UK Aviation Remains Subject to the EASA Standards and Bilaterals Through the End of the Year

Good news!  The UK and EU have taken the position that EASA regulations will continue to apply to the UK (and in the UK) during the transition period (post-Brexit).  The transition period will last from Februrary 1, 2020 through December 31, 2020.

The EU and UK have both signed the Withdrawal Agreement.  The EU issued a formal notice announcing the Withdrawal Agreement, earlier today.  Article 127(1) of the Withdrawal Agreement states:

“Unless otherwise provided in this Agreement, Union law shall be applicable to and in the United Kingdom during the transition period.”

This means that the Regulation (EU) 2019/494 (which had originally been expected to control aviation safety between EU and UK) will not come into effect.

The UK CAA updated their Brexit microsite, this morning, to reflect the application of EU law during the transition period.

This is a significant relief to many; as late as January 15, the EU had published plans that stated that the UK would have no recourse to EASA rules after Brexit, explaining that for the UK aviation community:

“All current EU law-based rights, obligations and benefits cease”

The industry is breathing a collective sigh of relief that this is not coming to pass (at least not yet).

International Response

In order for this to be truly effective, the rest of the world will need to allow the UK to be covered under the EU agreements, like bilateral aviation safety agreements and working arrangements.  If they refuse to allow the EU agreements to be extended to the UK (which will no longer be a part of the EU, tomorrow) then this could cause significant issues in accepting UK-sourced aviation goods and services.  The US has taken a leadership role in this regard by announcing its acceptance of the transition-period relationship.

Earlier today, the FAA circulated a letter from FAA Associate Administrator Ali Bahrami announcing that the United States will treat the UK as remaining subject to the US-EU aviation safety agreements during the transition period.

We expect other countries to continue to honor this relationship during the transition period (as of this morning, no analogous announcements had been made by Brazil, Canada or Japan – the other three nations to have negotiated post-Brexit airworthiness agreements with the UK – but this dearth of guidance is likely due to the short timing).

The fact that other countries are likely to honor this arrangement would make aircraft parts transactions smoother for the coming year, but it is not 100% good news.   The UK-Canada bilateral aviation safety agreement (BASA) was expected to permit reciprocal acceptance of component maintenance – a dramatic leap forward in international aviation safety comity.  Transport Canada has not issued any formal statement concerning the effect of the Withdrawal Agreement, but if they do treat the UK as part of the EU for bilateral aviation safety agreement purposes (during the transition period), it may delay to an important advance.

Resources:

Brexit Update

Here is a quick run-down of the latest Brexit news:

  • Remember, barring an agreed delay, Brexit is schedule to happen on October 31
  • Parliament was unable to secure a Brexit deal by the recent deadline of October 19
  • As directed by Parliament, Prime Minister Boris Johnson sent a letter to the EU asking for an extension to the October 31 date (the current withdrawal date)
  • Prime Minister Boris Johnson sent a second letter to the EU, saying that he believes a delay would be a mistake
  • EU Council President Donald Tusk is consulting with EU leaders on how to react
  • Boris Johnson has negotiated a deal with the EU, and tried to create a fast track mechanism to get it approved through Parliament before October 31
  • The deal is far from perfect, and includes a few elements that have significant opposition in the UK, including
    • a customs and regulatory border between Northern Ireland and Great Britain
    • The European Court of Justice will continue to have jurisdiction over UK
    • Language on workers rights is vague (many MPs wanted more concrete language)
  • The fast track mechanism for Parliamentary approval of the Withdrawal Agreement Bill was rejected today
  • Under normal timetables, it seems difficult to get the Withdrawal Agreement Bill passed before October 31

ASA will hold a Brexit webinar on October 28 at 11:00 am.  We will discuss the current state of the political solutions, the most likely upcoming scenarios, and how these scenarios will affect aircraft parts transactions.  The webinar will include a look at common parts documentation, and explain how to parse the documentation to identify critical elements that are related to Brexit.  We will focus on US-UK and EU-UK acceptance of aircraft parts (especially those manufactured in, or maintained in, the UK) in an effort to help you comply with the post-Brexit parts acceptance rules.

