30/03/2018
One of the most vitriolic opponents of "EU regulations" is Lord (Anthony) Bamford, chairman of the construction equipment giant, JCB. He is known
for complaining about "hidden barriers" such as EU red tape that "proves that this single market has not created a level playing field".
A prominent supporter of Vote Leave, and generous donor, he wants a "hard" Brexit, calling for a "deal that will allow us to become a truly global trading nation". And "if tariffs are the price we have to pay to leave the EU", he says, "well so be it". He adds: âBritish business people are very adaptable. They adjust very quickly to changes in the trading environment".
However, Lord Bamford may have his
own personal reasons for welcoming the application of tariffs. Not least of those is that he has moved substantial parts of his manufacturing empire to Brazil, India and the United States. Now, in servicing his own domestic (UK) market, his company has to pay tariffs, competing against European manufactures which enjoy tariff-free access, courtesy of the Single Market.
Applying tariffs to equipment manufactured in EU Member States would, for Lord Bamford, level the playing field, and help restore the fortunes of his company, which has not being enjoying the best of times over the last decade.
When it comes to regulation, though, construction equipment is in an anomalous position. Although vehicles such as JCB's excavator loaders (one pictured) are equipped for road use, the road vehicle component does not have to comply with EU type approval requirements that apply to cars and most commercial vehicles.
As such, there is no single market in construction machinery. Road-equipped plant such as a JCB excavator loaders must comply with national construction and use requirements, in terms of lighting, braking and safety systems and other parameters which apply before a vehicle can be driven on a public road.
Perversely, that creates a difficult situation for manufacturers. To service the EU market, they are forced to adapt their vehicles to comply with different local regulations. Not even mutual recognition helps them out, as national administrations can apply safety over-rides permitted by EU law, which allow them to apply their own regulations.
Therefore, although Lord Bamford
complains that the cost of EU regulations for companies means that "Britain is better off leaving the Single Market", we actually have a situation where the representatives of European equipment manufacturers
are pleading for harmonisation of regulation at an EU level.
"Due to a void in the internal market", they say, "each Member State in Europe is entitled to define their own rules to ensure an appropriate level of safety for mobile machines circulating on public roads".
Member States have each specified and implemented these requirements at National level to address general safety concerns. And, in the industry view: "The variety of those National requirements represents a disproportionate and unjustified economic and administrative burden for the mobile machinery industry".
This is an exact reversal of the pitch put by Lord Bamford. In order to reduce "red tape", the manufacturers actually want a single approval "allowing authorisation for road circulation of a mobile machine in all Member States without further technical requirements".
As of May 2017, the industry was requesting a legislative act. They want mobile machine manufacturers to receive an EU-wide third party approval, permitting public road circulation of the mobile machines in any EU Member State without the need for additional tests and/or documentation.
Perversely, should this come into effect (which undoubtedly it will in due course), it would put Lord Bamford's business at a grave disadvantage, if the law follows the typical EU model. It would mean that his UK operations would not be able to apply for, or hold, a valid approval for any UK produced machines. These would have to be approved separately by the authority of an EU member state, with the application made by a representative of the company resident in that state.
However, while this is something for the future, JCB is by no means out of the woods with current EU legislation. In the latest batch of Notices to Stakeholders, we see
a document on the "withdrawal of the UK and EU rules in the field of type-approval of certain vehicles and engines".
In respect of vehicles, this applies to Regulation (EU) No 167/2013 on the approval and market surveillance of agricultural and forestry vehicles and Regulation (EU) No 168/2013 on the approval and market surveillance of two- or three-wheel vehicles and quadricycles.
These themselves will affect UK manufacturers of the relevant equipment, as manufacturers established outside the Union must appoint a single representative established in the Union to represent them before the Member State type-approval authorities and for the purposes of market surveillance.
Manufacturers' representatives established in the United Kingdom will not, as from the withdrawal date, be considered as established in the Union for the purposes of these regulations and, therefore, the approvals will no longer be valid.
As to JCB's products, they are caught by Regulation (EU) No 2016/1628 on requirements relating to gaseous and particulate pollutant emission limits and type-approval for internal combustion engines for non-road mobile machinery.
Under this regulation, the plant itself does not require type approval, but the engines used have to be approved. And, in accordance with the standard EU regulatory model, that requires the approval to be held by a representative established in an EU Member State (or an Efta EEA state). Existing approvals obtained in the UK or held by a UK entity, will no longer be valid after Brexit (or the end of the transition period, if appropriate).
This will be problematic enough for JCB but there is an additional sting in the tail. The engines are also subject to "market surveillance" requirements which, within the EU, are carried out by the appropriate Member State authority. But, as a third country, the UK will not have a national authority recognised by the EU, unless there is a formal mutual recognition agreement (MRA).
Here, the rub is that if Lord Bamford gets his wish and there is a hard Brexit, there will be no MRA. He will be up the creek without a market. Wuith no provision for market surveillance, his company will be unable to export to the EEA any machines made in the UK.
Nor does the grief stop there. Equipment such as excavators are subject, by virtue of Directive 2000/14/EC, to specific noise limits. These must be verified by independent Notified Bodies â which also must be established in EU Member States. Any certification held by JCB reliant on a UK-established notified body will no longer be valid â unless, of course, there is an MRA on conformity assessment, which we won't have in a hard Brexit scenario.
Then there are
other little tweaks. If, as is so often the case, the backhoe or loading bucket is equipped with a lug or a hook which enables it to be used for lifting, then the Machinery Directive (2006/42/EC) applies. Here, the company can rely on self-certification, although safety equipment may require Notified Body assessment. There, without an MRA on conformity assessment, JCB is going nowhere.
No doubt within the JCB empire there are compliance officers or other officials who can tell Lord Bamford about these things, and what precisely he needs to do. But if he is to stay in business and maintain his 45 percent share of the combined backhoe loader market in Europe, he needs to tone down his rhetoric.
More to the point, unless Bamford feels he can ditch the European market altogether, he should recognise that the Single Market is a considerable asset to his business â and more so if in the future there is a single type approval covering road-equipped construction machinery.
In the interim, his immediate business requirements will be covered by the transition period. After that, he needs to hope that his current wishes are not granted.
