The EU UK Trade and Cooperation Agreement reinforces many of the basic principles for international trade in goods. Discrimination against imported products is prohibited. Each of the EU and the UK is to afford national treatment to each other’s goods. The wording reinforces article 3 of the WTO General Agreement on Trade and Tariffs. There is a developed body of opinions and rulings in relation to the meaning and scope of the obligations undertaken
Generally, imported products must not be treated less favourably than similar domestic products provided the imported product has entered the state of import home market. This may, of course, require the payment of customs duties and compliance with the conditions applicable to that category of goods in the tariff. There may for example be licensing and other regulatory conditions. Goods must comply with the standards of the state of import.
The general and key principle of the EU UK Agreement is that customs duties are not to apply to goods originating in the other territory. That is to say, there are to be no EU customs duties on goods originating in the United Kingdom and there are to be no UK customs duties on goods originating in the European Union. There are some prospective exceptions in particular by way of sanction.
The EU and the UK declare freedom of transit through each other’s territory for traffic moving to and from the EU and UK or going to a third country. Once again, this obligation builds on existing WTO agreements, the scope of which has been the subject of opinions and rulings in relation to its meaning.
Goods are to be categorised in accordance with the international World Customs Organisation classification. International agreements on customs valuations are to apply.
The general WTO agreements relating to anti-dumping, safeguarding, unfair trade practices and the agreements on agricultural support are to apply. The EU and UK may take measures against each other in the circumstances defined by these agreements. See the separate sections of this website dealing with these agreements. They set the parameters in which states may take action against each other for breach of agreements.
There are special rules in certain areas on a transitional basis. They include specific rules in relation to vehicles and fish. The EU and UK may maintain licensing provisions only where strictly necessary. Broadly licensing will continue to apply in the types of areas where it already applies and only where strictly necessary.
The key general principle of the EU UK Agreement is that customs duties are not to apply to goods originating in the other territory. That is to say, there are to be no EU customs duties on goods originating in the United Kingdom and there are to be no UK customs duties on goods originating in the European Union. There are some exceptions, in particular by way of sanction.
The requirement that the goods originate in the other territory is critical. The issue of origin is dealt with separately below and in other parts of this website. Origin has a very distinct meaning. It does not mean that the goods come from the other territory.
Goods may be of qualifying origin, where they are primary products from that country or manufactured products made there. They may contain a certain amount of products from other countries but there are defined limits of tolerance for those elements. There are rules on the cumulation of origin which allow EU or UK content to count as domestic content in the other territory for this purpose. However, certain minimal processing operations which are listed) are not enough.
Goods imported from outside the European Union (such as the US and Asia) will not be of qualifying origin and will be subject to the third party default rate of customs duty for those goods. Zero treatment will not apply. There may be both importation duty when they arrive in the first country e.g. the United Kingdom under the UK customs tariff and further import duty when they are exported onto the EU e.g. Ireland.
Unlike with value added tax, there is no credit for one import duty against the other. There are customs processes which might mitigate a double charge where for example the goods are held under a customs process in the United Kingdom, pending export to Ireland
The requirement for UK origin has the consequence that goods which originate in the continental EU countries and have been traditionally distributed by suppliers in the United Kingdom into the UK and Irish markets may be subject to full customs duties. While they may qualify for zero duties when imported into Great Britain, they will not qualify upon importation Ireland unless they have been maintained under certain limited customs controls procedures (not primarily designed for this purpose) while they are the United Kingdom. This has enormous potential consequences for Irish distribution and supply chains into Ireland.
Export duties and charges are prohibited. Export duties are very rare in practice. Fees and charges (as opposed to customs duties) in relation to import and export services and formalities, are limited to the actual value of services provided. Some limited categories of charges are permitted.
Customs duty do not apply to goods temporarily imported or exported for the purpose of repair, regardless of their origin.
Goods may be of EU or UK origin if they are produced in either the EU or the UK incorporating non-EU or non-UK materials that satisfy the particular product specific rules of origin set out in detail in the annex to the TCA. The specific rules decide origin by particular criteria which apply to the category of goods concerns.
The criteria may be a particular type of production process, a change in tariff classification or a sub-classification, maximum value or weight of non-originating materials. In some cases, these tests apply as alternatives. In this case if they qualify under one of the tests, they are deemed originating.
The rules are technical and may be difficult to apply for those who are not experts in the field and intimately familiar with the composition of the products concerned. They will usually be best known to manufacturers and major distributors
The change of tariff classification refers to the tariff classification of the goods under the EU or UK tariff. The change can be at a chapter, heading or subheading level depending on the particular test that applies. That is, it might have to go from a subcategory to another subcategory or to an entirely different category. The change can be either two digit (chapter level) four digit subchapter or six digit subheading level.
