UK Global Tariff (UK Brexit)

I posted before that the UK has announced its new UK Global Tariff.

These are tariffs that will apply on any products that the UK imports on a Most Favoured Nation (MFN) basis from the end of the transition period when the UK is no longer bound by the EU’s Common External Tariff. The published tariffs come after a public consultation on the subject was held in February this year.

Under the new Global Tariff, 66% of tariff lines will see some degree of change.

Tariffs on around 2,000 products have been fully eliminated, almost doubling the number of tariff-free products compared to the existing EU MFN schedule. A further 40% of tariff lines have been ‘simplified’ meaning that they have either been rounded down to the nearest standardised band, or have been converted from specific duties into simple percentages. And just under 10% of tariff lines have been converted from being expressed in € to being expressed in £ using an average exchange rate over the last 5 years. This conversion also entails some degree of simplification, as specific duties have  been rounded down to the nearest £, and for two-part duties, which include both a percentage tariff and a fixed charge, the percentage component has been rounded down to standardised bands.

My Blog does not focus on tariffs and customs, but as I explained in an earlier Blog post, we (Cardinal Environment) will be putting some staff through the UK Customs Academy training, in order to assist our customers further.

L. Alan Winters CB, Professor of Economics and Director of the UK Trade Policy Observatory; and Michael Gasiorek, Professor of Economics at the University of Sussex and Julia Magntorn Garrett, a Research Officer in Economics at the University of Sussex, (Fellows of the UK Trade Policy Observatory) have written a useful Blog on the subject.

This Blog is here. Extracts are below in italics.

The largest relative change is for stone, plaster and cement, where around 85% of tariff lines have changed to some degree, just under half of which have been fully liberalised. This is followed by processed food products, where most of the change is due to conversion of specific duties, and plastics and rubber products and chemical products where the vast majority of tariff lines have been simplified (rounded down).

The tariff changes would increase the share of imports that can be imported duty-free from countries currently trading on MFN terms. Under the Global Tariff, around 70% of the UK’s imports from ‘MFN countries’ would be duty-free compared with around 52% currently. However, the Global Tariff is far less liberal than the UK’s (now superseded) ‘No deal’ tariffs that were published in October last year, which would have seen tariffs eliminated on around 95% of imports from ‘MFN countries’.

If the UK and the EU do not reach a trade deal by the end of the transition period, the Global Tariff will apply also to imports from the EU. In this scenario, only around 44% of imports from the EU would be tariff free, compared with 100% currently. This is a higher share than if the current MFN tariff schedule was applied on EU imports, but is a much smaller share than it would have been under the ‘No deal’ tariffs.

Canada is one of the countries that did not roll over their trade deal with the EU, this writing is useful on the subject, and gives context – here.

UK-EU Future Relations (UK)

Today sees the publication by the UK of a number of trade relevant documents –

(1) the UK Global Tariff (UKGT) that will replace the EU’s Common External Tariff from 1st January 2021 – here

(2) the draft UK legal texts in the ongoing trade talks with the EU – here

The UKGT will apply to all goods imported into the UK unless:

• an exception applies, such as a relief or tariff suspension

• the goods come from countries that are part of the Generalised Scheme of Preferences

• the country imported from has a trade agreement with the UK

This Blog does not focus on Trade or Customs. Note – commencing in July 2020, we (Cardinal Environment Limited) will be putting some staff through the UK Customs Academy Level 4 qualification, this is in order to improve our services in the areas of Trade and Customs, that impinge on goods movement.

Trade talks are underway with the EU and the US.

The UK Government will announce shortly it’s proposals for how Northern Ireland based traders will benefit from the UKGT. The Withdrawal Agreement Ireland-Northern Ireland Protocol creates special arrangements for Northern Ireland. I will Blog post separately at that point.

UK-US Free Trade Agreement (UK)

The UK government has this morning set out its long awaited objectives for its proposed trade agreement with the United States.

The policy paper is here.

The objectives are set out on pages 9 to 12.

