On the 16th of July 2021 the European Union Regulation (EU) 1020/2019, also known as the ‘Market Surveillance Regulation’, will come into force. The new rules in the Regulation may result in many products being banned from entry into the EU market. Will your products be affected by the new rules? How can you prevent your products from being banned? In this presentation, I hope to answer your questions.
Regulation 1020/2019 aims to strengthen market surveillance throughout the European Union and to ensure only safe and compliant products can be made available in the EU market. Most provisions of the regulation are aimed at improving the procedures and capacities of the market surveillance authorities of EU Member States. That is probably not so interesting for you. However, Chapter 2 of the Regulation directly affects the business of non-EU-based manufacturers and exporters, and maybe your business too.
Chapter 2 tries to resolve a problem that has been developing over the last 5 to 10 years:
– The trend has been that product manufacturing has moved further away from the end-users. When I was a child, most products we bought were manufactured in our own country, or in one of the neighbouring countries. Nowadays even low-cost products are shipped from the other side of the world.
– Secondly, with the rise of the internet, and particularly the success of e-commerce platforms, such as Amazon, Alibaba and Ali-express, consumers are now used to buying products online. More often they are buying straight from foreign sellers and foreign manufacturers. The products are shipped to them with postal services.
– Unfortunately, often these products are not complying with the regulations and safety standards in the consumers country. But it turned out to be difficult for the authorities of European Union countries to hold responsible persons accountable. The reason is that the EU regulations were written with the traditional supply chain in mind.
Here you see an overview of a traditional supply chain, and the persons or economic operators in the supply chain that have responsibility for product compliance:
– manufacturer or private labeller
– authorised representative
– and then it goes further to retailers to the end-user
In the image below you see what currently is taking place after consumers discovered buying on e-commerce platforms:
Basically, the whole supply chain is surpassed. This also means that according the traditional EU regulations the end-user would become the importer. However, this is not ideal, because the end-user do not have expertise on product compliance and product safety rules. They also do not have the resources to conduct conformity assessment to ensure these products comply. This is why the ‘Market Surveillance Regulation’ introduces new rules.
So, let’s look into what the biggest challenge is that the ‘Market Surveillance Regulation’ introduces for non-EU based businesses. The challenge is introduced in Article 4. From the 16th of July 2021 products can only be placed in the EU market if there is an ‘economic operator’ established within a EU Member State, who takes care of the tasks of paragraph 3. As we will see later in the presentation, these tasks are related to the product’s compliance. What is important to note now is that according to paragraph 5, the limitation only applies to products that are within the scope of the mentioned EU Directives and Regulations. I will show you later for which products the limitation applies.
So the ‘economic operators’ that have to be in place are:
- manufacturer or private labeller based in the EU;
- importer based in the EU;
- authorised representative (based in the EU);
- fulfilment service provider (based in the EU).
Here you see a graphical presentation.
How non-EU-based manufacturers and sellers can prevent their products from being blocked?
What does that mean for manufacturers and sellers that are located outside of the European Union and that sell product to the EU through websites or e-commerce platforms? In this case, there typically is no manufacturer or importer in the EU.
Therefore in order to avoid the products from being banned from entering the EU market, the non-EU-based manufacturer or seller has the following options:
- Open an office or subsidiary in an EU Member State.
- Start selling through an importer that is established in one of the EU Member States.
- Appoint and authorised representative. An authorised representative is a person or a company that is appointed by the manufacturer and mandated for the tasks that the Regulation requires, which we will come to shortly.
- The last option is to use the services of a fulfilment service provider that offers product compliance services.
For those of you who are not entirely clear on what the term fulfilment service provider means, here you can read the definition.
What is important to note is that the service provider does not take over ownership (otherwise they would become a distributor), but offers at least two of the following services: warehousing, packaging, addressing and dispatching. Postal services like DHL/FEDEX and the like or freight transport services are not considered fulfilment service providers.
Which products may be blocked from EU entry due to the Market Surveillance Regulation?
