By Andrew Hood and Peter Sellar, Fieldfisher LLP and Bob Savic, Federal Trust

Divergence risks grow in post-Brexit EU and UK machinery standards

The European Union’s new Machinery Regulation, approved by the EU Council of Ministers and the European Parliament in late January 2023, extensively revises the 2006 Machinery Directive.  This Directive has been applicable in the United Kingdom since 2008 when it was transposed into UK law as the Supply of Machinery (Safety) Regulations. The 2018 EU Withdrawal Act retained these Regulations, enabling the equivalent of EU standards for health and safety to remain applicable for machinery produced in the UK after Brexit and thereby enter the Single Market in full compliance with its machinery safety rules.

The extent to which divergent UK standards will apply to this sector as a result of the proposed EU Retained Law Bill, which seeks to repeal or revoke the entirety of EU legislation within UK law, remains to be seen.  Nonetheless, the government is looking to extensively “update” UK health and safety standards governing the production of machinery, including new provisions on emerging and critical technologies such as Artificial Intelligence.

As for the EU’s Machinery Regulation, this sets out new measures which potentially give rise to divergence between EU health and safety standards for the production of machinery in relation to existing rules in the UK.  Any such divergence will likely have economically significant implications for UK machinery manufacturers exporting to EU buyers and their corporate supply chains.  This is particularly so given the importance of the Single Market as the UK’s top export destination for machinery and associated industries.  For instance, the UK’s annual exports of machinery to the EU are roughly £9 billion, while vehicle and automotive sector exports to the bloc are typically about £27 billion a year.

Scope of the Machinery Regulation

The Machinery Regulation applies to the safety requirements for a broad range of machinery products.  These can include machines used by individuals such as electric scooters and bikes among various other small vehicles for personal transport, all of which could be hazardous for users.  Other machinery covered by the Machinery Regulation includes industrial equipment for use in large scale industrial processes, heavy construction equipment, advanced digitized products such as robotics and digitalized equipment in the form of 3D printers.

Other modern machinery is also introduced into the Machinery Regulation.  This involves, for the first time, safety protocols which can be applicable for human-machine collaboration, as well as the operation of Artificial Intelligence systems in machinery.  In general, the Machinery Regulation covers health and safety challenges and emergent risks arising from new technologies embedded within machinery products.

Unlike the Machinery Directive which was transposed into the legislation of EU member states, the Machinery Regulation would have direct application in all EU jurisdictions without requiring any transposition.  The European Commission argued that the former often resulted in varying interpretations of the same concepts by different member states.  To this extent, UK machinery exporters will therefore only need to take account of one set of EU rules rather than its various derivations under the Machinery Directive.

Principal concepts introduced by the Machinery Regulation

New Testing and Declaration Regimes for Machinery

As a starting point, the Machinery Regulation conforms to the EU’s New Legislative Framework (NLF) which was introduced a couple of years after the Machinery Directive, but into which it was never incorporated.

The NLF establishes a legal obligation on persons who place machinery on the EU market to ensure it satisfies the relevant health and safety standards.  This includes machinery from outside the EU, brought in by importers or distributors.  This concept of legal responsibility is a more explicit and stricter approach than adopted by the Machinery Directive.  This required only a general responsibility for persons placing machinery on the Single Market to meet safety requirements; normally in the form of a Declaration of Conformity and CE mark after fulfilling a conformity assessment.

The Machinery Regulation also deals with ‘high-risk’ machinery products.  These will have to be subject to the conformity assessment of a ‘third-party’ notified body as a paid service. Under the Machinery Directive, manufacturers could undertake self-assessments of machinery, including those considered high-risk. According to the Commission, this process elevated the risk of unsafe products on the Single Market.  The list of high-risk machinery is also expanded by the Regulation to include software enabled safety operations and any machinery with embedded AI.

To mitigate some of the extra costs arising from mandatory third-party conformity assessments, the Machinery Regulation only lists a limited number of products requiring this procedure.  The majority of products can still be self-assessed by the manufacturers.  By the same token, the Commission is enabled to expand the list of products for mandatory assessment in cases of complex machinery and its  associated potential risks.

For the purposes of achieving an equitable balance of industry risk management and cost control, the Machinery Regulation sets out to tailor third-party charges for conformity assessments to more appropriately suit the financial resources of small and medium sized businesses which constitute the vast bulk of producers in the machinery sector.

A new Declaration of Conformity will also have to be performed where machinery undergoes a ‘substantial modification’ and thereby making its previous specifications less relevant – an outcome which could lead to uncertainty over the machinery’s ongoing safety.

Increased Oversight

The NLF also introduces the practice of market surveillance into the Machinery Regulation. As a result, machinery products can be monitored and removed by regulatory bodies where they are considered unsafe.   Even so, where the safety standards of specific machinery placed on the EU market do not meet the prevailing harmonized standards for satisfying the Machinery Regulation, the Commission is empowered to introduce technical measures allowing an individual supplier to fulfil those requirements on a temporary basis.

Governing Artificial Intelligence

One of the most notable areas of new technology safety governance is in relation to Artificial Intelligence.  This is particularly so for industrial robots which operate near to human operators and where software programs control the robots’ movements with an ‘evolving capacity’. Safety measures have therefore been introduced to address risks of physical interaction, whether that be accidental or intentional. Suppliers would also be liable for injuries caused if those risks had not been addressed during the AI’s development.

Another proposed major EU law, the Artificial Intelligence Act (AIA) , would operate in parallel with the Machinery Regulation through an additional layer of governance enabling specific safety measures for “high risk” AI systems.  The AIA provides that an independent conformity assessment would be necessary in such cases, in addition to a conformity assessment provided for general AI safety requirements.

Although the Machinery Regulation and the AIA were originally meant to be issued at the same time, this now seems unlikely as the latter remains under further review with the possibility of inconsistencies arising in how the two sources of legislation regulate high-risk AI.  We shall endeavour to monitor future critical technology legislation on this matter.

Updating Operating Guidance

One of the main benefits of the Machinery Regulation will be for manufacturers to provide operating guidance in digital format as an alternative to paper instructions. Even so, users can still request paper instructions up to six months from date of purchase.  Both digital and paper instructions must still be provided in the official language of whichever EU member state the product is sold.

Conclusion

The new requirements of the Machinery Regulation may create a headache for manufacturers in the short-term, but will ultimately provide for a uniform application across the Single Market.  This should remove the different approach to regulation and enforcement across the EU; provide clearer and more proportionate terms (which the Machinery Directive lacked); align safety standards applicable to non-conforming machinery products with those implemented in broader EU rules on product safety; and ultimately provide more legal certainty for manufacturers.

For UK machinery exporters the new Machinery Regulation prospectively gives rise to regulations governing the health and safety aspects of supplying machinery to the EU which could substantially diverge to those applicable in the UK.  Manufacturers will want to consider whether they adhere to the more rigorous of the regulatory regimes to allow access to both UK and EU markets or whether there is any commercial advantage in a differentiated approach to their production.  Either way, UK (and EU) manufacturers will want to stay abreast of the changing regulatory regime to ensure they are ready to mitigate any risks and take advantage of the opportunities provided by the evolving regulatory landscape.

 

Andrew Hood is a partner with Fieldfisher LLP based in London specializing in global trade and regulatory matters.

Peter Sellar is a partner with Fieldfisher LLP based in Brussels advising on EU regulation and REACH.

Bob Savic is an Associate Fellow of the Federal Trust covering EU industry and trade policy.