Meeting the rules of origin to claim zero duty can be tricky, but you can still make zero duty if you use tolerances in a clever way, says Arne Mielken of Customs Manager Ltd.
A subscriber of the ongoing support subscription service that Customs Manager Ltd offers was sitting a breakfast in a coffee place enjoying a blended fruit juice. They wondered if that product, proudly produced in the UK, was of "UK origin" under the terms of the EU-UK FTA.
The description said:
"A juice blend made from red berry juices with added botanicals.
Ingredients: fruit juices from concentrate 57% (grape, aronia berries 3%, raspberry 3%, pomegranate 2%, cranberry 1%), water, natural flavourings, extracts (hibiscus), vitamin c."
What are the rules of origin?
Origin is the ‘economic’ nationality of goods traded in commerce. It is the origin that determines which duties apply to your product when it enters the EU or UK market.
The rules of origin are used to determine whether a product may be considered as
sufficiently linked to the country from which it is exported to say that it ‘originates’ from there.
To benefit from a preferential tariff when exporting to the EU or the UK, we need to refer to the rules of origin applying to the type of fruit juice we export/import in the EU UK TCA.
Basic concepts of rules of origin for fruits and fruitjuice
Goods wholly obtained in your country
Production does not involve any country other than your own. Fruits originate in your country when they are grown or harvested there. You may import the seeds, but the plants must be grown in your country. If it's, however, fruit juice you export, then you need to declare that, not the individual fruits.
Goods sufficiently transformed in your country
Production involves more than your country. For instance, fruit juices may not originate in
your country when most of the components used to produce them come from another
The UK-EU rules of origin define — for each product — the degree of processing that must be carried out in your country to claim originating status. Three basic criteria determine if a product was sufficiently transformed in your country.
For agricultural products, compare the weight of the materials not originating in your country with the net weight of your final product when it leaves the factory.
Change of tariff classification: compare the product code (four-digit tariff classification) of the materials not originating in your country with the product code of your goods.
Specific operations: you should carry out the quoted processing
Read more about the three basic rules:
In some cases, the applicable rule may involve a combination of the above criteria.
In our case, this was the product consumed:
"So what are the steps to take to understand if this product originates as of UK origin and I can claim zero duty under the EU-UK Free Trade Agreement?" asks our valued subscriber.
She expressed concern: "The duty rate is quite high, so what can we do?"
We are, of course, very happy to support you with an analysis. The first step is to determine the commodity code at 4 to 6 digits. Care must be taken to get it right. A look at the ingredients list can help and the supplies/producer may have to shed some light on where they come from and if the juice was actually produced in the UK (aka berries squeezed) or just blended (different fruit juices mixed together") or if the finished product was imported into the UK and then only packaged for retail. This will affect the origin of the product.
Here, we are likely to be in HS heading 20 09 "Fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether containing added sugar or other sweetening matter"
Next, find the product-specific rule of origin. You can download the list of rules of origin applicable directly here:
The rule to apply is likely to be: "CTH, provided that the total weight of non-originating materials of headings 17.01 and 17.02 used does not exceed 40 % of the weight of the product".
While the second part refers to sugar content, which we can reasonably assume is below 40%, the CTH rule may be problematic. This means manufacture from materials of any heading except that of the product. In this case, you must compare the tariff classification of all non-originating materials used and this end-product
The product is classified to 20,09. And what about the ingredients?
From the picture, we could reasonably assume that the aronia berries were harvested in North America.
Possibly the cranberries came from Canada.
The pomegranate, one may assume, would be from outside the UK and so would the grapes, as the UK is not known for cultivating any of those.
Raspberries could be harvested in the UK. Some of these products may have been grown in the EU.
So, most of these ingredients are not originating in the UK, they are non-originating material.
If we consider the fruits themselves, then they would all be classified in earlier chapters and not in 20.09. This would mean that the fruits would be imported into the UK and squeezed to produce juice. However, if juice itself is imported then it may be classified to 20.09, aka the same product as your finished product. The PSR rule of origin may not be met.
For fruit preparations (such as fruit juices and jam), ingredients whose import is limited or
forbidden by the product-specific rule may still be used if they do not exceed 15 % of the
product’s net weight.
Rules of Origin: Tolerances explained Many exporters or importers forget that the tolerance rule can help your product count as originating. Find out how it works
To claim the tariff preference, you must prove that your fruit originates in your country and
fulfils all conditions. For this, you need one of the following documents, registrations and statements
There are other rules to consider:
Rules of Origin: Direct transport or non-manipulation explained
Many exporters or importers forget that the direct transport or non-manipulation rule can disqualify your product counting as originating. Upon request, your importer must be able
to prove to EU customs authorities that the fruit bought to you and originating in your country has not been altered elsewhere before arriving in the UK or EU. You need to verify that your product has been sent from your country to the UK or EU without being altered or transformed in another country. If your product “transit” in another country, it must not be altered or separated, and it has to be under the vigilance of customs authorities. Find out how it works
Rules of Origin: Minimal operations explained To claim originating status, the production steps carried out in your country must
go beyond the minimal operations listed in the agreement, such as packaging or simple mixing. If only the steps listed in the GSP regulation were carried out in your country, and nothing else was produced or transformed there, the fruit preparation cannot be considered as originating in your country.
Many exporters or importers forget that the minimal operations rule can disqualify your product counting as originating. Find out how it works