The following products are examples of products for which the requirement applies:
- electrical equipment and material within the scope of the Low Voltage Directive
- electronics and active components within the scope of the EMC Directive
- electrical and electronic equipment within the scope of the EU RoHS-Directive
- electrical and electronic equipment within the scope of EU eco-design and energy labelling regulations, such as power adapters, computers, washing machines and refrigerators;
- radio equipment (electrical devices containing radio frequency broadcasting and receiving technologies, such as WIFI and Bluetooth)
- ATEX equipment, so that means equipment intended to be used in potentially explosive atmospheres
- machinery & outdoor noise equipment
- construction products
- personal protective equipment, f.e. helmets, safety shoes, gloves
- pressure equipment
- simple pressure vessels
- gas appliances for cooking and heating purposes
- recreational craft such as yachts and personal watercraft
- measuring instruments & non-automatic weighing instruments
- pyrotechnical articles
You may have noticed that these are all products that in the EU are required to be affixed with the CE marking.
Responsibilities of the ‘economic operators’ under the Market Surveillance Regulation 2019/1020
Let’s look in detail at what are the responsibilities of these economic operators are. The tasks are described in paragraph 3 of Article 4 of the Regulation:
- First, to verify that the Declaration of Conformity and the Technical File with the product specific compliance files exist and ensuring that they can be made available to the market surveillance authorities upon their request.
- Secondly, to be the single point of contact within the EU for the market surveillance authorities, in case they have questions about product compliance.
- Also they have a legal responsibility to inform the market surveillance authorities if they have reason to believe the product poses a risk, for example because a serious incident happened.
- They also are legally required to cooperate with the market surveillance authorities in taking corrective measures or taking actions to mitigate the risks.
- Finally, their name and (EU) address shall be provided ‘product, its packaging, the parcel or accompanying documentation’. This is for traceability purposes, so that consumers and market surveillance authorities can find the contact details easily.
All of these responsibilities are related to the verification of product compliance and helping market surveillance authorities to find and take measures against non-compliant and unsafe products. It is important to point out that the new rules are NOT including responsibility for the product’s compliance and product liability. Product compliance and liability for damages caused by a defect in a product remain the responsibility of manufacturer and parties in the product supply chain.
Authorised Representative (Amazon EU Responsible Person)
As discussed, when looking for solutions to prevent the CE marked products from being blocked from entering the EU market, the following has to be taken into consideration:
- Opening an office in the EU is expensive and also complex from a regulatory point of view.
- Nowadays, many exporters specifically choose not to work with an EU importer. The e-commerce business model is attractive because it allows cutting out a big part of the supply chain in order to keep the price as low as possible or maximise the profit margin.
- It has to be noted that currently most fulfilment service providers do not offer product compliance services, because it requires a specific expertise and therefore is outside their scope of competence.
For that reason, probably the easiest solution is to appoint an authorised representative. Also, platforms like Amazon are requiring their sellers to register who their representative (or as Amazon calls it ‘EU Responsible Person’) is.
So what would be the qualifications you would like to see from your authorised representative?
- Considering the main task of the authorised representative is to communicate with the authorities on product compliance, it would be good for the authorised representative to actually have a good level of expertise on EU regulations, standards and conformity assessment procedures;
- we recommend you to also consider the country in which the authorised representative is located: for example after Brexit, the authorised representative should not be located in the United Kingdom;
- the authorised representative shall be a well-established company which is also not going to disappear whenever there is an issue. Please note: PO Box companies and virtual offices are not allowed and they will actually may cover a batch to be flagged;
- the authorised Representative should have the necessary Infrastructure in place to be able to communicate with the authorities efficiently;
- they should be professional in their communication skills and also knowledgeable in order to avoid that cases will get escalated quickly;
- you would like to consider the secure storage of your files by the authorised representative;
- the representative should provide good customer support.
Alura Group has been providing authorised representative services for 20 years. We are ready to work with manufacturers and sellers that take product compliance and product safety seriously. Contact us. We will be glad to provide you with information about our services and to see if our companies are a good fit.