In this two-part series, we take a step-by-step introductory approach to understanding free trade between the UK and the EU. Ideal for newcomers to trade agreements.
In Part 1 we focus on fundamentals and create basic understanding. In Part 2 we introduce the key principles of so, called "Rules of Origin". Study both parts to get a great overview of the key principles behind how to secure free trade with the EU.
Content
Introduction
The first word on UK-EU preferential rules of origin
A qualifying level of processing
Read the details in the TCA
Most Favoured Nation
Other ways to enter the EU or UK without payment of duty
Introduction
The EU and the UK have moved to trading based on a Free Trade Agreement between the UK and the EU, the Trade and Cooperation Agreement (TCA).
The first word on UK-EU preferential rules of origin
To export tariff-free under the TCA, goods must meet the UK-EU preferential rules of origin.
Tip: Access our dedicated Rules of Origin HUB to get all the insights on how rules of origin work. For the latest developments and changes, check out our dedicated section on the expert blog: https://www.customsmanager.org/customs-global-trade-blog/categories/free-trade-agreement
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A qualifying level of processing
This means that there must be a qualifying level of processing in the country of export to access zero tariffs.
This applies to EU origin goods imported and moving through the UK from an EU member state to another EU member state, as well as goods imported from outside the UK or EU.
Read the details in the TCA
These rules are set out in the TCA and determine the origin of goods based on where the products or materials (or inputs) used in their products come from.
Their purpose is to make sure that preferential tariffs are only given to goods that originate in the UK or EU, and not from countries outside the UK and the EU member states.
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Recording of the analysis of the EU-UK Trade and Cooperation Agreement, with a focus on the rules of origin and how to secure free trade within the rules.
Most Favoured Nation
Goods that do not meet the rules of origin can still be traded, but they will not be able to benefit from preference under the TCA, and may have to pay the standard - also known as ‘Most Favoured Nation’ - tariffs that the EU and UK apply to imports. For exports to the EU, this will be their Common External Tariff. For imports to the UK, this will be the UK Global Tariff.
For some goods, these ‘Most Favoured Nation’ standard tariffs may be low or zero, but for many other goods, they can be much higher.
Businesses will need to decide if it is in their interest to meet (and to prove that they meet) the rules of origin to benefit from the TCA’s zero tariffs.
Other ways to enter the EU or UK without payment of duty
Returned Goods Relief
For goods that were imported from the EU or the UK and are being returned or redistributed in the EU or the UK without obtaining EU/UK origin, the importer in the EU / UK may be able to claim Returned Goods Relief. Read our dedicated blog entry on Returned Goods Relief (RGR): https://www.customsmanager.org/post/returned-goods-relief-rgr
Transit or Customs Warehousing
If goods entered the UK under the internal Transit procedure (T2) and have not been entered into any customs procedure other than Transit or Customs Warehousing, they may be able to retain their original country status. This will mean that customs formalities, including duties and taxes, in the country of import, can be avoided.
More on transit: https://www.customsmanager.org/transit and https://www.customsmanager.org/customs-global-trade-blog/categories/transit
More on Customs Warehousing: https://www.customsmanager.org/post/duty-relief-how-to-operate-a-customs-warehouse
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