Rules of Origin: What has Changed?
12th February 2021
Rules of Origin have been in the news a lot recently. Businesses up and down the country have been struggling to make sense of the new arrangements for exporting inside and outside of the EU.
With new processes and new paperwork, shipments are being held up and there are increasing concerns about the impact on the economy.
The problems centre around new rules which describe which goods can be counted as being made in the UK, meaning they benefit financially from these new agreements.
However, UK exporters from a variety of sectors are actually finding that goods which they thought were classified as being made in the UK, which they could export tariff- and quota- free, don’t actually meet these new origin rules, putting their goods at a disadvantage compared to their EU competitors.
The rules vary but in general, if at least 50% of the price of the product is considered as being made in the UK, then the entire product would be considered to be of UK origin. However with modern supply chains, parts come from all over the world, leaving UK exporters struggling to understand what tariffs are payable, and to even complete the relevant paperwork.
Liam Smyth, Director of Trade Facilitation at the BCC, explains Rules of Origin in more detail.
Although we now have an agreement with the EU for tariff-free trade, this hasn’t removed a need for businesses to have the right documentation to send shipments to Europe and beyond.
When we were part of the EU’s internal market there was no need for rules of origin as all goods were moving around the single market. Now if companies want to avoid paying any duties on goods, they must show proof of where they were made.
The rules have changed for many products because of this and it’s a new situation for a lot of companies. This issue was highlighted recently by M&S and its Percy Pigs – because they are made in Germany, then come into the mainland UK before going on to the Republic of Ireland (ROI), they are now subject to import tariffs for the second leg of that journey. If they were exported from Germany directly to ROI they would be tariff free.
But this is an area of trade that our network has a huge amount of experience in as we’ve been issuing certificates or origin for exports to countries outside of the EU for a long time. Last year we issued 575,000 for businesses exporting £20billion of goods outside of the EU.
We can also help businesses to remain competitive through the use of preferential tariffs and by pushing government for interim arrangements for traders where full agreements are not yet in place, like we did recently with Vietnam.
We have been speaking to the Department for International Trade and the HRMC for the last three years to make sure that whatever the outcome of Brexit we would be in a position to supply the paperwork that businesses need.
In summary Rules of Origin are an added barrier to trade that many UK exporters have not needed to consider before. Not all goods can move tariff- and quota- free between our trading partners.
For more information, or to speak to a member of the International Trade team, call 0114 201 8888 or email firstname.lastname@example.org.