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Understanding the Trade in Goods chapter

Helpsheets and support

Published: 14 Jan 2021 Update History

Read this guidance to understand the chapter Trade In Goods from the UK-EU Trade and Cooperation Agreement.

Where can I find the Trade and Cooperation Agreement (TCA)?

Trade in goods is covered in Part 2, Heading 1, Title 1 of the TCA, and associated annexes.

What does the TCA allow?

The agreement creates a free trade area between the UK and the EU. This means that goods originating in the UK can enter the EU customs zone without any tariffs (customs duties) or quotas applying. Similarly, it means that EU originating goods can enter the UK without tariffs or quotas.

It also commits each party to avoiding certain "non-tariff" barriers to trade and to recognise international schemes that simplify customs procedures for eligible traders.

 

What has changed from 1 January 2021?

The UK is no longer part of the EU single market or customs union. However, the TCA means that Northern Ireland (NI) effectively remains within the EU customs zone.

Customs formalities therefore apply for goods entering the EU from Great Britain (GB: England, Scotland and Wales) or entering GB from the EU. Customs formalities will also apply on entry to NI for goods arriving from GB. "Qualifying" goods moving from NI to GB do not need to be declared to customs. There will be no new customs formalities between NI and the Republic of Ireland.

Goods will need to comply with the rules and standards of the importing party. Checks and controls will apply for safety, health and other public policy purposes. These will depend on the nature of the goods.

Tariff and quota free access only applies to goods that "originate" in the other party. "Rules of origin" are used to determine whether goods qualify for originating status. If goods are deemed not to qualify then corresponding tariffs and quotas could apply. Customs authorities have the power to apply origin decisions retrospectively. Origin will therefore be of high importance to businesses trading in manufactured goods. The rules are complex and product specific. See Determine where your goods originate.

 

What do I need to do to clear customs?

Customs procedures depend on the nature of the goods and the port they are shipped through, as well as the date of the shipment as some procedures at the GB border are being phased in over time. Businesses shipping goods across the UK border should therefore familiarise themselves with the Border Operating Model which explains the different requirements.

At the core, these requirements apply:

Customs declarations

The arrangements for completing customs declarations will depend on which port is used, which computer system is used and who is doing the shipping. Refer to the UK Border Operating Model for the full detail. Simplified procedures apply to imports to the UK until the end of June 2021.

Nevertheless, at a minimum there is some standard information that businesses will need to have to hand. A key starting point is the commercial invoice, which you would expect to complete even if an agent is handling the customs formalities on your behalf. It is therefore important that invoices or equivalent commercial documents are available at the time of shipping, complete with all the information required and accurate.

The information needed includes these details, which will be of particular interest to the finance department as, where tariffs do apply, they determine the amount of liability

Value

The invoice value of the goods. See Value your goods for customs

Category

The "Harmonised Tariff Code" of the goods being shipped. There are around 5,000 product categories and it’s important to select the appropriate one. Accurately selecting the appropriate category speeds up exports and reduces delays. Where tariffs apply, the HTC is used to assess which tariff rate is used. See Classify your goods using commodity codes.

Origin

Identifying the "origin" of goods might be considered the most important field to complete as tariff and quota free trade between the UK and EU is only for goods that "originate" in the other party. The TCA allows for exporters to self-certify origin, which can be done by making a statement on the invoice in accordance with ANNEX ORIG-4 of the TCA. For more information, see our guide on Determine where your goods originate

Customs duties

There will be no customs duties to pay on trade between the UK and the EU as long as the goods can be shown to originate in the other party. However, duties may be payable on imports from other countries. Excise duties continue to apply as before to alcohol, tobacco and energy products. Some traders will therefore benefit from having a Duty Deferment Account, which enables duties to be settled monthly by direct debit rather than at port. Where duties apply, having an account will reduce administration, speed-up processing at port and offer cash-flow benefits. For low volume traders, HMRC has waived the requirement to have a "Customs Comprehensive Guarantee", which is otherwise needed to open a DDA. For many traders that will make it easier and cheaper to open a DDA.

VAT

The existing rules for imports from non-EU countries now apply to imports from the EU, but with some changes. The government has introduced "postponed accounting" for import VAT on goods brought into the UK with effect from 1 January 2021. This means that UK VAT registered businesses importing goods to the UK will be able to account for import VAT on their VAT return, rather than paying import VAT on or soon after the time that the goods arrive at the UK border.

This important relaxation applies to imports from the EU and non-EU countries. For more information read our guide on UK VAT after the transition period

Safety and security declarations

In addition to customs declarations, safety and security declarations need to have been made in advance of crossing the border. These declarations protect against threats such as terrorism and the movement of illicit goods. EU (and Northern Ireland) customs authorities use an electronic Import Control System (ICS) for these declarations.

Safety and security declarations are required at the EU and NI border from 1 January 2021. They are not required for goods moving into Great Britain from the EU until 1 July 2021 or for qualifying goods being shipped from NI into GB. There are no new customs controls between NI and the Republic of Ireland. Additional information and declarations will be required for certain types of goods – in particular any goods subject to sanitary and phytosanitary controls.

 

Are there any schemes to simplify customs?

There had been some uncertainty before the agreement about whether the UK Authorised Economic Operator scheme would be recognised in the EU. The TCA now clarifies that the UK and EU AEO schemes will be recognised by both parties, providing a recognised route for traders to qualify for customs simplifications. The TCA also recognises the Common Transit Convention, which allows goods to be shipped through several countries without having to be inspected at each border.

  • Common and union transit: using "transit" means traders will not need to make customs declarations at every border crossing and allows some customs processes to be completed away from the border.

How does product regulation and compliance change?

As well as passing through customs products also need to meet appropriate standards to be placed on the UK or EU markets. That means following the relevant technical product standards including any labelling or certification requirements that may apply.

The UK and EU are now separate regulatory and legal spaces. Although the regulatory framework in the UK starts off as the same as when it was part of the EU, there is some potential for divergence over time.

Nevertheless, in the TCA, both parties have agreed to reference international standards in their domestic product standards. That should ensure a level of compatibility continues between these standards. It should also be noted that the TCA also contains "level playing field" provisions as well as a mechanism for ongoing regulatory cooperation, both of which are intended to minimise the potential for regulatory divergence over time.

For the assessment of conformity with EU/UK rules, as required for some products; the agreement allows for the continuation of self-certification, where currently allowed.

 

What rights does the TCA establish?

The TCA prevents either party from establishing certain barriers to trade. For example:

barriers to freedom of transit of goods through the EU customs territory;

  • duties, taxes or other charges that wouldn’t apply to products on the domestic market;
  • fees or other charges in excess of the cost of services rendered;
  • import and export monopolies;
  • non-automatic import licences;
  • prohibition on price requirements or licensing subject to performance requirements.

According to World Trade Organization rules, governments may take remedial action against imports that are causing material injury to a domestic industry due to a sudden surge of foreign goods or to unfair practices such as dumping or trade-distorting subsidies.

The TCA also includes specific provisions to ensure a level playing field between the UK and EU. It enables actions to be taken swiftly where there are deemed to be ‘unfair’ trade practices. Remedies might include levying tariffs on certain goods.

Both the UK and EC have departments that investigate potentially unfair import practices and consider whether trade remedy measures are merited:

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