the UK’s internal market. They provide the devolved administrations and UK government the ability to act in areas where, for example, local environmental considerations need to be considered.

Will there be the ability to add or remove areas of regulation from the scope of mutual recognition?

We are proposing very limited areas of regulation that are excluded from mutual recognition, and only where there is justification that local approaches are necessary to account for specific health and environment considerations. The government will have the ability to amend the list of exclusions by statutory instrument if justification for additional exclusions is identified, and that instrument is subject to a vote in Parliament following scrutiny and debate. This is necessary to make sure that we can react swiftly to unforeseen outcomes that could not have been predicted.

Will mutual recognition override the currently existing regulatory differences?

No, existing differences are specifically excluded from mutual recognition. So, for example, the existing Scottish rules on raw cow’s drinking milk are unaffected.

Businesses already live with and have adapted to these differences, and so mutual recognition does not need to retrospectively apply.

This is a forward-looking piece of legislation to ensure businesses will continue to enjoy seamless internal trade with no new barriers, after the transition period ends on 31 December 2020.

If existing regulation (which would otherwise have been captured by mutual recognition) is amended in a way that substantively changes the effect or outcome of the legislation, it would then come within the scope of mutual recognition.

Where existing legislation receives technical or minor amendments that do not alter the substance of the legislation, that would continue to be out of scope.

What about where there are no existing regulatory differences across the UK?

Where there is convergence in existing regulations across the UK, mutual recognition would have no effect in practice.

What about regulatory requirements not captured in the list for mutual recognition? Would they need to be duplicated if selling a good under the mutual recognition principle?

The list of regulatory requirements that apply at the point of sale is comprehensive, which avoids duplication for businesses.

Businesses would only need to fulfil the extremely limited requirements that are not captured as part of mutual recognition.

The mutual recognition principle seeks to capture requirements that relate to the good itself, or things which must be done to or in relation to the good before it can be sold. These include requirements relating to the characteristics or presentation of the good.

Requirements relating to the arrangements under which a good can be sold will generally be out of scope of the mutual recognition principle and are covered by the non-discrimination principle instead. This ensures that they can still be enforced as long as the rules are fair.

How will this system interact with international trade?

The UK government is responsible for international trade, negotiating and entering into agreements with partners on behalf of all parts of the UK.

Under the devolution settlements, the devolved administrations have competence to observe and implement international obligations that relate to devolved matters. The UK government is responsible, as a matter of international law, for compliance with those obligations.

Trade agreements with partners reduce barriers and create opportunities for UK businesses in international markets. This helps to create jobs across the UK and drive economic growth. The UK Internal Market Bill takes the necessary steps to protect the integrity of the domestic market and will help to develop and implement ambitious trade deals for the benefit of businesses and citizens in every part of the UK. It will also make the UK more attractive to foreign investment and build confidence in our present and future trade partners.

The government has been very clear that any future trade deal must uphold our high regulatory standards and work for UK consumers and businesses.

A well-functioning internal market system, tailored to the interests of businesses across the UK, will therefore play a vital role in supporting our long-term global trade ambitions.