The new Brexit nightmare is GPSR

I once visited a boiler manufacturer in Norway which had just been forced to spend millions changing its designs and production line, all because it had failed to notice new European Union regulations governing the central heating industry. Of course, Norway isn’t in the EU, but it is part of the single market and so this company couldn’t even sell its products in Norway until they met the new rules.

Move forward ten years or so and this is pretty much the situation that the UK finds itself in now. England, Scotland and Wales are no longer in the EU but our manufacturers sell a lot there. Meanwhile, Northern Ireland is effectively in the Single Market for goods. Therefore, the EU’s rules on the minimum standards a product needs to match up to before it can be sold there continue to mean a great deal to us.

Nothing illustrates why this is so more than something called GPSR, the EU’s new General Product Safety Regulation. It doesn’t sound sexy – or even interesting – but it is vitally important. And like that Norwegian boiler maker, it has crept up on the UK unawares.

At the moment both the UK and the EU follow product safety rules which were introduced into UK law in 2005. Post-Brexit the UK could, in theory, diverge from those rules if it could find some commercial benefit from doing so. But if you want to sell into the EU, you still have to follow them.

The problem now is that those rules are changing. As of December 13, the EU is introducing a new tougher system, which means that suddenly our exporters will have to adopt the new GPSR system, lock, stock and barrel. If they want to keep supplying our largest market that is.

This is because when we left the EU we lost any influence on its policies and became an outsider which has to follow its rules, even when they change. We used to follow all the EU rules quite naturally and easily as a member state, now we have to adapt to them when we are outside.

And not only the rules that were in place when we left. We have to follow any new ones too. This is called regulatory divergence, and it recognises that as we go our own way and the EU goes its own way, our regulations may drift apart – but if we want to sell in the EU our exports have to meet the new rules, no ifs no buts.

The new rules are, according to the European Commission, designed to “address major societal changes that have affected consumer product safety in the past two decades, such as increasing digitalisation, new technological developments, and globalised supply chains.” In short it brings the rules up to date and covers the increasingly important online sector. It also covers just about every non-food product that is sold.

This means that products sold online are now more thoroughly protected, there are new enforcement powers for governments and very importantly all products sold in the EU must have “an economic operator in the EU responsible for the product safety issues”.

That means UK companies exporting to the EU now either have to have a branch in the EU with the capability to introduce and maintain these new regulations or hire an expert company to do it for them. Neither is a cheap option and for small companies in particular the cost is going to be hard to bear. As William Bain, head of trade policy at the British Chambers of Commerce explains, “The impact of this regulation will be felt most strongly by small- and medium-sized traders”.

If you sell just one item on the continent you will still need to follow these rules and that almost certainly means an awful lot of SMEs who have been bravely battling the red tape to carry on exporting to the EU are now going to stop altogether. The game will no longer be worth the candle.

But it’s not just the EU. GPSR matters to anyone selling into Northern Ireland as well, because under the terms of the Trade and Cooperation Agreement and the Windsor Framework Northern Ireland remains in the EU’s Single Market for goods. Thus, even if you are a company with no interest in exporting to Italy or Greece but which does sell in Northern Ireland, you will now have to follow the new rules.

Every online company will have to do the same. Ebay is warning its customers to be ready, and Amazon has even provided a handy list of things you will now have to do in order to be able to sell in Belfast or Derry next month via their website. This includes:

Ensuring all the products meet existing labelling and traceability requirements; having an EU responsible person for those products; labelling the products with the contact details of that responsible person, the manufacturer, and the importer and labelling products with their type, batch or serial number.

The list goes on but you get the general trend – vastly more red tape and expense for everybody, even for those selling to another part of the UK. And, of course, no benefits that anyone can think of for the UK – just like Brexit itself, really.

Also, just like Brexit the biggest moaners about all this are the Brexiteers themselves, with Sammy Wilson the DUP’s MP for East Antrim claiming that online sellers are already pulling out of Northern Ireland, and that this is hardening the border between Northern Ireland and the rest of the UK. Yes, Sammy you are right. They are, it is and this is your fault.

William Bain of the BCC makes it clear why that is happening – the simple fact is that his members will bear the brunt of GPSR. “Again, it is independent, small businesses which will face the largest compliance costs and burdens moving affected goods across the Irish Sea to Northern Ireland,” he said. Well done, Sammy.

There could be a small lining to this issue. The Labour government’s first King’s speech included the Product Safety and Metrology Bill, the idea being to broadly follow the development of the European product safety regime, including GPSR. So, we are trying to stay in lockstep with new EU regulations even though we have no say whatsoever on what they are, how they work or when they are introduced.

But this also demonstrates how little the UK can do to ameliorate the damage caused by new EU legislation. In this case we are having to do what the EU wants even though it is damaging to our exporters and our relationship with Northern Ireland. Yet if we didn’t it would be far, far worse. You just will not be able to sell into the EU or NI if you don’t follow these rules and many others, there is really very little we can do about it.

And there is much more of this kind of thing coming down the road. For instance, the EU’s Carbon Border Adjustment Mechanism, which will be fully introduced by 2026, will mean UK exporters paying a carbon tax on exports to the EU if UK rates are different from EU ones. Just another instance of it being utterly pointless to not just accept the EU’s system root and branch.

Manufacturing industry is pulling its hair out about that one but although it is a larger problem than most it is no different from the continuing trend. The EU is introducing new laws and regulations all the time and improving and adapting old ones and all for its benefit, not ours.

We are on the outside looking in and desperately trying to make sure that, unlike that Norwegian central heating firm, we don’t miss any new rules before they affect us, ever.