Future trade with the EU: Mutual recognition

‘Mutual recognition’ has featured prominently in the debate over the UK’s future relationship with the EU. This paper examines the different ways in which this term is used. It considers how mutual recognition has been used in practice, within the EU, between the EU and non-EU countries and between non-EU countries.

Mutual recognition of rules involves two countries recognising each other’s standards as equivalent. They may have different rules but these achieve the same outcomes. These rules are generally managed by shared processes or institutions. This is very different to mutual recognition of conformity assessments which is a much more limited concept. Mutual recognition of conformity assessments acknowledges the differences between regulatory regimes but permits one party to test and certify that a product complies with the other party’s regulations.

It is worth noting that mutual recognition as used in the Single Market is different to mutual recognition agreements between the EU and non-EU countries. Where rules are not harmonised at EU level, EU Member States must recognise each other’s regulations except where the specific and narrow derogations laid down in the Treaties, legislation and Court of Justice case law apply. Within the EU, the principle of mutual recognition is that once a product is lawfully placed on the market in one Member State, it can be marketed in another Member State without barriers (subject to some limited exceptions).

The EU has already indicated that it would reject a partnership with the UK based on mutual recognition outside the Single Market and its enforcement mechanisms. M Barnier has stated that the idea of mutual recognition, in which the UK and EU would agree common regulatory outcomes but have the freedom to set their own rules, would not work: “In the absence of a common discipline, in the absence of EU law that can override national law, in the absence of common supervision and a common court, there can be no mutual recognition of standards.”[1]

Outside the EU, mutual recognition is generally much more limited in scope than arrangements within the EU. Mutual recognition agreements (MRAs) can be arranged without or alongside wider free trade agreements (FTAs). Australia, Israel, New Zealand and the US have MRAs with the EU, without a wider FTA.[2] Canada, Japan and South Korea have MRAs within the context of their respective FTAs.[3] Beyond the specific principle of mutual recognition within the EU itself, and to a lesser extent the Trans-Tasman arrangement between Australia and New Zealand, most mutual recognition agreements are limited to conformity testing (e.g. with the US) which as noted above, is much more limited than mutual recognition within the EU.

Where there is so-called ‘mutual’ recognition of standards themselves, the alignment is in fact based on EU rules (e.g. with Israel, Ukraine, Turkey). This category covers countries in the EU neighbourhood, effectively extending the territory of the internal market. This may explain why the Government’s Brexit White Paper proposes a “common rulebook” for trade in goods.

[1] ‘Theresa May aims to calm Brussels fears with key Brexit speech’, Financial Times¸ 2 March 2018

[2] The EU currently has five sectoral deals with Australia and New Zealand, but opened negotiations for a wider free trade agreement on 22 May; ‘EU ministers greenlight Australia-New Zealand trade talks’, Financial Times, 22 May 2018; European Commission, Launching trade negotiations with Australia and New Zealand, 2017

[3] Institute for Public Policy Research, The shared market: A new proposal for a future partnership between the UK and the EU, 18 December 2018, p13