The registration cut-off date is this October 24, 2019 at 5:00 pm Eastern.  There is no charge for the webinar but attendance is limited to ASA members.  You must be an ASA member to participate in the webinar – if you are not yet an ASA member then you should be!  Please contact Gabriel Maupin at 202-347-6897 if you have any registration questions.

I will be teaching the ASA London Workshop on Wednesday this week – this year’s topics include approved parts standards, documentation, export compliance, import classification, Brexit, and a discussion of some of the new and impending changes in the laws and regulations taht will affect aircraft parts distribution.  After the London Workshop, we’ll have three more ASA workshops in 2019. For complete details please visit our Workshops webpage:

  • Ft Lauderdale, FL – November 19, 2019
  • Chicago, IL – December 3, 2019
  • Dallas, TX – December 5, 2019

 

ASA Workshop in London, with Special Guest Neil Williams of the UK CAA

Need to know the latest changes in the rules that apply to aircraft parts transactions?  Your trade association is here for you!

I will be teaching a regulatory workshop in London later this month (on October 23).  The workshops will deal with the following topics:

  • Aircraft Parts Regulations (European and US)
  • Recent and Prospective Changes in European Law (and how these changes affect the global community
  • Brexit (Neil Williams of the UK CAA plans to join us to discuss the latest developments)
  • International Documentation (and where the norms come from)
  • Compliance with US Import and Export Laws (and how these laws affect international commerce)

As you can see, the broad focus is on compliance standards to help ensure your domestic and international transactions are conducted properly.  As usual, we will focus on some recent and upcoming changes so that the members can plan for those changes and help ensure their business models keep up with the ever-changing world of aircraft parts.

Need to register for the workshop?  You can find workshop details and registration information on ASA’s website.

Can’t make it to London?  No problem!  I am teaching a total of six workshops this Fall:

  • September 20, 2019 – Los Angeles Airport area
  • September 24, 2019 – Singapore Airport area
  • October 23, 2019 – London Heathrow Airport area
  • November 19, 2019 – Ft Lauderdale Airport area
  • December 3, 2019 – Chicago, IL area
  • December 5, 2019 – Dallas, TX area

While I am in London, I will be visiting Aviationweek’s MRO Europe Conference.   If you will be in London and want to meet, then send me (or Katt Brigham) an email and let’s set up a time.  I look forward to seeing you there!

Upcoming ASA Regulatory Workshops Help Aviation Parts Businesses Plan for Industry Changes

Need to know the latest changes in the rules that apply to aircraft parts transactions?  Your trade association is here for you!

I will be teaching regulatory workshops in Los Angeles this week and in Singapore next week.  The workshops are each a little different to reflect the localities, but each workshop will deal with the following topics:

  • Aircraft Parts Regulations (European and US)
  • Recent and Prospective Changes in European Law (and how these changes affect the global community
  • Brexit (how will it affect the rest of the world?)
  • International Documentation (and where the norms come from)
  • Compliance with US Import and Export Laws (and how these laws affect international commerce)

As you can see, the broad focus is on compliance standards to help ensure your domestic and international transactions are conducted properly.  As usual, we will focus on some recent and upcoming changes so that the members can plan for those changes and help ensure their business models keep up with the ever-changing world of aircraft parts.

Need to register for the workshop?  You can find workshop details and registration information on ASA’s website.

Can’t make it to LAX or SIN?  No problem!  I will be teaching a total of six workshops this Fall:

  • September 20, 2019 – Los Angeles Airport area
  • September 24, 2019 – Singapore Airport area
  • October 23, 2019 – London Heathrow Airport area
  • November 19, 2019 – Ft Lauderdale Airport area
  • December 3, 2019 – Chicago, IL area
  • December 5, 2019 – Dallas, TX area

While I am in Singapore, I will be speaking at Aviationweek’s MRO Asia-Pacific Conference.   I will be part of a panel on traceability challenges – and I will be sharing this stage with Jason Reed (President of the Component Solutions Group at GA Telesis) and Brent Webb (President of Aircraft Inventory Management & Services).  If you will be in Singapore, then be sure to catch both events.  I look forward to seeing you there!

