Trade in Goods

Key facts:

• Since 1 January 2021, the UK is outside the EU Customs Union and the EU Single Market.
• Moving goods across the border will attract paper work and possibly tariffs, where the new rules of origin have not been met under the post-Brexit trade deal.
• A Trade in Goods section of the EU-UK Free Trade Agreement (Part Two, Heading One, Title I: Trade in Goods) sets out terms on trading goods between UK and EU.

Since 1 January 2021, UK businesses trade with the EU under the terms of the EU-UK Free Trade Agreement. If you import or export, you are advised to prepare for customs procedures and to check if you need a representative in the EU.

Summary of the Trade in Goods provisions contained in the EU-UK Free Trade Agreement:

Key positive outcomes for businesses

• No tariffs or quotas for goods. There will be no tariffs or quotas for goods traded between the UK and EU.  However, this is accompanied by a number of new customs procedures and formalities, including completing and submitting customs declarations, new ‘rules of origin’ requirements, which are needed in order to qualify for the tariff-free, quota-free treatment.
• Self-certification of the origin of goods. Traders can self-certify the origin of goods sold and enjoy ‘full cumulation’ (i.e. processing activities also count towards origin, not just materials used), making it easier to comply with requirements and obtain zero-tariff access.
• Authorised Economic Operators. Mutual recognition of trusted traders programmes (‘Authorised Economic Operators’) ensures lighter customs formalities and smoother flow of goods.
• Common definition of international standards and possibility to self-declare conformity of low risk products make it easier for producers to cater to both markets.
• Reducing barriers to trade. Specific provisions were agreed to reduce the non-tariff barriers for medical products, automotive, chemical products, organic products and wine.
• UK-Turkey trade agreement. The free trade deal has enabled the UK to reach a continuity trade agreement with Turkey which will be extremely beneficial for many supply chains which rely on the EU-Turkey Customs Union to source products. The UK and Turkey have committed to expanding this agreement in the future to include services trade and investment.
• The agreement is limited to adherence to international frameworks and cooperation in areas such as tax and debt recovery, including VAT, customs duties and excise.  UK autonomy on tax rates and rules is preserved.

Key negative outcomes for business

• New customs procedures and formalities. A return to full EU border formalities from 1 January 2021 means that goods entering the EU from the UK will require customs declarations to be completed, including proof of origin, without which duties could become payable. Goods entering the UK from the EU will be subject to a phased implantation of border controls over six months.  Specific arrangements for Northern Ireland will apply, including the application of EU customs duties applying to goods entering from Great Britain deemed at risk of entering the EU.
• Treatment of the UK as a ’third country’. UK is now treated as a ‘third country’ for regulatory purposes by the EU, requiring businesses to undertake additional processes for EU and UK approval for product and manufacturing standards. This is especially the case for the food items which will be subject to the EU’s SPS rules, such as some animal products and raw meat.
• Tax. There are changes to the way VAT and withholding tax are applied, including in some cases payment of VAT at the border, loss of simplifications and additional registrations or administrative procedures apply.
• Conformity assessments. There is no agreement on the mutual recognition of conformity assessments, which means UK manufacturers will need to have their products assessed for compliance with an EU-notified body, and vice versa.
• Agree food. The UK and EU have not agreed on how to reduce the burdens of sanitary and phytosanitary (SPS) checks and cooperation, which require enhanced regulation and physical checks for products of human, animal and plant origin. Agrifood businesses will be highly impacted, although the degree to which this is the case will depend on the implementation of the provisions of the Free Trade Agreement. There was also no agreement on geographical indications (GIs) beyond what was already set out in the Withdrawal Agreement.
• Trade remedies. The Free Trade Agreement includes virtually no restraints to prevent the UK and EU using trade remedies against each other. Trade remedies are policy tools that allow governments to take remedial action against imports which cause injury to domestic industry. This means that the level playing provisions may have less power than expected, because either side can revert to trade remedy action as an alternative resort.

To do

Export

• Check what you need to do via the Government Brexit checker tool.
• Check the general Government Export Guidance.
• If you are a non-VAT registered business, register for a GB Economic Operator Registration and Identification (EORI) number. This is automatic for VAT registered businesses.
• Check for any specific paperwork and other requirements when sending packages or parcels to your EU customers or any other parties through a courier.
• Decide whether you will submit export declarations yourself (or someone else).

If doing it yourself (not advisable unless you are confident with your ability):

• Check your importer has an EU EORI number.
• Decide if your goods can move through common transit countries (Common Transit Convention or CTC).
• Apply to use simplified procedures for import or export (C&E48).
• Acquire specialist software.
• Establish the commodity code to calculate the duties that your importer needs to pay / or find out about the Rules of Origin on the same page.
• Check if there are special rules / export licences for arms export, tobacco, certain oils etc.
• Check VAT rules.
• Find a transporter.
• Check compliance with EU product rules.
• This is what you need to do to export a parcel through the post.
• Call the HMRC helpline 0300 3301 331 for questions about exporting to the EU.

To do

Import

• Check the general Government Import Guidance.
• If you are a non-VAT registered business, register for a GB Economic Operator Registration and Identification (EORI) number. This is automatic for VAT registered businesses.
• Check for any specific paperwork and other requirements when sending packages or parcels to any EU parties through a courier.
• Decide whether you will submit import declarations yourself (or someone else).

If doing it yourself (not advisable unless you are confident with your ability):

• Apply for access to Customs Handling of Import and Export Freight (CHIEF).
• Buy software that can submit declarations through CHIEF.
• Decide if your goods can move through common transit countries (Common Transit Convention or CTC).
• Set up a duty deferment account with regular imports.
• Check the duty rates or excise duties.
• Check import VAT rules.
• Check if there are special rules / import licences for arms export, tobacco, certain oils etc.
• Identify other things that need to be actioned: e.g. change labelling, licences, identifying an approved UK border inspection post for entering your goods.
• If you carry merchandise yourself this is what you need to do.
• If you are importing products by post this is what you need to do.
• Call the HMRC helpline 0300 3301 331 for questions about importing from the EU.

NB for both import and export: Adapt contracts and INCOTERMS (International Terms and Conditions of Service) to:

• Reflect you are an exporter or an importer.
• Clarify who is paying for increased costs of customs procedures and changes to the value of the pound.
• Ensure the territorial scope of the contract is correct, stating the UK as a non-EU country.
• Define termination grounds of the contract

What’s next?

Despite the agreement on no tariffs and quotas for all goods, there will be disruptions under the new post-Brexit trade deal, as the new customs formalities and regulatory checks will need to be completed for the movement of goods between much of the UK and the EU. The exception is Northern Ireland, which remains, in effect, part of the EU customs territory and its internal market for goods.