Dive Brief:

• The U.K. and European Union have begun a new relationship governed by the terms of a deal reached one week before the Brexit transition period ended on Dec. 31.

• The deal spares medtech manufacturers from their worst-case scenario, in which tariffs and quotas would be applied as the two sides failed to reach an agreement, but still leaves scope for significant disruption.

• Notably, the 1,246-page agreement lacks provisions for the mutual recognition of standards, meaning products made in the U.K. will need to undergo an extra certification step to enter the EU market.

Dive Insight:

The full implications of the agreement will only become apparent over time but some sources of disruption for medtech and other industries are already evident. The U.K. government wanted the agreement to cover the mutual recognition of conformity assessments but failed to get the provision, which could have prevented the creation of a regulatory barrier to trade, into the final text. 

Regulatory officials on both sides have been preparing for the failure to agree to mutual recognition of standards. The U.K. Medicines and Healthcare products Regulatory Agency, for example, spent the final months of 2020 sharing guidance that assumed manufacturers would need to get a CE mark, in addition to the U.K. Conformity Assessment (UKCA) needed to access England, Scotland and Wales, to sell their devices in the EU.

The creation of barriers to the trade of financial services has led a senior U.K. politician to express a desire to strike additional agreements that enable U.K. companies to trade as if they are in the EU. However, there is no indication that medtech is the subject of similar plans to go beyond the terms of the existing trade deal. 

As it stands, the mutual recognition of good manufacturing practice agreements is a rare example of an area in which the U.K. and EU have agreed to prevent the creation of a regulatory barrier to trade. Yet, while the pharmaceutical industry succeeded in getting that provision into the deal, it failed to persuade the U.K. and EU to agree to the mutual recognition of batch testing. 

The lack of mutual recognition of standards is a blow to medtech companies that want to avoid the duplication of activities in the U.K. and EU. Nonetheless, the deal does at least permit companies to trade between the U.K. and EU without facing new tariffs or quotas.  

Trade across the U.K.-EU borders largely continued as normal in the hours after the transition period ended on Dec. 31, with only isolated reports of freight vehicles being turned away because they lacked the required post-Brexit paperwork. However, there remain concerns that more severe disruption will occur as cross-border trade increases after the holiday lull, potentially affecting the supply of medical devices and other products.