EU-UK TCA: Rules of Origin, Trade in Goods & SPS provisions
Information on Rules of Origin, SPS measures and Acess2Market database, including ROSA from 2021 meetings with the EU Commission
Rules of Origin: Information meeting of DG TAXUD
The EU Commission held a detailed stakeholder meeting on the general aspects of rules of origin in the context of the EU-UK TCA. After a presentation, there was ample time for answering questions from stakeholders.
How can importers ensure that the goods they are importing into the EU from the UK can benefit from the tariff-free provisions in the draft EU-UK Agreement?
Answer by EU Commission:
The draft EU-UK Trade and Cooperation Agreement provide for zero tariffs and zero quotas on all trade in goods originating in the EU or the UK, from 1 January 2021. The zero tariff and zero quota provisions apply to all goods that comply with the appropriate rules of origin.
If you want the goods that you are importing to benefit from this duty-free treatment, you must claim preferential treatment. The claim has to be based on a statement of origin, made out by the exporter, stating that the product qualifies for preferential treatment.
It is up to the exporter to make sure that the conditions are met to issue a statement of origin and that the information provided is correct.
EU goods importers have to keep the statement of origin and provide a copy to the EU customs authority if required.
Alternatively, the importer can claim the preferential treatment based on his/her own knowledge, in line with the conditions set out in the draft EU-UK Agreement. (Article ORIG.18).
The draft EU-UK Agreement also contains a “non-alteration” provision (Article ORIG.16). This means that the manipulation (e.g., processing) of the goods in another third country must be very strictly limited if the goods are to qualify for preferential treatment.
What information must be in the statement of the origin of a UK exporter? Do UK exporters need to have an EU Registered Exporter (REX) number?
Answer by the EU Commission:
The draft EU-UK Agreement sets out the rules for statements on origin (Article ORIG.19) as well as the format for these statements on origin (Annex ORIG-4). A reference number by which the exporter is identified needs to be indicated in the statement on the origin.
For UK exporters, the number will be assigned according to UK rules, which should establish an identification number for their exporters. The UK will not use the REX system, and plans instead to use EORI registration numbers: please consult the UK national authorities for more information.
If a statement of origin cannot be made on time, can it be made retrospectively?
Answer by the EU Commission:
Yes. EU importers can introduce a retrospective claim for preferential treatment of goods imported from the UK, for up to three years after the date of importation. This also applies to goods EU exports to the UK.
How can I ensure that goods that I am exporting from the EU to the UK are not subject to customs duties in the UK?
Answer by the EU Commission:
Under the draft EU-UK Agreement, products of EU origin will benefit from tariff-free, quota-free access to the UK market. To benefit from this preferential treatment, you need to comply with the requirements established in the “Rules of Origin” chapter of the draft EU-UK Agreement.
This means practically that:
The goods that you are exporting needs to be originating in the EU i.e., the production process has to satisfy a list of requirements.
Your good has to be sent directly to the UK i.e., it has to respect the “non-alteration” rule.
The importer may require that you, as EU exporter, provide him with a statement on origin, proving that your goods originates in the EU.
Your statement on origin should contain the information required under the draft EU-UK Agreement (Annex ORIG-4). This statement should appear on an invoice or on any other document that describes the product well enough for it to be identified.
To make out a valid statement to export to the UK, you need to be registered in the EU Registered Exporter System (REX). To do this, you need to fill in an application form and return it to your competent national authorities, who will give you a registered exporter number and enter it into the REX system. For small consignments of less than EUR 6000, you do not need to be registered in REX.
I am exporting EU processed foods to UK supermarkets. Can I issue a statement of origin if I do not have all the supplier’s declarations for the goods used to manufacture my final goods product?
Answer by the EU Commission:
Under EU customs rules, suppliers of goods products to you should make a supplier’s declaration. This is to ensure you as goods exporter have the necessary information to determine the originating status of your products and, if relevant, make a statement of origin for preferential trade purposes.
However, given that suppliers may not be in a position to provide such a declaration, the Commission has adopted transitory rules that will apply until the end of 2021. These allow an EU goods exporter to make out a statement on origin based on supplier’s declarations that he receives afterwards.
The goods exporter is still responsible, however, for ensuring that the statement on origin and the information provided is correct. The goods exporter must also have all the relevant supplier’s declaration by 1 January 2022 at the latest, or else inform the importer that the statement on origin cannot be substantiated.
