This is a quick guide to UK-EU rules of origin for traders, and its post-Brexit implications on customs declarations
To qualify for preferential tariff treatment, under the UK-EU Trade and Cooperation Agreement, post-Brexit, businesses must demonstrate the origin of goods traded with the European Union. If goods do not match the origin standards, they will not be eligible for preferential treatment, and will be subject to customs taxes or tariffs.
To take advantage of preferential rates negotiated under the UK-EU Trade and Cooperation Agreement, when importing into the UK or EU, they must claim preference on their customs declaration, and provide documentation that the commodities comply with the Rules of Origin.
Let us first try to understand what are the rules of origin?
The Rules of Origin facilitates an importing country to identify, and classify a product’s origin. Rules of Origin outline how customs authorities establish a product’s ‘economic nationality’. Either where it is entirely grown, or produced, or where the last significant manufacturing & transformation occurred.
When the production takes place in a single country, the process is straightforward. Given the complexity of modern global supply chains, which involves components and operations carried out in various countries, the application of rules of origin can be pretty challenging. Rules of origin are legal international trade tools, permitted under the World Trade Organization rules, and are common in international trade agreements. Numerous types of rules of origin regulations apply, and a product may be subject to more than one rule.
There are two types of rules of origin.
Non-preferential rules of origin are applied in order to implement a variety of commercial policy measures, such as anti-dumping and countervailing charges, trade embargoes, safeguard measures, and quantitative limits or tariff quotas.
Preferential rules of origin establish whether items qualify as being from specific nations, subject to special arrangements and agreements. When all requirements meet, businesses may import the items of preferential origin, at reduced or zero duty rates.
Following are the major steps to comply with Rules of Origin to claim zero tariffs on your goods:
Following are the major steps to comply with Rules of Origin, to claim zero tariffs on your goods:
Step 1: Classify your goods.
Step 2: Determine whether your goods meet rules of origin.
Step 3: Proof your goods meet rules of origin.
Step 1: Classify your goods.
For international trade purposes, all commodities classify in a standard way, a standardised system of naming, descriptions and numbers used to identify products. To determine the applicable rule of origin, you must know the classification of your commodities. You can categorise your commodities, using the Customs-Declarations commodities tool, available within the app.
Step 2: Determine whether your goods meet rules of origin.
There are distinct rules for various products known as Product Specific Rules. You must understand your supply chain, to determine where your goods or commodities originate. Whether they originate in the United Kingdom or the European Union, or elsewhere in the world.
When determining whether your UK exports to the EU, meet rules of origin criteria, you can include EU-sourced materials and processes if there is a qualifying level of output in the UK. This is referred as ‘cumulation’.
If the product you are exporting, contains non-originating material, you must adhere to the applicable Product Specific Rule. Customs-Declarations can help you in determining the Product Specific Rules, that conforms to the Trade and Cooperation Agreement and HMRC guidelines.
Step 3: Proof your goods meet rules of origin.
Businesses must provide evidence, that their goods meet rules of origin. Following are some of the potential pieces of evidence:
Evidence of origin from the supplier, such as a supplier declaration.
Self-declare that the goods meet Rules of Origin.
Importers can alternatively claim for zero tariffs based on their knowledge.
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