Why we should all know about Mutual Recognition Agreements of Conformity Assessments

Mutual Recognition Agreements of Conformity Assessments (MRCs) might sound a bit technical, and in a lot of ways they are. But they are also pretty important, especially when it comes to economic growth and the ongoing UK-EU reset. So to help you out we have created a handy FAQ outlining what they are, why they matter and most importantly, how they impact our relationship with the EU, so that you too can be an expert on all things MRC related.

What are conformity assessments? 

Conformity assessments are procedures used to determine whether a product meets the necessary standards or regulations, ensuring safety, performance, and compliance with legislative requirements. These assessments are essential for maintaining consumer trust, safety standards  and regulatory compliance. 

Taking electrical and electronic products as an example, it is likely that you will have come across both the EU’s and the UK’s conformity assessment markings. In the EU, if products have been assessed for conformity they will bear the ‘CE mark’. In the UK, post Brexit, some products must bear both the CE mark and the UK’s own ‘UKCA mark’. Businesses that want to sell their product in a country must pay to test their products and gain these marks before they can do so. 

What are Mutual Recognition Agreements or MRCs? 

A mutual recognition agreement of conformity assessments (MRC)  is an agreement between two trading partners  - countries or blocs of countries - to remove technical barriers to trade to create smoother trade flows and reduce costs for businesses, like the duplication of costly paperwork and tests. 

MRCs can be arranged without or alongside wider free trade agreements. Australia, Israel, New Zealand and the US have MRCs with the EU, without a wider free trade agreement. Canada, Japan and South Korea have MRCs within the context of their respective FTAs.

The EU offers two types of MRCs: traditional and enhanced.

Traditional MRCs

A traditional MRC is an agreement to recognise a trading partner’s  ‘conformity assessment’ bodies and procedures, in order to avoid the duplication of testing and certification. 

Traditional MRCs may cover a single sector or they can be multi-sectoral and cover a range of sectors. The Comprehensive Economic and Trade Agreement between Canada and the EU (CETA) is a trade deal which includes an MRC with the broadest sectoral coverage to date, covering virtually all sectors and aspects of Canada-EU trade from automotive standards to pharmaceutical manufacturing.

It is important to note that traditional MRCs do not require trading partners to align standards and regulations, nor do they require partners to recognize each other’s requirements as equivalent. They are merely limited to the recognition of the competence of each partner’s Conformity Assessment Body (CAB) to carry out testing, inspection, or certification of conformity. Put simply, a Canadian business can get their product marked as safe for both Canada and the EU by the same testing facility in Canada.

Enhanced MRCs 

Enhanced MRCs involve both the mutual recognition of conformity assessments and the automatic acceptance of regulatory standards. Examples include some sectors of the EU’s Switzerland agreement; the marine equipment agreement between the EU and US, which is based on the rules of the International Maritime Organisation (IMO) of which both are members.

In all cases, enhanced MRCs are concluded either on the basis of broad and deep regulatory alignment or conformity through compliance with international standards. 

Does the UK have any MRCs of conformity assessments in place?

Yes. After Brexit, the UK replaced many of the EU’s MRCs with continuity agreements to maintain smooth trade post-departure. Some of these continuity agreements have since been superseded by new MRCs as the UK has established Free Trade Agreements (FTAs) with individual countries.

Notably, even Boris Johnson’s Conservative Government agreed to include MRCs of conformity assessments with Australia and New Zealand, as part of his administration's post-Brexit FTAs with both countries.  

In addition to the bilateral MRCs the UK has adopted since Brexit, the UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), spearheaded by Rishis Sunak’s Conservative Government, has also introduced provisions for MRCs. As a result, now that the UK’s accession to CPTPP has taken place, the UK will enjoy a higher level of mutual recognition with 11 countries in the Pacific region compared to our closest neighbours and largest trading partner across the Channel.

Does the EU have existing MRCs in place?

Yes. The EU has a range of MRCs in place, both traditional and enhanced, depending on its relationship with the trading partners in question. The most recent and most relevant MRC deal negotiated by the EU is the EU-Canada CETA deal, which came into force in 2017.

Does the UK have an MRC in place with the EU?

Incredibly, not currently. This means that UK businesses exporting to the EU, as well as EU businesses exporting to the UK, face additional non-tariff barriers as they have to ensure products meet both conformity regimes, including the UKCA and CE requirements, and acquire certification separately in order to export. This duplication increases costs for businesses and consumers, and hampers economic growth.

What does UK industry want?

In May 2023, the UK Trade and Business Commission published an important report, Trading our Way to Prosperity which recommended, among other things, that the UK Government work closely with the EU in order to establish a plan for the mutual recognition of conformity assessment results to reduce trade friction for UK businesses trading into the EU.

The report was put together with over 80 hours of live testimony from 234 expert witnesses, industry leaders and business owners. And with evidence submissions from over 200 organisations as part of an open consultation.

The Commission is due to be relaunched in January 2025 to provide original research and evidence based solutions to the problems businesses face after Brexit. This comes after new Best for Britain polling revealed that almost half of all voters (44%) think that Britain’s economic future lies with the EU compared to those who think the Government should prioritise trade with the USA (19%). 

A report by the British Chambers of Commerce, published in December 2024, highlighted that 41% of exporters say the Brexit deal is hindering their growth, and recommended that the UK Government “Negotiate a supplementary mutual recognition agreement on conformity assessment and markings of industrial, electrical and electronic goods”.

What does EU industry want?

Industry support within the EU for new MRCs with the UK signals potential for progress towards a UK-EU MRC. Indeed, a recent surveyconducted in 2023 by the European Commission’s Directorate General for Trade among EU-based conformity assessment bodies found strong support for expanding MRCs, with the UK among the countries with above-average interest. 

What does this all mean for a UK-EU trade deal? 

The EU and the UK have established notable precedents for incorporating MRC clauses within larger trade agreements. Examples include the previous Conservative UK Government's post-Brexit trade deals with Australian and New Zealand, and UK’s accession to the CPTPP. On the EU’s side, the EU’s CETA deal with Canada provides a comparable precedent. 

In this context, an EU-UK MRC should be seen as a feasible, mutually beneficial policy proposal, within the UK Government’s negotiating red lines. Any such agreement, or agreements, would significantly reduce trade barriers for businesses on both sides, facilitating economic growth in both the UK and EU.

This article first appeared on Best for Britain