I am an exporter of goods with EU origin. Will the UK’s withdrawal from the EU have any impact on my ability to access preferential treatment for my EU goods?
Answer by the EU Commission:
Under the draft EU-UK Trade and Cooperation Agreement, EU and UK goods traders have to meet rules of origin compared to those which the EU and the UK have with other trading partners.
Since 1 January 2021, traders have to demonstrate the originating status of the goods for them to benefit from preferential tariff treatment under the draft Agreement.
Goods that do not meet the origin requirements contained in the draft Agreement will be liable for customs duties.
Self-certification of the origin of the goods will be possible for trade between the EU and the UK, thereby making it easier for the trader to prove the origin of its products. Also, the EU exporters will benefit from additional flexibility in collecting documentary evidence to prove origin during the first year, to allow their products to benefit from the preferences despite the short timeline between the conclusion and application of the Agreement.
EU exporters trading with the EU’s preferential partners other than the UK will also be affected. UK content (both material and processing operations) will become ‘non-originating’ when determining the preferential origin of goods under EU trade preferential arrangements.
Therefore, goods produced in the EU with relevant UK content for the acquisition of the origin will not be considered as EU-originating. As such, it will not be able to benefit from the preferential trade arrangements that the EU has with other third countries. EU goods exports will need to reassess their supply chains if they wish to avoid this happening.
To maintain their preferential origin status, goods products traded under EU preferential arrangements other than the one with the UK, which transits through the UK, will also have to meet requirements related to direct transport/non-manipulation, which are contained in those EU preferential agreements.
Is the customs clearance at the origin, even though it passes through several borders, valid from the departure border (in the EU) to the destination? If so, is it necessary to mention in the dispatch the codes for the goods' exit and entry borders?
To bring goods out of EU to the UK, and export or transit declaration needs to be lodged. A transit declaration allows the goods to start their journey in the EU Member States, exit the EU, enter the UK and finish the movement in the premises of the UK goods importer, provided that both parties hold the necessary authorisation to start and finish a transit operation. The preferential origin is declared upon import based on a statement of origin placed on the invoice.
Is it necessary to submit EUR1 or is it enough to present a declaration of origin on the invoice? Are there any minimum value per invoice to present either a EUR1 or a declaration of origin on the invoice?
Submission on EUR1 is not foreseen as per the EU-UK TCA. A statement of origin on the invoice is foreseen where the goods exported meet the rules of origin as per the agreement (see also reply above). A valid REX number is required to make statements on origin, where the value of the export is more than 6000 EUR (see reply above)
Does the UK require the presentation of a Certificate of Origin issued by the Chamber of Commerce?
While Certificates of Origin can be requested for non-preferential origin purposes, there is no EUR1 Movement certificate foreseen for preferential trade with the UK. UK authorities should not routinely ask for a certificate of origin for non-preferential purposes.
Civil Society Dialogue meeting on 21 January 2021
The European Commission, Directorate General of Trade held a CSD meeting on the new Trade and Cooperation Agreement signed between the European Union and the United Kingdom on 24th December.
Purpose
The purpose of the meeting was to update EU civil society organisations on the Trade part of the Agreement. It will cover the issues of Trade in Goods, Services and Investment, SMEs, Public Procurement, Intellectual Property Rights, Level Playing Field and Sustainable Development and Governance of the TCA.
Lead speakers and participants
The Director on Strategy and Overall Coordination of the UK Task Force, as well as the Principal adviser to the European Commission on UK TCA affairs, lead the meeting. The Director for Resources, Inter-Institutional Relations, Communications and Civil Society in DG Trade let the meeting.
Overview of the agreement
After intensive negotiations, the European Commission has reached on 24 December 2020 an agreement with the United Kingdom on the terms of its future cooperation with the European Union. The EU Commission recalled that there is already a Withdrawal Agreement, which also entered into force.
The EU reminded everyone that this guarantees the rights of current EU citizens in the UK and treats Northern Ireland as part of the EU Single Market and EU Customs Union for this agreement. The EU Commission also recalled that this agreement is very different from others for two reasons:
1. It has been done in a very short time under immense timing pressure.
2. Normally it is about converging more with partners and get closer together, here it is the opposite.
As a result, there will be friction, especially for goods. All companies that do trade with the UK need to check their supply and distribution model; a lot of things have changed for goods from 1 January.
There are also some services agreed in line with basic Free Trade Agreements standards based on unilateral decisions. There is no automatic recognition of services and this needs to be carefully assessed.