Brexit Update – September 3, 2019

UK politics are getting more interesting.  As we predicted a month ago, the UK Parliament will be prorogued next week.  This means that the current Parliamentary session (which is already the longest in history) will end and a new session will be started five weeks later.  The five week period includes a three week scheduled recess, so it really only eliminates two work weeks; but it also terminates all legislative proposals that remain incomplete at the end of the session (Americans will be familiar with the corollary in Congress, and they will likewise be familiar with the notion that unfinished bills simply get reintroduced in the next session).

With just days left in the current Parliament, Labor leaders have announced plans to take steps to prevent a “no-deal” Brexit, and several prominent conservatives appear ready to support that effort.  This could spell the end for Prime Minister Boris Johnson’s government – potentially leading to snap elections in the middle of the Brexit uncertainty (although the Labour Party has said that it would not vote for a snap election if that would help Johnson deliver a no-deal Brexit.).  If elections happen, Johnson could win a majority, strengthening his negotiating position and supporting his “do or die” pledge to leave the EU; or the “stay” contingent could win a majority which might result in a further delay of Brexit pending further negotiations, or even a revocation of the Article 50 declaration (which would keep the UK in the EU).  It is equally possible that snap elections (if they happen at all) could lead to a new parliament with the same problem: a slim majority that favors leaving the EU, but another majority that rejects a “no-deal” exit.  This is all part of a triangular political battle pitching Boris Johnson and “leave” proponents on one side, British Liberals and other “stay” proponents on another, and the EU on a third side.  And right in the middle of the triangle are the people of the UK – waiting to see how it will all lay out.  But outside the triangle is another constituency waiting to see the results: the rest of the word (including the global aviation community).

Things are heating up and the next week could see some dramatic action in UK politics.

While the pace of the news about Brexit seems to be getting more frenetic, the scenarios for aviation remain largely unchanged.  Our latest guidance and recommendations concerning aircraft parts inventories and transactions continue to be valid, and readers should refers back to the August 8 article for tips and guidance.

The most important thing to know is that the UK CAA, and the other global aviation authorities, have seen this coming for a long time.  Preparations have been made for a both “deal” and “no-deal” scenarios.  We fully expect issues, because change always creates unforeseen issues, but we also expect that aviation business – on a grand scale – will go on.

How Will Brexit Affect Aircraft Parts?

Brexit is coming.  It is currently scheduled to happen at midnight on October 31 (European time).  November 1 is a Friday and it could represent a whole new slate of frustrations and issues for every industry – including the aircraft parts industry.

The UK is an important participant in the global aviation community so Brexit will affect the whole world.  Understanding what plans and standards have been put into place can help reduce the frustrations and facilitate both safety and compliance after Brexit.

Short History of Brexit

The United Kingdom joined the European Union on January 1, 1973.  44 years later, on March 29, 2017, Tim Barrow (the Permanent Representative of the United Kingdom to the European Union) delivered a letter invoking Article 50 to Donald Tusk, the President of the European Council.  The Article 50 deadline has been extended, and currently the United Kingdom is expected to leave the European Union at midnight on October 31, 2019.

Article 50 is the provision of the Treaty on the European Union that provides for exit from the European Union.

All of this is pretty well known to anyone who has followed any major news source over the past two years.  Yet, how this will all affect the aviation community remains less clear than we would like.

Options

The world has been anticipating two basic options for Brexit.

The first option, known as a “soft-Brexit,” is that the UK and the EU come to an agreement that allows them to have continued trade relations.  It has been widely anticipated that in the event of a soft-Brexit, UK CAA would join EASA as a third-party participant, much like Iceland, Liechtenstein, Norway and Switzerland (which are not EU member states but are EASA members).

