What Is the Current State Of BREXIT, And What Happens Next?
On March 29, 2017, the United Kingdom (UK) invoked Article 50 of the Lisbon Treaty, beginning the two-year process of leaving the European Union (EU), more commonly known as Brexit. Although the UK government and the EU reached a deal on the withdrawal agreement in November 2018, British Members of Parliament (MPs) have not been able to rally a majority to support a specific withdrawal arrangement on several occasions.
Given that the government has not been able to secure parliamentary approval for the deal — and considering the UK was, by law, set to exit the EU on March 29, 2019, regardless of whether an agreement had been reached — a majority of MPs voted on March 14, 2019, to request a delay to Brexit. Such a delay requires approval from all 27 EU member states, and was vital to avoid the UK crashing out of the EU with no deal.
On March 22, 2019, the EU granted the UK a conditional extension; under this arrangement, if PM Theresa May was able to obtain parliamentary approval on the negotiated withdrawal agreement before March 29, 2019, Brexit would be delayed till May 22, 2019 — a day before the beginning of European Parliament elections — to allow for relevant legislation to be passed. However, if the House of Commons was not able to approve the withdrawal agreement by March 29, 2019, Brexit would be delayed only until April 12, 2019, by which point the UK would have to inform the EU of its plan, as well as whether it intends to take part in European Parliament elections, set for May 23-26, 2019.
On March 29, 2019, the withdrawal agreement was voted down by the House of Commons for the third time, effectively delaying Brexit to April 12, 2019. To stave off a “no-deal” Brexit on that date — which was the default outcome — the UK was required to inform the EU of its plan for moving forward by April 10, 2019, in time for a special EU summit called for specifically in the wake of the third vote. On April 8, 2019, British parliamentarians voted to pass legislation that would force PM May to seek another Brexit extension and prevent a “no-deal” scenario on April 12.
On April 10, 2019, the EU and UK agreed on a “flexible” extension until October 31, 2019. Under the terms of this extension, the UK can leave the EU at any point during the period leading up to October 31, 2019 if MPs manage to ratify a withdrawal agreement. However, the UK remains obliged to take part in European Parliament elections on May 23, 2019, should it fail to exit before those elections begin.
If the UK does not participate in the elections, it would be forced to leave the EU on June 1, 2019 without a deal. If, on the other hand, it does, then all options — including the thrice-defeated negotiated withdrawal agreement, a full renegotiation, a second referendum, a general election, the revocation of Article 50, and a “no-deal” Brexit on October 31, 2019 — are back on the table.
In the case that some form of withdrawal agreement is approved, the UK and EU already have agreed on conditions of a 21-month transition (or implementation) period, which is aimed at avoiding potential disruptions by providing citizens, businesses, and the government more time to prepare for post-Brexit arrangements.
During this implementation period, Marketing Authorization Holders (MAHs) based in the UK will continue being able to access EU markets; manufacturing and distribution licenses and inspections will continue to be mutually recognized in both regions. Moreover, UK-based firms will still be able to apply for marketing authorizations. Furthermore, both UK and EU markets will continue to rely on CE marking, and UK-based firms will not be required to have EU-based authorized representatives. Notified bodies in the UK may continue third-party conformity assessments, which will be recognized throughout EU markets.
Significantly, because both the MDR and the CTR are set to be implemented prior to Dec. 31, 2020 — which is the date that the implementation period is meant to end — the UK government will implement both regulations in full. However, given that the government’s negotiated withdrawal agreement has been rejected, it is unclear whether this implementation period would still be effective under another arrangement.
While the full impact of Brexit will be reliant on the specifics of the final withdrawal agreement, a number of consequences for the medtech market can be anticipated. For example, historically, the UK has been at the receiving end of a large portion of grants from the European Research Council; although some non-EU countries receive funding from this council, it is possible that the amount given to the UK will be reduced; other partnerships and research investments may be in jeopardy, as well. Furthermore, the UK may be able to maintain some trade cohesion with the EU if it negotiates to remain in the European Economic Area or join the European Free Trade Agreement; it is currently uncertain whether this will occur.
In the event of a “no-deal” Brexit, the UK will no longer be party to EU regulatory networks and will need to have its own approach to managing internal regulatory actions. This would include developing new processes and systems for UK-based companies and informing these companies of any changes they would need to implement to abide by UK regulations; in addition, companies applying for device approval in both the EU and the UK would have to engage in these processes separately.
That said, a “no-deal” Brexit appears unlikely, given the substantial opposition to this potential outcome in both the UK and the EU — in fact, on March 13, 2019, British MPs voted to rule out a “no-deal” Brexit; though this was not a legally binding vote, it does demonstrate the prevalent opposition to such a scenario.
Because the situation remains largely unresolved, no assumptions regarding the impact of Brexit have been factored into this evaluation.