The amount of duty applicable will be determined in accordance with the customs tariff. This will be provided for and established by Treasury Regulations, maintaining a Customs Tariff. The system used will continue to be in accordance with the World Customs Organization’s Harmonized Systems. The Customs Tariff will be in accordance with those international standards providing for common systems of naming and classifying goods.
The tariff will set out (like the existing EU and other tariffs)
- the classification of goods,
- the associated duties,
- rules and variations based on the nature of the goods, their origin or any other factors relevant to their treatment for customs purposes.
The rate of import duties may be specified by reference to a formula.
The legislation allows for tariff quotas. The applicable duty rate is dependent on a quota referred to as a tariff rate quota. This is a defined quantity of the goods that can be imported at a lower import duty specified in the Customs Tariff. Any further imports above the quota level are charged at a standard rate.
Quotas may arise under a Free Trade Agreement or by way of concessions granted by the UK at the WTO. The arrangements may specify products covered and conditions. Importers will need a licence or allocation of the quota in order to benefit from the lower import duty. A fee may be payable in respect of the licence.
Other quotas may operate on a first come first serve basis. Once the quota limit is reached or where the person who requires a licence does not have it, then the standard duty will apply.
There is provision for a tariff suspension. This allows for a waiver of some or all import duty for specified goods for a period in order to encourage trade and support domestic production by ensuring UK businesses have access to the required supplies. Generally, they would be commodities that are not yet manufactured or worked into finished goods. The criteria would be set by regulations. The lower rates are intended to be temporary.
Businesses may request a suspension which may be considered by the Secretary of State. The provisions for application will be set by regulations.
If trade remedies duties are applied following a dumping or subsidy investigation, they act as an additional import duty chargeable. The legislation sets out provisions for investigations in accordance with WTO procedures. The duty or tariff related quota must be in accordance with a recommendation made by the Trade Remedies Authority and set out in a notice by the Secretary of State.
There is provision for special agricultural safeguards, which are allowed under the WTO agreement. Additional import duties may be applied to certain agricultural goods designated in the UK’s WTO schedule of commitments. They are applicable if the relevant imported goods exceed a volume of imports at a given time or when individual shipments fall below the set price. Regulations define the details of the application.
Special agricultural and cultural safeguards may not be applied to goods which have a global safeguard measure applied or are currently within the set import quota.
The Secretary of State may vary the rate of duty when there is a dispute or issue between the UK and another government where international law so permits. This power may be exercised in trade disputes by way of retaliatory trade measures. This may include higher import duties against the imports of a particular state which has failed to comply with a disputed ruling.
The above provisions may also be applicable if the UK is required to offer compensation to complainants, including in the form of lower import duty when it has lost dispute and has not brought itself into compliance within the requisite period.
Valuation and Origin
The Act sets out the general principles for the valuation of goods. This is generally their transactional value which is the amount payable at the time of export to the UK. This includes the price/consideration and certain costs associated with importation including some transport and insurance costs. Regulations may provide further in relation to the use of other valuation methods.
There rules and powers for determining the place of origin of goods. This will be relevant in the context of trade preferences for goods that are eligible to benefit from the lower duty or a quota, etc. They must originate from the relevant territory to which the reduced rate or other preference relates.
Rules of origin are applied to check that goods meet the criteria established a trade agreement providing for preferential treatment (as most do). The rules of origin set out minimum requirements to be considered originating under the relevant free trade agreement or scheme. The free trade agreement or scheme will define the rules of origin applicable. There are a number of standardised forms of rules.
Valuations must first be translated into sterling. Duties are charged in sterling. HMRC may publish criteria and rules regarding conversion.
The provisions for the application of reliefs for various types of importers and goods. The reliefs conform with those under current EU legislation. Conditions may be applied. The availability of the leave may be preconditional on compliance. The preference may (for example) include
- goods imported for a limited period prior to re-export,
- previously exported domestic goods being returned without alteration,
- goods imported for specified uses such as education, scientific, or cultural purposes
- testing for future trade purposes
- private gifts
- inherited items.
The overarching principles under GATT and the World Trade Organisation system (covering almost all countries) are the most forward nation rule and the non-discrimination principle. The first principle requires most favoured treatment to be afforded to all other countries. An exception arises where there is a comprehensive trade agreement or customs union
There is provision for lower preferential rates to be applied to goods coming from certain states and territories to give effect to arrangements between the UK and the governments of those states territories. This may cover a free trade agreement or between the UK and another country or a regional organisation in particular, the EU.
There is a provision whereby the trade preference scheme may be varied, suspended or withdrawn temporarily, or in total. This may be due to a range of circumstances including harm to domestic industry breach of the terms and conditions applicable to the preference e.g.compliance with human rights, labour rights, etc.
Trade preferences are permitted for trade with developing countries by way of exception. The UK provides trade preferences for goods and exports to developing 70 countries through EU legislation applying a generalised scheme of preferences (GSP).
When the UK first leaves the EU, it is intended that products and preferential tariffs applied in each tier will reflect the current EU scheme. The Secretary of State may make regulations to give trade preferences to developing countries unilaterally. This may provide for lower than standard import duty under the Customs Tariff. It may provide for a complete exemption. There may be different tiers of preference for different countries.
The standard General System of Preferences applies reduced import duties on two-thirds of products tariffs.
In accordance with the present position, eligibility may depend on economic circumstances and compliance by the country concerned with certain international agreements as under the current General Scheme of Preferences + (GSP+). GSP+ provides for removal of import duties on two-thirds of tariff lines (and not just reduced duty). The enhanced terms are available to economically vulnerable countries that implement certain international conventions on human rights, labour rights, environmental protection and good governance.
“Everything but arms” provides full import duty-free and quota-free access for all products except arms and ammunition to the least developed countries as designated by the UN. This is in accordance with the international commitment to the UN sustainable development goals, which is supported by the UK. Arms and ammunition are classified in accordance with international practice. The nil rate may be withdrawn for breach of conditions such as systematic human rights violations.