At the end of 2024 the EU plan to implement the General Product Safety Regulation (EU 2023/988 – GPSR), turning up the dial on post-Brexit trade barriers with our closest overseas market and delivering yet another hammer blow to the wedge that the Windsor framework is driving between Great Britain and Northern Ireland.
At the moment the original product safety directive (2001/95/EC), incorporated into UK law in 2005, applies both here and in the EU, but after 13 December when the EU update their product safety regime, different rules will apply.
Many thousands of UK businesses – and surprisingly, not just exporters – are going to be impacted because the new rules will apply in Northern Ireland and will cover “most non-food consumer products”.
The new rules, according to the EU, are designed to “address safety challenges posed by new technologies and online selling”. The legislation aims to bring market surveillance rules for non-harmonised products into line with those that already exist for harmonised products (those carrying a CE mark).
Seasoned EU exporters will no doubt easily cope with the changes, but others are going to face a unique challenge, especially SMEs (small and medium-sized enterprises), who up to now haven’t thought of themselves as exporters and don’t wish to become exporters. After December they may be forced to follow the EU’s GPSR regime because under the Windsor framework, the rules will automatically apply in Northern Ireland.
And this will throw up some bizarre consequences.
Amazon notifies sellers of the GPSR
The looming issue was flagged up by Amazon in a recent note to sellers: “Prepare for the new General Product Safety Regulation.”
The note began, “If you sell non-food products in the EU and Northern Ireland (our emphasis), you’ll be required to meet General Product Safety Regulation (GPSR) requirements in 2024. On December 13, 2024, the GPSR will introduce new requirements for most non-food consumer products”.
But the problem isn’t confined to Amazon sellers. The new rules apply to sales of most non-food consumer goods and will impact many GB based businesses small and large, with and without an online presence. Nevertheless, Amazon’s note is a good place to start.
A lot of Amazon sellers already trade with the EU and will probably be aware of plans to revise the GPSR. They will be least affected.
However, following Brexit at the end of 2020, many sellers chose to limit sales to the UK only. Before that, the American multinational technology company shipped goods frictionlessly to European fulfilment centres. Brexit made that too difficult and expensive, as my colleague Lisa Burton explained at the time, so Amazon shifted responsibility for transporting goods across the EU’s external border onto the sellers themselves and many decided not to bother.
It is these largely domestic sellers on Amazon and elsewhere who may be surprised to learn they are going to be affected by legislation passed in the EU.
Fulfilled by Amazon (FBA)
To understand one of the consequences, you need to know there are two categories of Amazon seller: FBM and FBA. The former, known as ‘Fulfilled by Merchant’, list items on the e-commerce platform but despatch items from their own warehouses. They can restrict sales to the GB mainland only and may be able to effectively swerve round the EU’s GPSR, if they so choose.
Not so fortunate are the FBA sellers – ‘Fulfilled by Amazon’. Their stock is held in one or more of over 30 regional UK fulfilment centres with picking, packing and delivery handled by Amazon, and by a peculiar quirk, they cannot at the moment choose not to supply to Northern Ireland. There is no way of preventing potential customers in the province from ordering their items, unless they quit the platform.
So, FBA sellers will automatically be dragged into the EU’s General Product Safety regime, even if their sales in Northern Ireland are negligible or non-existent.
According to Jungle Scout, a US search and marketing company offering analysis of online marketplaces, around 80% of Amazon’s 280,000 UK sellers come into the FBA category. Many are micro businesses or sole traders with limited resources.
A ‘responsible person’
Amazon is threatening to “remove listings” if they are found not to be “compliant with the [EU’s] GPSR on December 13, 2024”. For many sellers, this will mean, among other things, appointing an EU Responsible Person (RP) or economic operator based in the EU or in Northern Ireland. A further guidance note sets out who can become an RP for each product and whose contact details must appear on product labels, packaging, parcels and online listings:
There are businesses set up in the EU, many in Belgium and Germany, who for a fee will act as an RP for businesses outside the bloc. The fees vary with charges of perhaps €100–€150 per item per year. A seller with several hundred items listed (and this could simply be different colours of the same product) is going to find it a significant cost for a market that may be unable to justify it.
Guidance issued by the UK government says being “established” in the EU or Northern Ireland means having a physical presence; it can’t simply be a postal address. That could mean setting up a registered office in Northern Ireland. An individual can do it from his or her residential address in the EU or Northern Ireland, but they would then become the legally responsible entity for all the tasks set out in Article 4(3) of Regulation (EU) 2019/1020 in respect of the product or products.
The Amazon note also spells out in general terms how to comply with the other main requirements of the GPSR:
The bizarre consequences
Amazon FBA sellers will have their listings removed if they fail to comply with the EU’s GPSR, meaning they will be prevented from selling in the UK on Amazon’s platform. But the issue goes far wider than just Amazon sellers. It affects anyone selling non-food consumer goods in Northern Ireland.
A GB based business could easily find itself paying a company in the EU for the right to despatch items to a consumer in Northern Ireland, either absorbing the extra costs or increasing the prices of all their items, piling the burden onto GB consumers. Many will perhaps be deterred, thinking selling into Northern Ireland isn’t worth the hassle, and withdraw, with huge political implications.
In another potential unforeseen consequence, a GB company competing with a Northern Ireland-based firm across the UK could face significant extra costs that their competitor will not, since there appear to be no equivalent plans (and no need since they can be their own RP) to force Northern Irish companies to appoint a Responsible Person in the UK.
For the companies who do decide to invest in appointing an RP, the move might be seen as an encouragement to take the next step in becoming a fully-fledged exporter to the EU. They would need to overcome other issues of shipping goods internationally, rules of origin, freight handling, potential customs charges and so on, but it could push some into testing the water.
There is no doubt the new regulation is going to raise the height of the self-erected trade barrier between Great Britain and Northern Ireland, deter GB suppliers, divert yet more trade towards the Republic, and put further strain on the fabric of the United Kingdom.
Amazon may come under pressure to extend to FBA sellers the opportunity of opting out of the Northern Ireland market altogether, again carrying political risks with consumers in the six counties unable to access items that may only be available on Amazon UK.
The DUP are still refusing to join the power-sharing executive at Stormont unless the Windsor framework is substantially changed. Since no executive was formed by Thursday 18 January, the Northern Ireland secretary Chris Heaton-Harris will now come under a legal duty to call an early assembly election.
The GPSR is not going to make things any easier.