Of relevance to this Blog are the following objectives – to

• remove and prevent trade-restrictive measures in goods markets, while upholding the safety and quality of products on the UK market,

• seek arrangements to make it easier for UK manufacturers to have their products tested against US rules in the UK before export,

• promote the use of international standards, to further facilitate trade between the parties,

• uphold the UK’s high levels of public, animal, and plant health, including food safety,

• enhance access for UK agri-food goods to the US market by seeking commitments to improve the timeliness and transparency of US approval processes for UK goods,

• improve trade flows by ensuring a transparent, predictable, and stable regulatory framework to give con dence and stability to UK exporting businesses and investors,

• secure commitments to key provisions such as public consultation, use of regulatory
impact assessment, retrospective review, and transparency, as well as regulatory co-operation.

New Import Tariff (UK Brexit)

The Transition Period ends 31st December 2020

The UK is today consulting on its new Import Tariff that will apply to all imports, except those under a trade deal, from 1st January 2021.

This Blog does not focus on tariffs.

Note: special arrangements will apply to Northern Ireland.

The consultation document is here. Consultation is short and ends on 5th March.

The consultation seeks :

* views on a potential series of amendments to the EU’s Common External Tariff to create a bespoke UK tariff- specifically: simplifying and tailoring the UK Global Tariff policy, removing tariffs on goods imported by UK businesses to manufacture other goods, and where the UK has zero or limited domestic production

[so, not a temporary zero tariff on most goods]

* specific feedback on specific products or commodity codes of importance to individuals (individual organisations), including on the corresponding tariff rate

* information on an individual’s (individual organisation’s) interactions with MFN tariffs and the importance of tariffs to a particular sector

UK Temporary Import Tariff Regime (UK Brexit)

Exit day is 31st October (this date is in a Statutory Instrument)

Today (8th October) the UK republished it’s temporary Import Tariff Regime that will apply in a no-deal Brexit.

Here

[this Blog does not focus on Customs or VAT]

It is mostly unchanged from the March version. Three aspects have changes – affecting HGVs, bioethanol and clothing –

• lower tariffs on HGVs entering the UK market, striking a better balance between the needs of British producers and the SMEs that make up the UK haulage industry, ensuring that crucial fleet replacement programmes that help to lower carbon emissions can continue

• adjusted tariffs on bioethanol to retain support for UK producers, as the supply of this fuel is important to critical national infrastructure

• tariffs applied to additional clothing products to ensure the preferential access to the UK market currently available to developing countries (compared to other countries) is maintained.

Error in Trade Rules of Origin – Brexit Date (UK Brexit)

Today’s post on Trade Rules of Origin displayed an incorrect Brexit Date – the Brexit Date is 31st October 2019.

The Blog post is corrected online.

Thank you!

Trade Rules of Origin (UK Brexit)

The Brexit date is 31st October – the Brexit time is 12.00 (midnight) CET

[I am waiting for the Exit day Statutory Instrument (SI) to be laid to change the Exit day in UK law from tomorrow 12th April – once this is laid future Blog posts will reference the UK Exit day not the international Brexit date]

Yesterday the UK government (Department for International Trade – DIT) issued instructions on Trade Rules of Origin to be used after Brexit – here.

This Blog does not focus on Rules of Origin. [this will likely be the only Blog post on this matter]

The Government instructions set out how to continue to access preferences where the UK has agreed trade continuity arrangements with partner countries, or through the UK’s Generalised Scheme of Preferences (GSP).

Further advice will be published when the UK leaves the EU.

The UK will implement its own independent Generalised Scheme of Preferences (GSP) scheme from day one after Brexit. It will have its own administration arrangements, but will aim to keep much of the existing administration arrangements as the EU.

To ease the transition, the UK will keep the same qualifying operations as the EU’s rules of origin, and will continue to use FORM A as proof of origin.

The UK will not be able to use the EU’s Registered Exporter Scheme (REX).

To help transition goods arriving into the UK, up to 12 months after 12 April 2019 [this date is now 31st October 2019, we are awaiting the Exit day SI – see earlier] HMRC will allow GSP exporters to use the REX statement on origin as proof that goods originate from a GSP country.

