UK and EU agree one-year grace period on rules of origin forms

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Companies exporting goods between the UK and the EU will not have to fill in customs forms declaring their goods are locally made for a year after the Brexit deal comes into force, offering industries temporary relief from some of the new red tape they face after Brexit. 

Britain’s formal departure from the EU single market and customs union at 11pm on New Year’s Eve means that, from Friday, businesses face a wave of new bureaucracy and checks at ports.

HM Revenue & Customs estimates the post-Brexit arrangements will add £7bn of bureaucracy to the costs of doing business with the EU.

However, the Brexit deal includes a 12-month waiver on so-called rules of origin declarations, that require exporters such as carmakers to certify that their goods qualify as locally sourced in order to avoid tariffs under the new trade deal agreed on Christmas Eve.

While companies will still have to comply with the rules, they will not have to fill in forms until 2022, offering time to adapt to the new trading landscape. 

“This new agreement will mean that vital industries with complex supply chains, such as automotive, supporting thousands of jobs, have more time to adapt to the new relationship and build the requirements into their working practices,” the UK government said.

Rules of origin are particularly critical for the British car industry, which relies on complex international supply chains and had warned that cars were likely to become more expensive even with a trade deal as many of their components originate from outside Europe.

British business groups have largely welcomed the Brexit trade agreement, with manufacturers relieved that the rules of origin allowed them to self-certify their goods under the zero-tariff regime, but had called for flexibility to allow them to adjust to the new trading regulations. 

The UK government said the 12-month waiver for declaration forms was a “success for the UK in the negotiations” because it offered “flexible transitional rules” for the car and aluminium industries.

Make UK, which represents the manufacturing sector, said the deferral “could potentially be useful for industry”. But it said greater clarity from the government was still needed.

“We need HMRC to outline what their approach will be for the transitional period up to the end of December 2021 in order to protect businesses against future problems if any early errors were made,” said Ben Fletcher, director of policy at Make UK.

The new arrangements offer a reprieve only for companies with supply chains outside Europe: they will not be required to make declarations on the origin of components when shipments arrive at ports during 2021.

But the government said: “Businesses should still ensure that their goods meet origin rules before claiming that they’re eligible for zero tariffs, and after the 12-month grace period they could be asked to produce these documents as part of compliance activity.”

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