The second option is known as a “hard-Brexit,” or a “no-deal Brexit.”  Under a hard Brexit, there would be no deal between the UK and the EU.  Politically, it is likely that EASA would be unable to extend to the UK an offer to join EASA as a non-EU member.  This would mean that the UK CAA would have to shoulder all of the airworthiness responsibilities for itself – they already handle many airworthiness duties but the additional duties undertaken by EASA would transfer back to the UK CAA.

The UK is in a fairly good position to support airworthiness.  UK CAA has continued to function for the UK by providing direct oversight in areas like production and maintenance.  UK CAA has already begun to increase its staff in anticipation of a hard Brexit.  UK CAA has also been hard-at-work establishing and updating bilateral aviation safety agreements with the UK’s major trading partners – these agreements will come into force immediately after Brexit.

One organization with which they have not formally negotiated is EASA.  The EU has taken the position that they cannot legally treat an EU member as a foreign entity, and thus they cannot negotiate international agreements like bilateral aviation safety agreements with a member state like the UK.  Despite this, the EU and EASA have issued regulations, and discussion papers explaining the position EASA intends to take in the event of a hard Brexit.  As discussed below, EASA and UK CAA have an excellent working relationship which should permit them to work well together when (and if) they are allowed to do so.

EU Position on Acceptance of UK Parts

The original April 2018 European Commission Notice to Stakeholders had painted a bleak picture of the near future between the UK CAA and EASA; it would have cancelled all UK approvals and it would have refused to recognize any UK-sourced EASA Form One after March 29.  The EU’s January 2019 updates to Brexit policy, though, have set much more reasonable short-term policies for the EU, and the subsequent March 2019 regulation has established a greater level of confidence that aviation will not come to a halt on November 1, 2019.

In essence, the EU intends to grant a nine-month grace period after Brexit.  This will permit the EU to continue negotiations with the UK; and it may allow the UK to join EASA as a non-EU member, or to otherwise establish a working arrangement with EASA.  Nine months is a short time period for negotiations and the UK CAA will be “under the gun” to achieve results during this time frame, but results to extend the UK CAA-EASA relationship are possible.

During the nine-month grace period, EASA will consider certain EASA design approvals issued to parties in the UK to remain valid.  This includes

  • Type certificates and restricted type certificates,
  • Approval of changes to type certificates and restricted type certificates,
  • Supplemental type certificates,
  • Approval in respect of repairs,
  • European Technical Standard Order authorizations,
  • Design organization approvals.

In addition, EASA will continue to recognize the validity of Authorized Release Certificates (EASA Form 1) for products, parts and appliances.  This includes the original certificates issued by the production organization, as well as maintenance certificates for articles that have already been installed in aircraft as of the Brexit date.  Unlike the nine-month recognition of design approvals, this recognition does not have a time limit.  This means that EASA will continue to recognize articles tagged in the UK before Brexit as valid articles.

But let’s look at some of the details in this pronouncement, because there are problems.  The regulation is ‘triggered’ by Brexit and enters into force on the following day.  The new regulation specifies that EASA will continue to recognize the validity of Authorized Release Certificates (EASA Form 1) that were valid as of the day before the regulation becomes active.  This means that an EASA Form 1 that existed on October 31 (assuming that is the day of Brexit) will continue to be valid on November 1.  But an EASA Form 1 issued on Monday November 4 will not be valid because it was not valid on October 31.

Where is the problem?  EASA will consider UK type certificates, STCs and ETSOAs to remain valid for nine months, but all UK production organization approvals (POAs) are considered invalid on November 1 (remember, EASA has offered to issue third country POAs to manufacturers in the UK).  This means that UK Form 1 (or other-named-forms) issued by UK manufacturers after October 31 will likewise remain invalid.  After decades of hearing requests for “fresh tags,” we may find ourselves preferring “stale tags,” because a Form 1 issued on or before October 31 by a UK manufacturer will be acceptable in the EASA system, while a Form 1 issued on or after November 1 by a UK manufacturer may not be acceptable in the EASA system.

Practice Tip: Because EASA Form 1 issued after October 31 may be invalid for EU-registered aircraft, companies who rely on parts produced in the UK, or parts overhauled/repaired in the UK, should ensure that the UK EASA Form 1 tags are dated by or before October 31, 2019.

