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
UK-EU preferential rules of origin under the TCA
General Provisions
Harmonised System - HS: Necessary for zero duty trade, too!
Product-specific rules of origin (PSRs) or List Rules
Originating products - general concepts
Claiming preferential treatment under the TCA
UK-EU preferential rules of origin under the TCA
To be considered originating and qualify for preferential tariffs, products must be sufficiently worked or processed within the countries in the agreement.
Non-originating materials are materials imported from countries outside of the UK and EU. Non-originating may also refer to materials whose origin is unknown or are not possible to determine.
The rules of origin in the TCA are set out in 2 parts:
General Provisions
These are rules that apply to all products being traded under preference. They include the primary and administrative requirements.
Some are:
Harmonised System - HS: Necessary for zero duty trade, too!
These are the specific rules that set out, for every product based on their Harmonized System (HS) code, what the requirements are for that product to be considered ‘originating’.
The HS, or Harmonized Commodity Description and Coding System, was developed by the World Customs Organisation (WCO) to describe and classify groups of goods and is used by more than 200 countries worldwide.
Our dedicated expert blog on customs classification and classification hub provides a wide range of step by step information as to how to find out a product’s HS code.
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Product-specific rules of origin (PSRs) or List Rules
These are the specific rules that set out, for every product based on their Harmonized System (HS) code, what the requirements are for that product to be considered ‘originating’.
The product-specific rules are included in Annex ORIG-2 (Product-specific rules of origin) of the TCA. See the blog entry "EU-UK TCA: Where do I find the Product Rules of Origin for zero tariffs?"
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
Originating products - general concepts
There are 2 ways a product can be considered originating:
It can be ‘wholly obtained’ - these are goods that have been exclusively obtained or produced in the territory of one country, without using materials from any other country. The goods must not have been manipulated or changed in another country, apart from certain minimal processes to keep them in good condition.
Examples of wholly obtained goods include:
minerals extracted from the soil of a single country
live animals born and raised in a single country
goods produced in a single country from materials sourced exclusively from there - that is, all materials used in a product are wholly obtained
It has been substantially transformed in line with the relevant product-specific rule - there are 3 basic rules used to decide if goods are sufficiently transformed:
the ad-valorem, or ‘value added’ rule
the change of tariff classification
manufacture from certain products or through specific processes
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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.
In the TCA:
materials originating from the EU - as well as production carried out within the EU on non-originating materials - may be considered as originating in the UK
materials originating from the UK - as well as production carried out within the UK on non-originating materials - may be considered as originating in the EU
This mechanism is known as bilateral cumulation.
Once a product has gained originating status, it is considered 100% originating. This means that if that product is incorporated in the production of a further product:
its full value is considered originating
no account is taken of non-originating materials within it
For example, if an EU-manufactured engine contains 30% non-originating content but meets its rule of origin if that engine is used in the production of a car in the UK or EU, 100% of the value of that engine can be counted towards the originating content of the car.
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Claiming preferential treatment under the TCA
For businesses to benefit from preferential tariffs when importing into the UK or EU, they will need to:
claim preference on their customs declaration
declare they hold proof that the goods meet the rules of origin
A proof of origin is used by the importer to show that the goods qualify as originating and are eligible to claim preference. In the TCA this proof can be either:
a statement on origin completed by the exporter on a commercial document
knowledge obtained and held by the importer that the goods are originating
Read more about the different proof of origins for the TCA.
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