The weight or value may determine whether the extent of non-originating material disqualifies the goods from being originating. Where the rules require a maximum percentage of value for non-originating material, the ex-works price applies. This will include the value of the materials used and other costs. There are detailed rules for the calculation of the ex-works price. The maximum permitted non-originating material of value is 50% for many categories of product. The product-specific rule should always be checked.
The Agreement deals in detail with certain types of processing that are sufficient to constitute the goods as originating. The types of processing are specific to the particular category of goods.
There are special detailed rules in relation to different categories of textiles. In some cases, they focus on materials while it other cases, they focus on the process such as weaving. There may be alternative tests.
There are rules on the cumulation of origin.A product originating in the UK used to produce another product in the EU and vice versa is considered to originate in the EU (and vice versa). However, the degree of production must be sufficient and there is a list of excluded operations which are deemed insufficient always applies.
Zero customs duty under the EU UK Trade and Cooperation Agreement (TCA) is available for goods that “originate” in the territory (EU or UK) of export. This “preferential” origin treatment must be claimed. If it is not, the standard “third country” rate of duty mentioned in the tariff will apply. This applies both on the EU/Irish side where the EU tariff (TARIC) applies and on the Great Britain/UK side where the UK Global Tariff applies.
The question of the correct duty can be re-examined either in a border check or in a later customs audit. Sometimes internationally, it has been found that the costs and risks of complying with origin requirements lead traders to choose not to claim preferential duties.
The EU UK Trade and Cooperation Agreement allows traders to self-certify the origin of their goods. They are given a year in which to gather the supporting documentation if is not immediately to hand. The form of the declaration which a supplier is to make is set out in the TCA. It is to be attached to the sale invoice or other documents describing the goods n sufficient detail to allow them to be identified. A reference number by which the exporter is identified is to be indicated in the statement of origin.
Where a regular line of products is supplied which is expected to remain constant in terms of origin, a single long-term supplier’s declaration may be used. It is usually valid for up to 2 years. There is a separate form for this declaration. It is to describe the parts in sufficient detail so they can be identified. If it ceases to be applicable or valid it must not be used anymore.
The supplier who makes the declaration must be prepared to submit at any time on request by the customs authority, of either state all appropriate documents proving the information given in the declaration is correct. There are provisions in the TCA to allow the customs authority in the state of import to verify the basis of declarations made by the exporter. The exporter must ensure that the statement of origin is correct. It must retain a copy.
As an alternative to reliance on an export statement, the EU UK TCA allows for the importer to claim origin based on his own knowledge. He must have the necessary information to prove the product is originating in the territory (EU or UK ) of export. There must be supporting documents. In this case, no statement is required from the exporter.
The relevant declarations as to origin must be made in the import declaration. It is inserted by way of a code. The code may imply the existence of documents or another basis on which preferential origin is claimed. The proof of the basis of the claim must exist.
Some consignments are exempt from the requirement to have a statement of origin. Small consignments the total value of which do not exceed €500 for products sent in small packages or €1200 in the case of products within a traveller’s personal luggage, are not subject to the statement of origin requirement.
If the claim of origin cannot be made at the time, preferential duty rate can be claimed retrospectively for up to 3 years. This allows for reimbursement of duties. The statement of origin would be required at this point.
In order to make out a valid statement, an EU exporter must be registered in the Registered Exporter Scheme (REX). Upon application made to the national revenue authority, a registered export number may be given. This is entered on the declaration. For small consignments less than €6000, it is not necessary to be registered in the REX scheme.
In the UK, the relevant limit is £5,700. Below this consignment value, the exporter may make out the statement. Above this, the UK exporter must be a registered exporter.
Where a supplier provides an EU exporter with the information required to determine the origin of goods so that the exporter can issue a statement of origin, the supplier must make a supplier’s declaration.
Because of the late adoption of the EU UK Trade and Cooperation Agreement, there are transitional rules which apply until the end of 2021. The EU exporter may make a statement on the basis of information already at his disposal if he receives the formal supplier declaration only afterwards.
The exporter is responsible for ensuring the statement and information is correct. The exporter must have all the relevant suppliers declaration by 1 January 2022 or inform the importer that the statement of origin cannot be substantiated.
The UK importer has the option of delaying declarations filing until 1 July 2021. It is only at this stage that the declaration of proof of origin is required.
Goods originating in the United Kingdom are no longer EU originating for the purpose of other EU UK preferential trade agreements. This may be a critical issue for those relying on those agreements. The particular preferential rules in the agreement concerned would need to be considered.
The issues may apply to both UK content in terms of material and processing operations. It is possible that some goods which are now qualifying may become nonqualifying for preferential duty in trade with these other third countries.
Northern Ireland is part of the UK customs authority territory so that products that originate there, would not count for EU origin purposes in this context. Businesses may need to review their material sources and/or processing in order to continue to qualify under third country agreements.
