EU Ponders Termination of Brexit Agreement – What Would This Mean for Aviation?

October 22, 2021 by Leave a comment

Bloomberg has reported that the EU is considering terminating the EU-UK Trade Agreement instituted to manage trade following Brexit. This could have a tremendous affect on aviation, because that agreement currently permits the EU aviation community to use aircraft parts produced in the UK.

The Trade Agreement between the UK and EU details the scope of cooperation between the UK and EU in aviation safety. One important element is found in the AVSAF-1 (aviation safety) Annex which provides that the EU will recognize UK production approvals and accept UK CAA Form 1 on new production parts. Without this provision from the trade agreement, EU installers might be unable to receive and install an aircraft part that was produced in the UK.

This creates unnecessary confusion in the aviation world, because certain previously-acceptable tags could become unacceptable. For example, a party installing a part on an aircraft registered in the EU might be unable to install – and might be unable to even receive – a new-and-otherwise-airworthy aircraft part that had been produced and documented in the United Kingdom.

There is no timetable for rejection, and it seems unclear whether this even a reasonable path, but the aviation industry needs to remain aware of this possibility and needs to plan how it will support airworthiness in the face of such technical differences.

Filed under Uncategorized Tagged with , , , ,

The New UK: Post-Brexit EU-UK Aircraft Parts Transactions Are Still Up-in-the-Air (but some post-transition options remain)

December 17, 2020 by Leave a comment

With two weeks left before the end of the year – and the end of the Brexit Withdrawal Transition period – there is still no trade deal between the UK and the EU. With no trade deal, we have no basis for a continued relationship between the UK CAA and EASA.

This raises questions about what aircraft parts can be accepted between the UK CAA and EU EASA systems after December 31, 2020. This article provides preliminary advice, but this advice is current as of the time of publication. Trade negotiations between the UK and the EU are ongoing, and a concluded trade deal could either render this analysis obsolete, or it could authorize EASA and UK CAA to negotiate an obsolescence to this analysis.

UK Position

Under the UK’s EU Withdrawal Act, as amended, all EU regulations (including EASA regulations) that are active upon withdrawal will become UK regulations. This means that the EASA regulations will be adopted in the UK, so the UK will have a robust and familiar regulatory structure upon withdrawal.

The UK CAA has made it clear that they do not want to inhibit operations over legal technicalities, but instead they would like to remain laser-focused on airworthiness. With this in mind, the UK CAA has stated repeatedly that it will recognize EASA certificates, approvals and licenses for use in the UK aviation system and on UK-registered aircraft for up to two years after the exit date. This provides a cushion for UK-registered aircraft to be able to rely on EASA-approved parts, maintenance providers, and other certificates, for an extended period of time while trade negotiations continue between the UK and the EU.

EU Position

The EU has not been as generous in its acceptance of UK certificate, but it has made provision for acceptance of certain certificates and approvals as long as they are for goods put into the market before the end of the transition period.

EASA is likely to accept EASA Form 1s that are issued by certificate holders in the UK before the end of the transition period (before January 1, 2021) to support transactions in accordance with Article 41 of the Withdrawal Agreement (note that this is a different instrument from the previously-mentioned Withdrawal Act). Article 41 explains that goods “placed on the market” before the end of the transition period will continue to be considered “valid” under the laws of both parties until those goods (1) reach their end-user, or (2) are put into service (e.g. installed on a registered aircraft).

For the purposes of these provisions, “placing on the market” means the first supply of a good for distribution, consumption or use in the course of a commercial activity, whether in return or payment or free of charge.  ‘Supply of a good for distribution, consumption or use’ means that ‘an existing and individually identifiable good, after the stage of manufacturing has taken place, is the subject matter of a written or verbal agreement between two or more legal or natural persons for the transfer of ownership, any other property right, or possession concerning the good in question, or is the subject matter of an offer to a legal or natural person or persons to conclude such an agreement.”  ”Putting into service” means “the first use of a good within the Union or the United Kingdom by the end user for the purposes for which it was intended […].’

Notice to Stakeholders: Withdrawal of the United Kingdom and EU Aviation Safety Rules, Para 3.1 (Rev. 2: March 16, 2020).

You can see from this quote that an aircraft part need only be the subject of an offer of sale (or an actual sale) before January 1, 2021 to be protected under Article 41.

The end user has a burden to show that the goods were put into commerce before the end of the transition period (Under Article 42), so expect to see EU customers asking for such proof. Note that you can have goods that are subject to a sales agreement before the end of the transition period, and this may be sufficient for the goods to have been “placed on the market” under the rules. Thus, items of proof could include purchase orders, sales orders, invoices, or other commercial documents showing that the transaction was sufficiently contemplated to meet the definitions before the end of the transition period.

But aircraft parts produced under a UK production approval after December 31, 2020 will not be considered valid for installation on an EU-registered aircraft unless (1) EU promulgates a regulation or other enforceable standard permitting such installation, or (2) EU and UK conclude an agreement – like a bilateral airworthiness safety agreement – permitting such reliance. A precursor to such an aviation safety agreement may be the successful conclusion of a trade agreement between the UK and the EU (and these negotiations are still ongoing). The same issue applies to maintenance performed on an aircraft part and released by a UK CAA 145 after the end of the transition period.

To address this issue, many UK production organization approval holders have sought EASA production organization approval, and many UK maintenance providers have sought EASA maintenance organization approval. EASA plans to issue these approvals at midnight, as the transition period ends. Owners of EU-registered aircraft will be able to accept articles released under these UK-based EASA certificates just like they can accept articles released by any other EASA certificate holder.

Filed under Uncategorized Tagged with , , , , ,

100 Days Until the End of the Brexit Transition

September 22, 2020 by Leave a comment

Brexit has occurred. The UK is no longer part of the EU. But the effect of Brexit was softened with a year-long transition period during which the UK and EU were supposed to negotiate their future relationship.