What other problems are on the horizon?  Plenty of detail problems will be arising after October 31.  For example, the US-UK agreement will permit UK-produced articles to continue to be installed in US-registered aircraft, but US-based repair stations will have to be careful to check the date on the EASA Form 1!  While dates likely won’t matter for US-registered aircraft and US customers, EU-registered aircraft and EU customers may be unable to accept UK-sourced tags that were issued after Brexit.

Practice Tip: US repair stations with an inventory of articles with EASA Form 1 issued before October 31 should consider saving those articles for use on EU-registered aircraft and for EU-clients.  To facilitate this, use articles with UK CAA tags dated after October 31, 2019 on US-registered aircraft.

Practice Tip: Distributors should train their receiving inspectors to look carefully at the tags for articles produced in the UK.  The source of the POA (UK vs. EASA) and the date of the tag will influence who is permitted to use the article.

UK CAA Prepares

The UK CAA hasn’t been sitting idle.  Richard Moriarty reached out to EASA in a letter on June 1, 2018 to propose formal technical discussions to lay the groundwork for future cooperation.  The stressed the importance of clarity for the benefit of the regulated industry.  In a July 18, 2018 response, EASA Executive Director Patrick Ky made it clear that EASA would not be able to discuss practical cooperation with the UK CAA until after the specifics of the UK withdrawal had become clear and certain.  Over a year later, today, that certainty remains elusive.  While formal technical negotiations have not yet begun, UK CAA remains a member of EASA, and so there are normal channels of discussion about business matters that will likely help smooth the way toward an agreement between UK CAA and EASA (if an agreement is warranted).

As an example of the trust between the two organizations, EASA has offered to issue third-country certificates, like repair station certificates and production organization authorizations, to UK businesses.  The certificates would be issued immediately after Brexit (as soon as the UK becomes a “third-country” relative to the EU) in order to support safety and business continuity.  To allow the certificates to be issued immediately after Brexit, EASA needs to assess the applicants before Brexit.  EASA has made it clear that it is relying on the UK CAA to perform those assessments as the EASA technical agent.

UK and the US

UK CAA has been working closely with the US FAA on planning.  They have negotiated two different agreements – one that assumes a hard Brexit and one that assumes a soft Brexit.  Whichever one is appropriate will be signed immediately upon the occurrence of Brexit, in order to support continued, smooth, support of airworthiness between the UK and the US.

The US-UK agreement will be practically identical to the existing US-EU agreement,  The reason for this is to keep transactions smooth, under a set of transactional rules that all parties recognize.  So this means “business as usual” between the UK and the US.

While there may be minor issues that arise, the basic transactional model is expected to be solid between the UK and US.  This means that UK’s EASA Form 1 will likely continue to be valid in the US, and the future UK CAA Form 1 is also expected to be valid in the US after Brexit.  There are a substantial number of FAA 145 certificates in the UK.  Based on this, the US has discussed permitting UK-based companies with both a US 145 and a UK 145 certificate to issue the FAA 8130-3 as their maintenance release document for component-level work.  This allows the repair stations to use a globally-recognized tag, rather than having to educate the industry about a new UK-specific maintenance release document.

UK CAA has also been modifying its internal structures to support all of the elements that EASA has addressed over the past 16 years.  We expect them to be ready for Brexit.  We also expect this UK CAA staff to be overwhelmed with industry issues after Brexit, despite their best efforts to prepare.  The reason for this is because there are always details that fall under the radar during negotiations.

Politics in the UK and Brexit

There are a number of Brexit options lying in front of the UK.

It is looking increasingly likely that the UK will move into a hard Brexit.  The British press has reported that Boris Johnson has no intention of renegotiating the withdrawal agreement proposed by the EU and rejected by the UK.  This is partly because he has established – as a precondition to further UK-EU negotiations – that the EU must agree to withdraw the Irish backstop (and this is something the EU is unwilling to surrender).  The British press has also reported that a hard Brexit is Johnson’s “central scenario.”  It is clear that if Brexit does not happen on October 31 (in some form), then Johnson will be seen as reneging on his promises.

