After what feels like an eternity, tonight we find out the outcome of a no-deal Brexit vote.

Whilst the March 29 deadline looms it’s evident that many are of us are unclear exactly how this will affect businesses and how it will change the laws in certain industries.

French President Emmanuel Macron spoke about the effect leaving the EU will have on our food – in one example, he mentions  “the UK rely on 70% of their supermarket goods from Europe.” Not surprising, since we’re a small island that doesn’t get long spells of warm weather.

This will no doubt affect the prices of our food in the supermarket, but will also see the cost of dining out rise due to shipping and export costs.

Whilst all this circulates there’s one industry I haven’t heard any discussion on, and that is the effects that may arise for the cosmetics industry. Understandably it’s not high on everyones list of priorities when it comes to the B word, however, as a mother, I want to ensure that our personal care products won’t be compromised as a result of this deal. That covers body washes, lotions, shampoos etc.

It was important to find out if this could change the laws that govern which chemicals are allowed into our cosmetics – should we leave the EU.

Not only that, it’s vital to know if this will change our current law against animal testing?

Will cosmetic and animal testing laws change?

Currently, consumers can rest assured that beauty products produced in the UK are not tested on animals, thankfully this is because cosmetic animal testing has been illegal since March 2013.

However, UK animal testing laws come from the EU. The 2013 ban applied to all EU members and was a huge success for animals rights campaigners in this country – but what happens when we leave the EU?

Whilst reading some information on EWG regarding cosmetic chemical regulations, I came across a staggering statistic. Currently 1200 ingredients are banned for production in cosmetics in the EU where as only a minuscule 9 are banned in the U.S.

It’s been 80 years in the US since a law was put in place prohibiting the sale of cosmetics with any “poisonous or deleterious substance,” or any “filthy, putrid, or decomposed substance,”

The Food and Drug Administration has so far only banned nine cosmetics ingredients for safety reasons. Members of Congress made other efforts to modernize cosmetics law, starting in the 1950s, but all of these attempts were defeated by the cosmetics industry.

My first concern was if we go independent will we still maintain the same standards in cosmetics?

Thankfully, after further investigation I found some information from the CTPA – a UK industry body for cosmetics, toiletries and perfumes.

Their factsheet outlines the concerns and they had this to say:-

“Following the outcome of the Referendum on the United Kingdom’s status in the European Union, CTPA would like to reassure its members, the cosmetics industry at large and of course our millions of consumers that the UK decision to leave the EU does not alter the strict safety laws that govern our cosmetic products.”

A relief…

The UK as of now is still a full member of the EU and the current legal structure will stay unchanged for the time being – indeed, the process of transitioning will take years.  For our cosmetics sector, it means that all existing laws, regulations and guidelines remain in place exactly as they did before the vote – nothing changes.

In particular, it means that all of the cosmetics sold in the UK must continue to comply fully with the European Cosmetic Products Regulation, including requirements relating to safety, labelling and the ban on animal testing.

“Consumers may have concerns about the ban on animal testing, but we would like to stress that the UK cosmetics industry voluntarily abandoned animal testing seven years ahead of the EU-wide ban, so you can be assured this is not going to change. The European Cosmetic Products Regulation is seen globally as a success and many other jurisdictions across the world look to it for inspiration.  It will remain a passport for trade.”

In June last year the CTPA published a paper ‘Getting the Best from our Future Relationship with the EU’ and focused on two areas

According to the document, in 2016 the European cosmetics market was worth EUR 77 Billion at retail sales price making Europe the largest cosmetics and personal care market in the world. Furthermore, in 2017, exports accounted for £3940.1 million and imports for £4278 million according to the uktradeinfo.com database.

The benefits of being part of the EU is that the UK is part of the Customs Union, this means goods can move freely between the UK and EU Member States without the need for checks on the origin of goods. Exports to the EU from countries outside the customs union are subject to rules of origin checks even if they have a Free Trade Agreement (FTA) with the EU

This seems pretty straight forward but what about a no deal Brexit?