An important in this agreement ensures fair competition, the so-called level playing field. Both parties have committed to ensuring a robust level playing field by maintaining high levels of protection in areas such as environmental protection, the fight against climate change and carbon pricing, social and labour rights, tax transparency and State aid, with effective, domestic enforcement, a binding dispute settlement mechanism and the possibility for both parties to take remedial measures.
Trade specific aspects of the agreement
The EU Commission than recalled that the key feature of the agreement for goods that is provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin. Without this agreement, products like:
· beef, dairy, poultry, pork, lamb, cereals, sugar and several processed foodstuffs could have faced tariffs of some 50% or above under World Trade Organization rates;
· processed fish products would have faced tariffs of up to 25%;
· cars would have also been hit by tariffs of 10%;
· textiles and footwear would be subject to tariff peaks of 12% and 17%, respectively.
The EU Commission recalled that trading under ‘FTA' (free trade agreement) terms – even one as ambitious as this one, with zero tariffs or quotas – will inevitably be very different compared to the frictionless trade enabled by the EU's Customs Union and Single Market.
In particular:
· rules of origin will apply to goods to qualify for preferential trade terms under the agreement;
· all imports will be subject to customs formalities and will need to comply with the rules of the importing Party;
· and all imports into the EU must meet all EU standards and will be subject to regulatory checks and controls for safety, health and other public policy purposes.
90 minutes of trade-specific questions
There was a wide range of stakeholder questions, across multiple sectors.
Asked about the applicable ‘rules of origin' and what will traders need to do to comply with them, the EU Commission replied that these rules are necessary to ensure that the products can benefit from zero tariffs, zero quotas. The EU Commission said that products need to be are either wholly obtained from or manufactured in the EU or the UK or sufficiently worked or processed there. The EU Commission mentioned that there are specific mechanisms aimed at facilitating compliance with these rules of origin, namely:
1. A provision on ‘full cumulation', which allows traders to account not only for the origin of materials used but also if their processing took place in the EU or the EU. This mechanism enables the agreement to capture to the greatest extent the value-added in the free trade area.
2. Exporters will also be able to self-certify the origin of the goods, thereby making it easier for traders to prove the origin of their products and reducing red tape.
3. Additional flexibility in collecting documentary evidence to prove origin during the first year, to allow them to benefit from the preferences despite the little time available between conclusion and application of the Agreement.
Importing of food, animals and plants
Several questions and comments related to exporting and importing of food, animals and plants.
The EU clarified that there will be no changes to EU food safety standards and the Trade and Cooperation Agreement will safeguard the EU's high levels of SPS standards. The EU made it clear that just like agri-food exporters from every other non-EU country, UK agri-food exporters will have to meet all EU SPS import requirements and be subject to official controls carried out by Member States' authorities at Border Control Posts. Where required, these controls include the verification of health certificates in line with international standards. Similarly, EU agri-food exporters will have to meet all UK SPS import requirements. The EU Commission clarified that concerning food safety, plant or animal health or an SPS measure both the EU and the UK can request technical consultations, request audits and verifications of the other partner’s inspection and certification system.
There are simplifications:
The agreement allows for either party to unilaterally decide to reduce the frequency of certain types of border import controls, taking into account the extent to which their SPS rules converge.
It also ensures a simplified process for the approval of imports, where relevant by drawing up lists of establishments that are eligible to export to the other party, based on guarantees provided by the authorities of the exporting Party.
In case of animal or plant disease outbreaks in the territory of either Party posing a serious threat to animal or public health, the authorities of either Party may apply temporary protective measures – including suspension of imports from all or part of the country concerned or special requirements on products from that country.
Nevertheless, to improve the predictability of agri-food trade, the EU and the UK have agreed on procedures to speed up the recognition of disease-free regions in such cases.
Distortions
Participants enquired on what the procedure is if one side unilaterally distorts the level playing field.
The EU Commission clarified that the EU and the UK agreed to effective tools and mechanisms for the enforcement of their level playing field commitments, namely:
Appropriate and effective governance and dispute settlement mechanisms for solving disputes between the EU and the UK over the application of the Agreement. Ways:
a horizontal dispute settlement mechanism
calling upon a panel of experts.
Unilateral remedial measures if there is a significant negative effect on trade between the EU and the UK.
Opportunity to apply unilateral rebalancing measures in the case of significant divergences.
