In March 2020, the UK Transport Secretary, Grant Shapps, confirmed the country would be leaving the European Aviation Safety Agency (EASA) after December 31, 2020. The decision marks the first announced break in regulatory alignment since the then Chancellor of the Exchequer, Sajid Javid, warned businesses the UK may break with European Union (EU) bodies overseeing key regulations following Brexit.
The EASA is responsible for regulating safety standards for aircrafts flying in 32 European countries (counting the UK), including certifying aircrafts. Shapps touted the UK’s Civil Aviation Authority (CAA) as a replacement for some of the responsibilities fulfilled by the EASA. The move has the potential to significantly impact aerospace companies. For example, aircrafts may face two certification processes before being deemed airworthy.
What It Means for the Industry
The impact could be larger than final certifications. Council Regulation (EU) 2018/581 suspended the common customs tariff duties for certain goods used in aircrafts. This suspension was contingent on parts receiving an authorized release certificate from the proper authority within the EU (EASA). This stipulation cannot be met under the current wording of the law, meaning UK-certified parts will not be eligible for tariff-free movement across borders.
This adds costs to manufacturers, however, it may also result in an increased regulatory burden. Parts entering the EU will be subject to regulations such as the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation.
Previously, manufacturers would move not quite finished (NQF) parts over borders freely, oftentimes without regulatory documentation. These parts would move over borders to receive special treatments, like plating, heat-resistance processes, etc. Now they will be subject to tariffs and more likely to trigger the scrutiny of enforcement bodies. This could result in manufacturers being required to obtain regulatory documentation for each part used in the final construction.
Brexit & the Aerospace Industry
The UK has the third largest aerospace industry in the world, with over 3,000 companies headquartered in the UK working in the sector. Several groups have warned the UK government about the effect that redundant regulation resulting from Brexit could have on the industry.
Under earlier Brexit proposals, the UK would have remained as a third-party member of EASA. Prime Minister Boris Johnson took a different tact and removed some large sections of the proposal pertaining to regulatory alignment.
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The UK and EU are currently in a transition period, maintaining regulatory status quo until the end of 2020. During this period, the CAA says the UK government will negotiate with EASA to ensure “maximum continuity and stability.” The recent COVID-19 outbreak has interrupted government plans and negotiations; it remains to be seen if the transition period is extended in light of the crisis.
Complex Compliance Challenges
Aerospace companies are some of the most regulated in the world, requiring extensive supply chain due diligence activities to respond to a myriad of potential business risks. The data burden to certify planes or declare against legislation such as the REACH Regulation is formidable. Increasing this with additional oversight bodies or disparate requirements as a result of Brexit will require more investment for companies operating in the EU and/or UK.
The CAA notes “There are various possible outcomes, each of which may require different preparations.” This is true for all companies as the fallout from Brexit continues to affect the aerospace industry and others around the world.
Assent Compliance is the industry-leading supply chain data management company, providing businesses with the software and regulatory expertise needed to be successful in an ever-changing landscape. To learn more about the potential impact Brexit may have on your business, visit our Brexit FAQ page here or contact us today.