That statement on origin must hold the valid REX registration number of the exporter, and dated no later than 12 April 2020 [this date may also change, when the Instructions are updated with the Exit day change].

[the Brexit date may change, please continue to follow this Blog]

Trade Continuity (UK Brexit)

Disclaimer : this Blog does not focus on trade tariffs and processes per se

The UK Government today (21st Feb 2019) published revised guidance to UK and international businesses that use preferential trade terms under existing agreements between the EU and third countries to advise them about a scenario in which the UK leaves the EU without a Withdrawal Agreement (no deal, or unmanaged Brexit).

While some continuity agreements are likely to be concluded by exit day, the DIT Secretary Statement (of today) asserts it is the duty of government to produce a highly cautious list of those that both may and will not be in place in order that businesses and individuals ensure that they are prepared for every eventuality.

A list of the agreements and guidance of what to do in no deal is here.

The DIT Secretary statement continues –

Scope of the Trade Continuity programme

The Government is seeking continuity for existing EU trade agreements in which the UK participates as a member of the EU. These agreements constitute around 11% of our trade. These agreements also cover a wide variety of relationships, including:

• Free Trade Agreements (FTAs);

• Economic Partnership Agreements (EPAs) with developing nations;

• Association Agreements, which cover broader economic and political cooperation;

• Mutual Recognition Agreements (MRAs) and;

• Trade agreements with countries that are closely aligned with the EU

Businesses in the UK and partner countries are eligible for a range of preferential market access opportunities under the terms of these agreements. These can include, but are not limited to:

• preferential duties for goods, including reductions in import tariff rates and quotas for reduced or nil rates of payable duties;

• quotas for the import of goods with more relaxed rules of origin requirements;

• enhanced market access for service providers;

• protection from discrimination in public procurement opportunities across a range of sectors;

• allowing parties to mutually recognise conformity assessment procedures;

• the ability to complete mandatory inspections and tests on products close to the place of production; and

• common standards on intellectual property.

Progress Update

To date, the UK has signed trade agreements with Switzerland, Chile, the Faroe Islands, members of the Eastern and Southern Africa (ESA) Economic Partnership Agreement, Israel and the Palestinian Authority.

The UK is also close to formal agreement on text with Fiji and Papua New Guinea (Pacific) and arrangements are being made for their signature. It is likely these agreements will be transitioned in time for day one of exit.

The UK has also signed Mutual Recognition Agreements that allow continuity of trade with Australia and New Zealand, and the United States. These MRAs mean that UK exporters can ensure goods are compliant with trading partners’ technical regulations before they depart the UK.

Discussions with other partners continue with the aim of replicating the effects of existing EU agreements as far as possible. The DIT Secretary statement asserts –

We are continuing to engage with those other partner countries to conclude agreements in time for exit day. Particularly intensive discussions are, for instance, happening now with partners such as SACU+M, EEA, Canada and South Korea.

Some agreements that will not be in place for exit day – these are Andorra, Japan, Turkey, and San Marino.

As the statement points out, the UK’s trade relationships are not just determined by trade agreements; the UK also participates in the EU’s Generalised Scheme of Preferences (GSP), which allows developing countries, including Least Developed Countries and low to lower-middle income countries to receive preferential access to the UK market. The Government fully intends to continue the existing market access provided by these unilateral preference schemes.

To do so we have taken the necessary powers through the Taxation (Cross-border Trade) Act 2018 to allow us to continue providing non-reciprocal reductions in tariffs to developing countries. Through this, the current beneficiaries of the EU’s GSP will be able to export to the UK after our EU exit on the same terms as at present. We will shortly be laying the necessary secondary legislation in Parliament.

This means that some countries will continue to be eligible for preferential tariff treatment under the UK’s newly established independent trade preferences scheme even if the relevant EU-partner country trade agreement has not yet been transitioned into a UK-partner country agreements.

Details of non-EU countries with whom the UK currently has in place arrangements for preferential trade, including both free trade agreements and unilateral preferences is here.