The last day of the current transition period is scheduled to be December 31, 2020. That leave little time for the UK and EU to complete their negotiations; negotiations that have been hampered as each deals with the issues surrounding Covid-19.

Unfortunately, the precise future for aircraft parts manufactured under UK CAA production approval or maintained under UK CAA maintenance approval remains a little unclear.

State of Negotiations

Last year, the UK and EU signed a Withdrawal Agreement that included a one year transition period. During this transition period, the EU treated the United Kingdom as if it were a Member State, with the exception of participation in the EU institutions and governance structures. This notably meant that the UK continued to enjoy the privileges of the EASA bilateral agreements and the world treated certificates in the UK as if they were still issued under EASA processes. Thus, an EASA Form One issued by a UK CAA repair station on January 2, 2020 had the same legal effect as one issued on December 30, 2019.

The Withdrawal Agreement also included an Irish Protocol that guaranteed no hard border between Ireland and Northern Ireland, but in return required a customs border to be established between Northern Ireland and the rest of the UK. Recently, Prime Minister Boris Johnson has pledged to renege on the Irish Protocol; which would mean that there would be no customs border between Northern Ireland and the rest of the UK; but that implies that there would be a customs border between Northern Ireland and Ireland. This pledge has been criticized as a potential violation of international law. Subsequent British efforts to provide a legislative support for the pledge have been called “lamentable” by prominent figures like UK Government Special Envoy (and human rights activist) Amal Clooney.

A clause that permitted extension of the Withdrawal Agreement had a deadline of July 1, 2020 and that deadline seems to have passed without the extension being invoked. This doesn’t really prevent the parties from agreeing to an extension – but it makes it a little less likely.

It is also worth noting that under the EU’s Brexit Regulation, certain certificates, like UK type certificates become invalid for EU purposes nine months after the Withdrawal Date (January 31, 2020), which means that they could become invalid. Contrast this with a provision in Article 10 of the same regulation that invalidates that Regulation if a Withdrawal Agreement is reached pursuant to Article 50(2) (the EU provision that permits a withdrawal agreement with a withdrawing member of the EU). The current EU-UK Withdrawal Agreement cites Article 50(2) as part of its basis, but it does not actually address how aviation will be covered. Instead, the EU and UK agreed to “explore the possibility of cooperation” with respect to EASA-UK CAA relations, but nothing has been passed in Europe to address certificates from the UK. The current EU-UK Withdrawal Agreement appears to render the EU Brexit Regulation moot, but if that is true then it means that there is no clear guidance on what happens after the transition period, particularly if the EU withdraws its offer to exetend US aviation regulations to the UK.

While the UK CAA is quite competent to support its own airworthiness needs, if the EU will not recognize UK CAA certificates after December 31, 2020 then this becomes a problem in terms of being able to support the EU-registered fleet. It potentially devalues aircraft components or complicates the compliance path in uncertain ways.

During the 2020 transition period, EASA continues to process applications from existing UK CAA approval holder within the context of the early application process; EASA expects to issue EASA certificates to many businesses who currently hold UK CAA certificates. 

What Comes Next?

A “Hard Brexit” scenario is still a very real possibility. This is because the UK is setting early deadlines for concluding a long-term agreement (October 15) and the UK Prime Minister has indicated that he’s prepared to walk away from trade talks rather than compromise on what he regards as core principles of Brexit. The “Irish Backstop” concerns reflect a very delicate point because of the competing concerns between fully withdrawing from the EU Common Market and retaining a “soft border” between Ireland and Northern Ireland.

Because of the lack of clarity on “what happens next,” anything is possible but it is highly likely that the EU will simply reissue the EU Brexit Regulation, or possibly rule that it became once again “live” upon the expiration of the transitional Withdrawal Agreement. If this happens then it would create a new transition during which UK parties could decide whether they needed EU recognition or whether UK recognition was sufficient (the UK already has a number of bilateral agreements ready-to-go in order to facilitate international recognition of UK certifications).  This means that it is likely that (1) the EU would recognize the validity of components already on EU aircraft [components would not have to be removed from aircraft], and (2) components with a EASA Form 1 certificates of release issued by UK-registered businesses prior to the end of the transition period would very likely be recognized as airworthy after the transition period.

For the UK CAA, it has already announced that anything certified under EASA’s authority that was considered preemptively airworthy before the end of the transition period would continue to be recognized in the UK for at least two years after the transition period ends..

An ‘even harder Brexit‘ is also a possibility, in which the EU simply stops recognizing all UK-CAA certificates (including EASA Form 1) after December 31, 2020. While possible, this is unlikely because of the adverse effect it would have on maintaining the technical airworthiness of EU-registered aircraft. If this happened, then In such a case, distributors holding parts with UK CAA Certificates might not be able to sell them for installation on EU-registered aircraft, but they could still be installed on UK-registered aircraft and on the aircraft registered in the nations with which the UK CAA has appropriate bilateral agreements (like Canada, Japan and the United States).

But there are about four weeks remaining before the current UK negotiation deadline, so a “soft Brexit” – in which UK CAA either participates as a third-country member of EASA or otherwise enters into a deal with EASA for mutual recognition – still remains a real possibility. In such a case, distributors holding parts with UK CAA Certificates would enjoy a “status-quo” situation.

EASA still is restrained from publicly commenting on Brexit; they are waiting for the high-level political negotiations to conclude before they can start to expending resources and take an official position.  Nonetheless, EASA contacts have privately assured us that EASA is ready for any direction in which Brexit may go, and EASA hopes to be able to to implement some form of mutual reliance with the UK CAA.

Filed under Uncategorized Tagged with , , , , , , ,