Recording of the meeting
The meeting has been recorded and can be watched at in its entity here:
https://www.youtube.com/watch?v=xZskhBzcB58&feature=youtu.be
EU-UK TCA SPS Committee and dispute settlement
On 25th January, there was an information session with the EU Commission on the specialised consultative groups on SPS and the dispute settlement mechanism of the EU-UK Trade and Cooperation Agreement (TCA).
The EU Commission gave a presentation on the new governance ecosystem in the TCA. The Agreement sets up a new Partnership Council, comprised of ministerial-level representatives of the EU, through the European Commission, and the UK (Article INST.1). It has a wide range of powers, including powers to amend the substantive provisions of the TCA itself, and will be supported administratively by the Secretariat, consisting of EU and UK civil servants (Annex INST, Rule 2).
The TCA also establishes a range of Committees and Working Groups to oversee the implementation of particular areas of the Agreement.
As regards the SPS Committee, the exact composition and function of those bodies are yet to be agreed.
Additionally, limited engagement with the civil society is envisioned via the Civil Society Forum, which is to facilitate ‘independent civil society organisations’ to conduct a ‘dialogue on the implementation’ of the TCA provisions.
A New Mechanism for Dispute Settlement
The EU Commission explained that under the TCA, potential disputes should first be attempted to be resolved amicably between the parties, through a process of political consultations. If unsuccessful, either party can request the establishment of an arbitration tribunal, consisting of non-affiliated arbitrators. If a party fails to comply with an arbitration ruling, the other can suspend some obligations, which must be proportionate. Importantly, some cross-retaliation is allowed, for instance between trade and the level playing field.
The EU also mentioned that the TCA firmly integrates regulatory monitoring within enforcement mechanisms. In particular, a rebalancing mechanism has been agreed, whereby either party ‘may take appropriate rebalancing measures’, such as the introduction of tariffs, to account for a divergence of standards by the other party, where that ‘impact[s] trade or investment’ between the parties.
Presentation on Market2Access tool including ROSA
On 26 January, we also attended an information session by the EU Commission on the ROSA portal – portal of self-assessment of rules of origin per FTA – which also includes the EU-UK TCA.
It was a very practical, hands-on. We present the highlights here for goods traders.
What is Access2Markets?
The tool is a successor to the market access database and covers exporting from the EU, importing into the EU. It offers product-by-product information on
· tariffs & taxes
· customs procedures
· rules of origin
· trade barriers
· product requirements
· statistics
for all EU countries and more than 120 export markets around the world, including the UK.
It also allows goods traders facing barriers when trying to export to alert the EU. The European Commission then develops a tailor-made strategy, together with the EU Member States and business organisations, tackling your barrier in the most efficient way.
In addition to key country-by-country information about import and export conditions, Access2Markets has:
· step-by-step guides into importing/exporting goods and services
· detailed guidance on rules of origin
· a tool to help you assess your product’s ‘origin’
· trade terminology explained along the way
· examples of how certain tariffs will fall over time
· graphs with trade statistics
Access2Markets is available in all 24 official EU languages and a mobile-friendly layout.
It can be accessed here: https://trade.ec.europa.eu/access-to-markets/en/content
What about ROSA?
To benefit from lower or zero duties, certain "rules of origin" need to be respected. ROSA– the new Rules of Origin Self-Assessment tool in Access2Markets – offers guidance in simple steps to determine the rules of origin for your products. ROSA is a one-stop-shop for rules of origin for your product under the EU trade agreements. ROSA is free and easy to use!
The interactive guide, at present, covers exports to or imports from
· Canada
· Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama)
· Colombia, Peru and Ecuador
· Japan
· South Korea
· United Kingdom
· Vietnam.
Getting started with ROSA is very easy. Goods traders just input their HS code and country of origin and country of destination.
Up next, the user will be guided through the legislation in a simple step by step format.
Following this guide step-by-step will allow the user to consider all applicable rules and self-assess if their product meets the Rules of Origin. This system reacts to entry, so once the rules are met, the rest does not need to be completed. In the end, the system provides a “report” which provides the conclusion of the qualification. This can be stored and reproduced in case of an audit to substantiate any claim for preferential origin.
Please find the PowerPoint Presentation delivered here:
Slides_A2M_general
.pdf
Download PDF • 1.31MB
Conclusion
The multitude of meetings regarding the EU-UK TCA illustrates the desire for the EU to “get going” and move from negotiation to implementation. While the practical consequences for traders on the ground are significant, the political implementations of new rules and regulations, bodies and institutions, mechanisms and features will also be important. This will be done in Brussels mainly.
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