Just before Christmas, the U.K. and the EU have announced a historic agreement indicating tariff free trade deal. The agreement (termed a “Trade and Co-operation Agreement” (TCA)) meant how they’ll trade with one another after Brexit.
TCA agreed between the UK and EU came into force at 11 pm on 31 December 2020.
Why did the trade deal happen?
After Brexit happened, the UK and EU needed to decide the rules for their future trading relationship.
So, this was important because the EU is the UK’s largest and closest trading partner.
The deal means no tariffs or no quotas. Without a deal, some goods would have become more expensive.
What does the tariff free trade deal mean?
For goods to be tariff free under the TCA, they have to be of UK or EU origin as defined by the preferential rules of origin set out in the TCA.
If goods do not qualify under the preferential rules of origin, tariffs will be due on imports to the UK from the EU and vice versa. The tariffs into the UK will be under the UK Global Tariff and into the EU under the Common External Tariff.
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There are two considerable ways for originating goods in the EU or UK:
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.”
Substantially transformed –
The TCA sets out detailed product-specific rules (“PSR”) for determining whether the processing that carried out on materials from outside of the UK or EU makes the final product satisfy the origin requirements.
Therefore, in a simple situation where you import goods into the UK from outside of the EU and then subsequently export these into the EU without undertaking any process, tariffs could be due on the import into the UK depending on the UK rules but in any event, would be due on the subsequent import into the EU. So, the situation where goods are subject to any form of the process can be complex.
However, when importing from or exporting to the EU additional documentation will now need to be kept regarding the place of origin of products and customs declarations will need to be made to claim preferential origin.
Traders will have up to six months to complete customs declarations for goods imported into the UK (but not the EU) between 1 January 2021 and 30 June 2021.
Custom declarations is a complex area. This will most likely require the assistance of your freight forwarding or logistics company or that of a customs expert.
