Mutual recognition – the original
The principle of mutual recognition of goods stems from the Treaty on the Functioning of the European Union (TFEU), one of the two main treaties that form the basis for EU law. It requires that any goods sold lawfully in one EU Member State can be sold lawfully in another (subject to limited exceptions for public safety, health and the environment), even if the goods do not fully comply with national requirements of the second Member State. This ensures market access for goods that are not, or are only partly, subject to EU harmonisation legislation. Goods subject to EU harmonisation legislation do not require mutual recognition – as they are subject to common rules across the EU.
The EU sought to establish a framework to administer the principle of mutual recognition via Regulation (EC) 764/2008. However, businesses often faced delays, duplication of testing and additional costs when trying to sell certain products in another Member State. The European Commission determined that Regulation 764/2008 was insufficient to ensure consistent and effective continued application of mutual recognition and, in December 2017, it proposed significant reforms as part of a new “Goods Package” (which we blogged about at the time). The new mutual recognition regulation is the culmination of the legislative process that followed, and sits alongside a new regulation on compliance and enforcement (Regulation (EU) 2019/1020).
Mutual recognition – rebooted
On 19 April, Regulation 2019/515 on the mutual recognition of goods lawfully marketed in another Member State started to apply. This rebooted version of the regulation repeals Regulation 764/2008 and seeks to improve the functioning of the principle by including:
- a voluntary “mutual recognition declaration”, for businesses to demonstrate that their products are lawfully marketed in another EU Member State;
- an assessment procedure that Member State authorities must follow when assessing compliance of goods;
- a minimum level of reasoning that Member State authorities must give where they restrict or deny market access, so that their decision can be assessed for compatibility with the principle of mutual recognition;
- a procedure that allows businesses to contest decisions by Member State authorities through the European Commission’s SOLVIT network; and
- the establishment of “product contact points” in each EU Member State, which provide free advice to businesses on the interpretation and application of the mutual recognition regulation.
It is hoped that the new regulation will cut red tape and allow businesses to market and sell goods faster and more easily within the Internal Market. Indeed, the regulation has been described by the Commissioner for Internal Market as a “tool to exit” the coronavirus crisis – a bold statement in these uncertain times, but there is certainly a hope that the reforms will help to facilitate easier trade in certain goods. More generally, the emphasis on information sharing should make it easier for businesses to understand what is required of them to sell their products in another EU country, and hopefully make compliance more straightforward.
Businesses may want to think about whether to make use of the voluntary mutual recognition declaration. Businesses deciding not to make such a declaration can expect national authorities to make detailed requests for information to assess whether the goods should be allowed on the market.
And a final word from the UK…
The EU mutual recognition regulation will continue to apply in the UK until at least 1 January 2021. As with many post-Brexit issues, the position the UK will take after that date is currently unclear. We should get more clarity as the Free Trade Agreement negotiations progress and will keep you updated.