Brexit:what impact will it have on the beauty industry?
Over the past 10 years the cosmetic market in the United Kingdom has grown continuously, becoming the third market in Europe, after Germany and France, in terms of consumption and amounting to € 10.7 billion in 2019, according to data from Cosmetics Europe – the personal care association. The local cosmetics industry employs over 200,000 people and boasts close collaboration with the academic world, for continuous research and development.
With Brexit coming into effect this past 1st January there have been important changes. Up until 2019, strong economic ties connected the United Kingdom to the European Union, which received over 65% of the country's exports while also supplying 62% of the merchandise imported by the UK. Leaving Europe inevitably produced significant effects: to better comprehend the order of magnitude, Cosmoprof contacted experts at the British Chamber of Commerce for Italy (BCCI), a private non-profit making entity that works with the British Consulate General, the Department for International Trade in Milan and the British Embassy in Rome.
Founded in Genoa in 1904, The British Chamber of Commerce for Italy (BCCI) has around a total of 250 British, Italian, and International members. Its headquarters are in Milan, with regional offices throughout Italy and in London. The BCCI works with the British Consulate General, the Department for International Trade and the British Embassy. The mission of the Chamber is to assist and encourage commerce and investments between the United Kingdom and Italy and to support and promote the interests of its members’ commercial activities. The BCCI Brexit Committee was established in 2019 to help members better understand the full impact of the UK exit from the EU and prepare them for new regulations and changes in trade, thanks to experts from various sectors who have specific competencies related to the effects of Brexit and the ensuing changes.
Our questions were answered by lawyers Steven Sprague, Chairman of the BCCI Brexit Committee & BCCI Councillor; Partner of CastaldiPartners, and Ida Palombella, Partner - Head of IP and Fashion Law, Deloitte Legal.
What are the changes starting from 1st January 2021 for beauty companies that export to the UK?
Up until 31st December 2020 all that was needed for European beauty companies to export to the UK was compliance with the European law that governs the cosmetics sector, i.e., Regulation (EC) no. 1223/2009. As we all know, from 1st January this year the transition period for Brexit has ended and this regulation no longer applies to exports to the United Kingdom. As a result, businesses that plan to continue to export to the United Kingdom must make some important changes in terms of compliance. Starting from this year, any European business that plans to sell cosmetic products of any kind on the UK market must conform to the regulations of Schedule 34 of the Product Safety and Metrology etc. (Amendment etc.) (EUExit) Regulations 2019, which contains the amendments to Regulation (EC) no. 1223/2009. The laws currently in effect in the UK largely reflect the European Regulation, and the primary objective is still to have cosmetics that are safe for consumers on the market. However, there are some changes that companies certainly need to consider. As was true with the European Regulation, also the current UK law requires the designation of a ‘responsible person’ for the cosmetic products released on the British market. While before Brexit this ‘responsible person’ could reside in any country in the EU, that figure must now necessarily reside in the United Kingdom. In addition, UK law holds that the ‘responsible person’ for products sold in the United Kingdom may be alternatively the manufacturer of the cosmetics, if established in the UK, the person importing the products to the UK, a third person residing in the UK and nominated to the role or even the distributor in the UK, if the distributor sells the products under his/her own name or brand. This also means that the label on products sold in the UK must provide the name and address of the ‘responsible person’ residing in the UK. Another important point is that the ‘responsible person’ must notify the Secretary of State before any given cosmetic product is placed on the market in the UK. Notification is required even for products that have already been sold on the UK market prior to 1st January 2021.
What regulations are in effect for importing cosmetic products from the UK?
As we already mentioned, the reference legal text for matters pertaining to the beauty industry is Regulation (EC) no. 1223/2009. Besides providing a clear definition of what cosmetics are, the law also establishes responsibility for subjects involved in the supply chain and fixes safety levels designed to safeguard the health of consumers. Based on this Regulation, since the United Kingdom is no longer an EU Member State, the European person importing cosmetic products from the UK becomes the ‘responsible person’. It is therefore responsibility of the person importing any products distributed on the EU market to guarantee compliance with all the requirements stemming from Regulation (EC) no. 1223/2009.
Has Brexit influenced commercial trade of cosmetic products between Italy and the UK?
Statistics provided by ITA - Italian Trade Agency - do show a drop in the commercial trade of cosmetic products between Italy and the UK. Over the first 10 months of 2020, ITA documented a 17% drop (from about €436 mln to €361 mln) in exports toward the UK for the specific sector compared to the same period in 2019 as well as a 6% drop (from €112 mln to €105 mln) in imports from the UK. The drop does not appear to be different from the general trend when compared to other EU and non-EU countries. Nonetheless, it is still too early to know whether this trend was caused by Brexit, by the pandemic or by a combination of the two. In any case, very recently a study by the English Road Haulage Association noted a 68% drop in the total volume of exports from the United Kingdom to the European Union. The next few months of 2021 will be decisive for determining what effect Brexit will have on the commercial trade of beauty products between the UK and Italy.