The EU UK Agreement has detailed protocols on cooperation in relation to customs and value-added tax. They are designed to combat fraud and facilitate enforcement. They also allow the recovery of claims.
The EU and UK agree to cooperate in relation to enforcement of customs legislation. This is particularly important in the area of origin where the information about the origin is certified by the seller in one state and may be relied on by the buyer to claim zero duty under the agreement.
Both the EU and the UK agree to recognise each other’s authorised economic operator (AEO) programs. There is the prospect of further cooperation in customs in the future particular in relation to the handling roll-on roll-off traffic.
Import and export restrictions by way of quotas, import and export licences and other such measures are generally prohibited. This does not apply to regulations and controls on particular types of goods which are necessary for established regulatory and trade-related reasons. There are also other possibilities for exceptions, by way of countermeasures and sanctions.
Each of the EU and UK is to ensure that import licensing procedures applicable (only allowed where strictly necessary) are administered in a fair, equitable, non-discriminatory and transparent manner. Licensing requirements procedures in relation to the import of goods must be for a good justifiable reason and are permissible only for no other method of achieving the relevant regulatory objective is reasonably available. WTO agreements on the operation of licensing procedures are to apply.
Where permissible full details of licensing requirements are to be published on the official website and made available 21 days in advance. Similar requirements apply to export licensing
Since 1 January 2021, the EU and UK are two separate regulatory and legal systems. Different regulations may apply to goods in each territory. The UK rules commenced as aligned with the EU rules, but they may diverge in the future.
UK goods are not in free circulation in the European Union and regulatory checks may take place as part of the import process. This is a key reason why there are import duties even though there may be zero duty.
There is no mutual recognition of regulatory standards in the EU UK Trade and Cooperation Agreement. There is not even mutual recognition of product certifiers (notified bodies). EU CE marking will continue to apply to goods marketed in the European Union. Existing products on the market before 2021 are not subject to any change.
The TCA contains some provisions with seek to prevent and minimise unnecessary trade barriers. There is to be cooperation and simplified procedures for determining compliance. International standards are to be used. Each of the EU and UK is to allow simplified access to each other’s market. There is no mutual recognition of conformity assessment bodies. However, continued use of self-certification will be allowed in many cases.
The EU and UK have agreed on mechanisms for market surveillance, enforcement and strong product safety rules. There are arrangements for information sharing between the market surveillance authorities and cooperation in relation to measures against unsafe or non-compliant products. There are specific agreements for close cooperation in relation to pharmaceuticals chemicals vehicles wine automotive and organic products.
In the automotive sector regulatory convergence is to be based on international technical standards. The EU and the UK are to cooperate on initiatives to promote greater international harmonisation. Both the EU and UK agree to accept UN type approval certificates for vehicles and parts. There is to be cooperation and exchange of information.
In relation to medicines, there is to be recognition of inspections by authorities of the other’s manufacturing facilities. The Agreement allows for the EU or the UK to unilaterally extend recognition for manufacturing facilities in the other territory, under terms and conditions.
In relation to chemicals, each of the EU and UK agree on principles in relation to the assessment of chemical hazards and risks and formats for documenting them. They are to implement UN global harmonised systems for classification of chemicals. There are to be transparent procedures for the classification of substances and the possibility of exchange of confidential information.
The Agreement provides for continued cooperation in relation to safeguarding cultural property. This seeks to tackle illegal excavation and trafficking of antiquities and archaeological objects, as well as combating trade in them.
The sanitary (human and animal health) and plant health (phytosanitary) rules of the EU and UK will be separate. There are no changes to food safety standards.UK imports will be subject to the same rules procedures that apply to other imports from outside the UK. This will often require a health certificate prior notice through a separate IT system and specific checks at the border inspection posts.
The EU UK TCA has a number of measures which may limit SPS procedures where possible while upholding strict standards. Either party can unilaterally decide to reduce the frequency of certain border inspection controls taking into account the extent to which the SPS rules of both converge.
There is a simplified process for the approval of imports which provide for the recognition of establishments which are eligible to export to the other party, based on guarantees by the exporting party.
There are arrangements for cooperation in relation to outbreaks of animal or plant disease.
Goods entering Northern Ireland from Great Britain are treated as imports from Great Britain. They are subject both to the EU customs import requirements and product and sanitary and phytosanitary requirements.
There are special procedures where goods and not destined for or at risk of moving to the European Union market (usually the Republic of Ireland). There are provisions for simplified declarations and special arrangements in relation to medicines, chilled meets and food products for supermarkets.
Chilled meats for which imports into the EU are usually prohibited are to be accepted for delivery to supermarkets during a six-month period. During a three-month period, goods coming from Great Britain and destined for supermarkets in Northern Ireland may be accompanied by a simplified collective certificate covering all the goods in the truck instead of individual certificates.