Last reviewed 28 December 2020

The UK has reached an agreement on trade and cooperation with the EU. Tim Hiscock summarises what is known so far about the impact of the agreement on exporters and importers of goods, and all those involved in the movement of goods such as freight brokers and haulage companies.

The United Kingdom and the European Union reached an in-principle agreement on trade and cooperation on 24 December 2020. The agreement must be ratified by the UK parliament and the 27 countries of the EU and confirmed by the European Parliament. It is nevertheless expected to come into force at 11pm on 31 December when the Withdrawal Agreement expires, and the UK leaves the Customs Union and Single Market.

Although the agreement provides for significant benefits in trade, UK companies trading with the EU must be prepared for the additional requirements that will come into effect from 11pm on 31 December. The agreement does not remove the requirement for export and import declarations or product certification. The arrangements in the UK for Kent Access Permits and the arrangements for moving goods between Great Britain and Northern Ireland as previously described will still come into force as planned. In order to benefit from the tariff-free agreement, exporters must provide a declaration of origin.

Tariffs and quotas

There will be no tariffs or quotas on goods exported or imported between the UK and the 27 countries of the EU (EU27). There had been expectation of exceptions for some goods such as fresh food, but this is not the case.

To qualify for tariff-free entry, the goods must meet qualifying requirements for origin status. Because the agreement allows for cumulation, components or materials that originate in the UK or EU27 will count as qualifying in all cases. This means for example, that goods produced in the UK using a substantial amount of material of EU27 origin will qualify as being of UK origin and therefore no tariffs will apply.

Exporters must firstly check whether their goods meet the requirements for preferential origin. See the product-specific rules of origin in the treaty Annex Orig-2, starting at page 432.

Exporters will be able to self-certify the origin of their goods, meaning that forms such as EUR1 will no longer be required.

The approved text for the statement on origin is as follows:

(Period: from___________ to __________ (1))

The exporter of the products covered by this document (Exporter Reference No ... (2)) declares that, except where otherwise clearly indicated, these products are of ... (3) preferential origin.

……………………………………………………………............................................. (4) (Place and date)

……………………………………………………………............................................. (Name of the exporter)

Guidance notes are as follows:

  1. If the statement on origin is completed for multiple shipments of identical originating products within the meaning of point (b) of Article ORIG.19(4) [Statement on Origin] of this Agreement, indicate the period for which the statement on origin is to apply. That period shall not exceed 12 months. All importations of the product must occur within the period indicated. If a period is not applicable, the field may be left blank.

  2. Indicate the reference number by which the exporter is identified. For the Union exporter, this will be the number assigned in accordance with the laws and regulations of the Union. For the United Kingdom exporter, this will be the number assigned in accordance with the laws and regulations applicable within the United Kingdom. Where the exporter has not been assigned a number, this field may be left blank.

  3. Indicate the origin of the product: the United Kingdom or the Union.

  4. Place and date may be omitted if the information is contained on the document itself.

Goods that do not meet the requirements for origin (such as goods imported to the UK from a non-EU country and re-exported to the EU without further process) will be subject to the EU’s Most Favoured Nation (MFN) tariffs.

Export and import controls

The agreement does not remove the need for export and import declarations that will come into effect from 11pm on 31 December. All goods leaving the UK for an EU destination will need an export declaration before they can leave the country and an import declaration on arrival. VAT will be charged according to local regulations, which may be different from current procedures. All EU countries have their own rules on collection of VAT on imports from third countries.

The UK procedures for export declarations will be as already described. The declaration must be entered on the HMRC CHIEF System and permission to proceed must be given before the vehicle departs. Kent Access Permits must be acquired for all HGVs intending to leave the UK for an EU destination via Kent.

Conformance

The agreement will prevent unnecessary technical barriers to trade, eg by providing for self-declaration of regulatory compliance for low-risk products and facilitations for other specific products of mutual interest, such as automotive, wine, organics, pharmaceuticals and chemicals. However, all UK goods entering the EU will still have to meet the EU’s high regulatory standards, including on food safety (eg sanitary and phytosanitary standards) and product safety. This means that products of animal origin (meat, pet foods, dairy, eggs, honey and products containing any such ingredients) much carry veterinary certificates. Products that are required to display the CE mark must conform to EU requirements.

The UK will begin to introduce the new UKCA conformance mark from 1 January, but importers of CE marked goods from the EU will have at least 12 months to comply with the new requirements.

Authorised Economic Operators

The UK and the EU have agreed to recognise each other’s AEO (Authorised Economic Operator) standards, meaning that qualifying businesses can benefit from simplified customs procedures in some circumstances. More information about AEO status can be found here.

Road transport

EU and UK hauliers will be able to carry goods to and from any point of the other party’s territory, provided they meet agreed high standards on safety and working conditions. They will also be able to perform two extra operations within the other party’s territory (of which maximum one cabotage operation for UK hauliers), thus limiting the risk of having to travel back without a load. The agreement also provides for full transit rights (eg the right for Irish hauliers to cross the UK to reach the rest of the EU).

Services

The freedom of UK companies to provide services in other EU countries as a member of the single market will end at 11pm on 31 December. The “passporting” concept for financial services will end, and mutual recognition of qualifications will no longer apply. UK operators will no longer be able to supply audio-visual services in the EU.

There will be facilitations for short-term business trips and for temporary secondments of highly skilled employees.

Moving goods between Great Britain and Northern Ireland

The agreement does not affect arrangements trade between Great Britain and Northern Ireland, which are covered under a separate protocol. Details of procedures are available here.

GDPR

The agreement does not include a permanent arrangement for the transfer of personal data between the UK and EU countries, currently covered by the General Data Protection Regulation. A temporary arrangement for four months from 31 December, extendable by an additional two months, has been agreed pending a permanent arrangement.

Turkey

Turkey has a Customs Union with the European Union. This arrangement will no longer apply from 31 December. Turkey and the UK have announced that they have reached an agreement for free trade, which will be effective from 1 January 2021.

Further information

A summary of the new treaty plus access to the main 1500-page document is available at: Agreements reached between the United Kingdom of Great Britain and Northern Ireland and the European Union - GOV.UK (www.gov.uk).