Jan 6th, 2021
7 mins

A key aspect of the new Trade and Cooperation Agreement (TCA) between the UK and the EU is that zero tariffs will apply on trade between the UK and the EU.

To benefit under the TCA, goods will have to be of UK or EU origin. This means they must meet the UK-EU preferential rules of origin. 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 production come from. Their purpose is to ensure that preferential tariffs are only given to goods that originate in the UK or EU and not from third countries (i.e. those apart from UK and the EU Member States).

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 (“Most Favoured Nation”) tariffs that the EU and UK apply to imports. For exports to the EU, this will be their Common External Tariff. Likewise, for imports to the UK, this will be the UK Global Tariff. For some goods, these Most Favoured Nation tariffs may be low or zero, but for many other goods they can be much higher.

Businesses will need to take a commercial decision on whether it is in their interest to meet (and prove that they meet) the rules of origin in order to benefit from the TCA’s zero tariffs.

The TCA contains criteria for what are considered to be ‘originating’ goods. These are known as ‘Rules of Origin’.  Government guidance can be found here. We would recommend however reading the more specific DEFRA guidance which is available here. You may also find this recent Defra Presentation pack on Rules of Origin useful.

There are effectively three ways in which a product can be considered ‘originating’

1) 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.

2) It has been substantially transformed in line with the relevant Product-Specific Rule (PSR). There are three basic rules used to decide if goods are sufficiently transformed. (explained in more detail in the government guidance section 4 (Product-specific rules).

  • the ad-valorem, or ‘value added’ rule
  • the change of tariff classification
  • manufacture from certain products or through specific processes

You will need to check their application to your specific goods

3) Bilateral Cumulation. This a mechanism whereby 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 (and vice versa).

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 and no account is taken of non-originating materials within it.

The rules of origin also recognise that manufactured goods often need small amounts of non-originating material in their production.  Therefore, if a PSR limits the use of non-originating materials, the final product could be considered UK originating if the value or weight of applicable non-originating materials used does not exceed 15 per cent of the net weight of the final product or, for fisheries products, 10 per cent of the value (ex-works price) of the final product.

To simplify documentary requirements, traders can self-certify the origin of their goods by issuing a statement of origin. For manufactures/traders who make multiple shipments of identical product, the statement of origin can be valid for a period of 12 months.  Please also see Claiming preferential rates of duty between UK and EU. The form of declaration is set out on the final page.

Further information is also available on the WTO website here.

Please note that Rules of Origin requirements are understood to have taken effect from 1 January 2021, even though the need for supporting documentation may in some circumstances be deferred to a later date. Business are nevertheless advised to ensure they understand any potential liabilities and satisfy themselves that goods are compliant prior to shipment.


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