Despite the evidence favoring Johnson’s “central scenario,” a hard Brexit is not the only option.  Member of Parliament have discussed a no-confidence vote for Johnson as an early order of business upon their return in September in order to thwart the hard Brexit.  The Guardian newspaper has suggested that revocation of the Article 50 declaration is the only way forward for the UK (this would keep the UK in the EU).

But the Johnson camp has plans of their own: in the event of a no-confidence vote, one option would be to schedule elections for November (after Brexit happens) so that the new government would be too late to stop a hard Brexit.  Another option being discussed is proroguing Parliament.  Prorogation is the formal end of a parliamentary session and it is normally invoked through an announcement by the Queen.  When Parliament is prorogued, that ends the life of all incomplete motions and bills (although they can be introduced again in the next session).  Boris Johnson could ask the Queen to prorogue Parliament in an effort to prevent Parliament from interfering with the hard Brexit on October 31.  Although the Queen is legally permitted to act contrary to ministerial advice, she historically has not done so.

A hard Brexit is not a certainty; but it is a likelihood that must be considered as a reasonable possibility by aviation companies establishing their business plans vis-à-vis their UK business partners.

Expect Problems, But Work With Us On Solutions

Even in relationships specifically designed to weather Brexit, like the US-UK relationship, we will be facing new agreements that must be squared with a global market.  This means that there will be problems that arise where business models do not match the expectations of regulators who negotiated the agreements.  As you encounter these issues, please be sure to reach out to ASA so we can work with regulators to address and resolve these concerns.

 

ASA and ACPC Partner to Offer Classes on Changes in the Global Parts Paradigms; NEXT WEEK!

ASA will be at the Air Carrier Purchasing Conference (ACPC) in Washington, DC this weekend and next week. Look for us all weekend long, but we hope to see you all on Monday during our FREE classes!.

On Monday, August 12, 2019, Jason Dickstein will teach three professional development classes at ACPC that will be useful for the aircraft parts community. The first, in the morning, will focus on what we expect out of Brexit, and how it will impact global aircraft parts transactions. The second, after lunch, will discuss import law – as the US imposes new tariffs on imported aircraft parts, it is important to understand your compliance obligations as well as the duties you need to pay on the imported parts. Finally, the third session will look at a number of parts issues documentation issues, including both recent and impending regulations that are changing the parts transactional paradigms.

Read on for expanded descriptions, below!


Monday 10:00 AM – 11:00 AM

Doing Business in the Post-Brexit World

Brexit is almost upon us…. Maybe. We will discuss what factors to watch as the world approaches the current Brexit deadline, what the aircraft parts community should anticipate under several different Brexit possibilities, what aviation negotiations are going on behind-the-scenes and how to protect yourself from the worst-case scenarios.


Monday 2:00 PM – 3:00 PM

Import Law for Aviation Professionals: From Harmonized Tariffs to Country of Origin

Most aircraft parts are usually imported “duty-free” and this can give us a distorted view of import law; a view that is upset when you receive ab unexpected bill for import duties. With existing China tariffs and proposed tariffs on Airbus parts, many aircraft parts importers are facing unwanted surprises in the form of import duties. We will examine the process for importing, how to classify your imports, and how to identify the tariff and related import duties for your import.

If you import parts, then tariff duties can have a direct impact on your bottom line – this session will help you to avoid surprises.


Monday 3:15 PM – 4:15 PM

How Do International Agreements (like the MAG) Affect Aircraft Parts Transactions?

The rules for aircraft parts transactions are changing! This session will begin with an examination of the relationships between international agreements and acceptance of traceability documents, but it will also address recent and impending rule and policy changes that could significantly affect the documentation requirements for aircraft parts transactions. If you have questions about documentation and international transactions, then this is the place for answers.


All sessions will be held in the Maryland Suites in the Marriott Wardman Park Hotel on Monday, August 12, 2019.

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