Trading with the EU if there is no Brexit deal

As we begin to prepare for a no deal Brexit it’s important to understand what businesses may need to do and what could change if this is the scenario.

Last August the UK Government published a guide to inform businesses for the trade of goods between the UK and EU if there’s no agreement in place. Alongside a number of notices to help businesses prepare were the following;

• Labelling products and making them safe
• Importing and exporting
• Regulating medicines and medical equipment
• Classifying your goods in the UK Trade Tariff if there is no Brexit deal this explains how businesses will identify their goods correctly, in order to establish what duties and rules apply for the declaration process of exporting to the EU or importing into the UK from the EU.

What would happen to the customs and excise procedures in a no-deal Brexit?

According to the guidance GOV released on August 23rd

If the UK left the EU on 29 March 2019 without a deal there would be immediate changes to the procedures that apply to businesses trading with the EU. It would mean that the free circulation of goods between the UK and EU would cease.

So if the ‘free circulation of Goods’ ceases brands would then incur fees, this cost will in turn inflate the price of products. Exact figures are unknown.

Sales Director Nicky Saragossi of Daniel Sandler Cosmetics – “We have worked with our EU manufacturers for many years and none suggested we’ll see an increase in manufacturing price. Any increase will come should there be added tax to pay.”

Hopefully this will be the case for many brands but if new costs come from circulation fees this will cause an increase in prices.

As cosmetics is a complex sector, it’s important to note the difficulties that will arise at customs even if the EU and the UK agree under a FTA to establish a lower tariff. When importing goods, the importer must present a proof of origin to the importing customs authority and this would introduce bureaucracy, additional costs and delays into cross-border trade.

Another point is that the UK will need to have its own set of customs rules in place as anything going to the EU or coming in, from the EU will require customs declarations.

• the EU applying customs and excise rules to goods it receives from the UK, in the same way it does for goods it receives from outside of the EU. This means that the EU would require customs declarations on goods coming from, or going to, the UK, as well as requiring safety and security declarations
• for movements of excise goods, the Excise Movement Control System (EMCS) would no longer be used to control suspended movements between the EU and the UK. However, EMCS would continue to be used to control the movement of duty suspended excise goods within the UK, including movements to and from UK ports, airports and the Channel tunnel. This will mean that immediately on Importation to the UK, businesses moving excise goods within the EU, including in duty suspension, will have to place those goods into UK excise duty suspension, otherwise duty will become payable.

Excise is a percentage levied on manufacture, sale or use of locally produced goods, for example alcoholic drinks or tobacco products. A percentage tax levied on a company’s revenue. This duty doesn’t seem to affect the cosmetics industry from what I’ve read as it relates to alcohol, tobacco and fuel products. It does however show that delays are definitely going to increase as more items will need to go through customs when entering the UK from the EU.

Things will get more complex for brands in the EU wanting to place products in the UK market. Some businesses use a ‘nominated person’ to carry out certain tasks on the brands behalf but all that will change, according to the guide set out by the UK Government on September 13th.

So far businesses can have a representative in the EU who handles the business. However, as outlined below, in a no-deal scenario, businesses wishing post exit to appoint a new authorised representative to carry out tasks on their behalf, within the UK, will need to appoint a representative located in the UK.

• For cosmetics, responsible persons based in an EU country will no longer be recognised by the UK after March 2019
• Businesses placing cosmetic products on the UK market will need a responsible person located in the UK.

This will mean a relocation or sourcing of staff within the UK to be their representatives.

From the research it shows a no-deal Brexit will cause huge delays, inflated prices, a catalogue of complexities and costs both sides.

However, it also shows that if we do agree a deal with the EU, there may still be some challenges facing the cosmetic industry depending on what is agreed.

We will have to await the outcome of the vote but there’s no getting away from the fact there’s to be a lot of disruption and confusion ahead.

What’s your thoughts on Brexit?