Check what processes are considered as insufficient production under the Trade and Cooperation Agreement.
For a product to qualify for a zero tariff, it must meet its product specific rule.
Each product specific rule describes the nature or value of processing that must be carried out on any materials that do not originate in the country of export. The processing of these materials must go beyond the list of minor processes (known as insufficient production).
You cannot treat the product as originating in the UK (or EU) if insufficient production is the only processing carried out in the country of export, (even if the product meets its product-specific rule through that processing).
You should consider all processing carried out in the country of export to work out if the production is more than insufficient production. If any processing, other than those listed as ‘insufficient production’, is involved in making the final product in the country of export, then the processing involved in that final product goes beyond insufficient production.
Check if operations can be considered as production
You must consider if the operations undertaken can be considered as production. The Trade and Cooperation Agreement defines production as any type of working or processing including assembly. For example, transportation or storage of goods would not be considered as production under the Trade and Cooperation Agreement.
While some operations may be considered to go beyond insufficient, they may not be considered as production in the first place.
Vegetables and fruit that originate in the United States of America are imported into the UK. To preserve the freshness of these products they’re transported to (and stored in) special cooled warehouses in the UK.
As the goods have just been transported and stored, no production has been carried out to change the characteristics of the goods. This means the goods cannot be considered as originating in the UK, if subsequently exported to the EU.
If you import goods from the EU, you may be able to use bilateral cumulation to help get a zero tariff when you export them back. To do this you must show that processing in the UK goes beyond insufficient production.
This means you can send the goods back to the EU as UK goods, if the goods imported into the UK:
- met the product specific rules – so originally qualify as EU goods
- did not quite meet the product specific rules (so did not originally qualify as EU goods) but when the EU and UK processing is combined the product specific rules are met
This also applies in the opposite direction (goods imported into the EU from the UK, and processed in the EU).
You cannot use bilateral cumulation to consider EU production as if it took place in the UK if the only processing carried out in the UK (or the EU) on a product imported from the EU (or the UK) is considered insufficient production.
Salmon which originates in the EU is imported into the UK where it is smoked. The smoking process gives the fish different characteristics in flavour and shelf-life.
These operations can be considered as more than insufficient so the EU production can be considered as if it also took place in the UK. By using bilateral cumulation the fish can be treated as originating in the UK if exported back to the EU.
Some of the processes considered to be insufficient production use the term ‘simple’ in their description.
A process would not be considered ‘simple’ if it required either:
- special skills
- machines, apparatus or equipment especially produced or installed
A machine is used to automatically cut cheese to a specific weight, size, and shape. It then uses flow wrapping to provide a seal to the final product to maintain quality.
Neither of these operations could be done without machinery and so is not a simple process.
However, using special skills or machines are in themselves not enough for the operation to go beyond simple, especially as machines are used in most production processes to help increase efficiency (processing at the required scale and volume).
Where you’re relying on the use of a machine to support that a process is not ‘simple’, that machine must be necessary because either:
- the processing cannot be done manually
- is needed to provide the product with its particular qualities or characteristics (such as exact size, weight or shape)
If the process can be done by hand, then the machine is not needed.
A machine is used to automatically cut cheese and wrap it in paper.
As the same process could be carried out manually without the final product being different or having other characteristics, the process would:
- still be considered ‘simple’
- not go beyond insufficient production
If you use simple packaging operations for the retail sale of your goods, this does not go beyond insufficient processing. But when you’re looking to apply bilateral cumulation or meet a product specific rule, you may also consider:
- UK processing on packaging materials that is beyond insufficient.
- The value added to those materials through that processing (where allowed).
Sweets that originate in the EU are imported into the UK, where they’re packaged into UK produced plastic bags. The bags are closed with an elastic rubber and a label with the name of the company is affixed on the sweets. The packed and labelled sweets are then sent back to the EU.
Although the process of packaging the sweets does not go beyond insufficient production, the act of producing the packaging in the UK does. This allows the EU production of the sweets to be considered to have also taken place in the UK, when the origin is worked out for export to the EU.
You cannot take into account any processing on packing materials used for transport or shipment of your products.
You can find more detailed case studies on insufficient production for manufacturing and agri-food processes.