New EU Regulation Strengthens Market Surveillance of EU-Made and Imported Products

On 16 July 2021, new rules on the market surveillance of both EU-produced and imported goods began to apply EU-wide. Hong Kong exporters may like to be informed that EU Member States are henceforth required to strengthen their market surveillance of products being imported into the internal market to ensure compliance with consumer, workplace and public health and safety requirements.

The EU rules, set out in Regulation 2019/1020 on market surveillance and compliance of products, provides a framework for increased market surveillance of certain products and stronger controls of products both made in and entering the EU.

According to European statistics, many unsafe, non-compliant products are continuing to be sold on the market: this includes electronics, toys and personal protective equipment, among others, products that are regularly inspected by Member State authorities and a number of which are believed not to meet the requirements for safety or consumer protection outlined in EU legislation. Non-compliant products are felt to endanger consumers and put compliant businesses at a competitive disadvantage. The new EU law, Regulation 2019/1020 on market surveillance and compliance of products, aims to address this problem. It establishes procedures for economic operators, provides for robust market surveillance of products covered by EU harmonisation legislation, and provides for controls on products entering the EU market.

The Regulation’s objective is to create a fairer internal market for goods by uniformly fostering cooperation among national market surveillance authorities. Such cooperation will include sharing information about illegal products and about ongoing investigations to ensure that national authorities can take effective action against non-compliant products. The Regulation will also help national authorities to improve checks on products at the EU border. Manufacturers of goods that are imported into the EU should take note of the increased surveillance and strengthened enforcement mechanisms under the new Regulation. Such goods include, among others, toys, electrical and electronic equipment, batteries, machinery, footwear, textile products, cosmetics, chemicals, packaging, personal protective equipment, medical devices and products subject to the ecodesign legislation.

For products exported to the EU from third countries (e.g., Hong Kong or mainland China), the importer must verify and maintain any declarations of conformity or technical documentation associated with the product and must keep those materials available for the market surveillance authorities for the requisite period as required by legislation. The importer will also be responsible for cooperating with market surveillance authorities as needed and informing them if a product appears to present a risk to consumers. The non-EU manufacturer may, on the other hand, appoint an authorised representative established within the EU, by written mandate, to act on its behalf in relation to specified tasks with regard to the manufacturer's obligations. Manufacturers of the aforementioned products should take note that the name, trademark and contact details, including the postal address, of the importer must be affixed to the product or its packaging.

The Regulation also considers the challenges posed by e-commerce and the digital environment. Products sold online will be considered to have been made available on the market if the offer for sale is targeted at end users in the EU. Determining whether the offer targeted EU users will be a case-by-case analysis. Manufacturers based in Hong Kong or mainland China who export products to the EU or who sell products online that are potentially targeted to end users in the EU should take care to identify an appropriate economic operator located in the EU to fulfil the appropriate tasks outlined in the Regulation.

Pursuant to the Regulation, Member States are responsible for organising and executing market surveillance and will designate market surveillance authorities in their territories. All companies manufacturing products for import into the EU, including those based in Hong Kong, should be aware that market surveillance authorities will perform documentary checks and, when appropriate, physical and laboratory checks to ensure product compliance. These authorities will follow a risk-based approach in deciding which checks to perform, on which products, and on what scale, taking into consideration a number of factors, such as possible hazards associated with the product and any prior history of non-compliance.

If market surveillance authorities find that a product may compromise users’ health or safety, or does not comply with the relevant EU harmonisation legislation, the authorities may require the importer to take appropriate and proportionate corrective action. Corrective actions may include bringing the product into compliance, preventing the product from being made available on the market, recalling the product and alerting the public to the risk, and destroying the product. Manufacturers outside the EU should be aware that importers may be required to take such corrective actions in response to an order from a Member State’s market surveillance authorities.

The Regulation also strengthens controls by customs officers to prevent unsafe products from being sold to European consumers. For example, market surveillance authorities will provide customs officers with information about categories of products or importers where a greater risk of non-compliance has been identified. Noting that improving market surveillance in the EU may involve exchanging information with third countries, the Regulation empowers the Commission to approve product-related pre-export controls completed by a third country on products immediately before their export to the EU, which would verify the product’s compliance with their applicable Union harmonisation legislation. Manufacturers located in third countries may want to take note of this provision, as they may be able to take advantage of the opportunity to expedite the import of their products into EU territory.

The majority of the Regulation’s provisions began applying from 16 July 2021; a few provisions, namely pertaining to the establishment of a network for the coordination of Member States’ market surveillance authorities, already began applying from 1 January 2021.