The UK/EU Trade & Cooperation Agreement - Trading food: 4 key areas to know about

The Trade and Cooperation Agreement (TCA), the trade agreement between the UK and the EU was ratified by the UK Parliament on 30 December 2020 and the EU Parliament will consider the draft in early 2021.

The four key areas for trading food are set out below.

Generally this will concern tariffs, where goods may have originated from, customs and conformity assessments.

It is likely that there will be a some uncertainties for the food sector as businesses will need to look at their products and assess what paperwork, assessments, codes and tariffs will apply. It is important that the risks of where any additional future costs/tariffs may fall are agreed commercially ahead of time to reduce the risk of future costs and potential litigation :

  1. Zero tariffs and quotas on goods

The UK and the EU agreed to zero tariff and zero quota trade on goods.

However, to qualify for tariff-free access, firms will need to ensure goods meet Rules of Origin (RoO) requirements as set out in the treaty, ensuring these goods meet the ‘local’ qualification criteria.

  1. Rules of Origin

Access to the zero tariffs and quotas will however depend on whether the goods meet the Rules of Origin (RoO) required in the agreement to qualify as ‘local’ .

This will mean that businesses will have to identify the full origin of their goods as well as provide additional paperwork in order to qualify.  

To be considered ‘originating’ and qualify for preferential tariffs, products must be sufficiently worked or processed within the parties to the agreement. By contrast, ‘non-originating’ materials are materials imported from third countries. ‘Non-originating’ may also refer to materials whose origin is unknown or not possible to determine.

There are two ways in which a product can be considered ‘originating’:

  • It can be ‘wholly obtained’. These are goods that have been exclusively obtained or produced in the territory of one country, without using materials from any other country.
  • Alternatively, if it has been substantially transformed in line with the relevant Product-Specific Rule (PSR). There are three basic rules used to decide if goods are sufficiently transformed (explained in detail in section 4 (Product-specific rules) of the TCA).
    • the ad-valorem, or ‘value added’ rule
    • the change of tariff classification
    • manufacture from certain products or through specific processes

The TCA includes a list of processes that, if carried out on non-originating materials, are considered such minor processing that they do not, on their own, confer originating status i.e. if the only processing carried out on non-originating materials is listed as ‘insufficient’, that product will not obtain originating status eg grating cheese and de-shelling nuts. However, the example of crushing or grinding pepper is listed by the UK government advice as processing that goes beyond ‘insufficient operations.’ There is still therefore likely to still be some uncertainty within industry around how this may be applied and interpreted to some products.

After the end of the transition period, from 1 January 2021, in order for business to benefit from preferential tariffs when importing into the UK or EU, they will need claim preference on their customs declaration and declare they hold proof that the goods meet the rules of origin.

  • Goods that do not meet the rules of origin can still be traded but they will not be able to benefit from preference under the TCA and may have to pay the standard (“Most Favoured Nation”) tariffs that the EU and UK apply to imports.
  • For exports to the EU, this will be their Common External Tariff. 
  • Likewise, for imports to the UK, this will be the UK Global Tariff.
  • For some goods, these Most Favoured Nation tariffs may be low or zero, but for many other goods they can be much higher.
  • Businesses will need to take a commercial decision on whether it is in their interest to meet (and prove that they meet) the rules of origin in order to benefit from the TCA’s zero tariffs.

Extensive government guidance overall is available here 

The import, export and customs for businesses advice from the UK government provides detailed information covering all customs related issues for trading, and provides links to official guidance on each issue.

The Import and export goods using preference agreements advice from the UK government provides guidance on how businesses can claim preferential tariffs and check if a preferential agreement covers the goods they wish to export/import.

Businesses can find more information about the tariff rates for their products using the following links: Guidance on the UKGT.  

  1. Customs and Trade

The TCA will require customs declarations and paperwork to process the movement of goods. It does provide for mutual recognition of Trusted Trader Schemes (Authorised Economic Operator), allowing for streamlined customs procedures for traders already registered.  However sanitary and phytosanitary (SPS) border checks will be required for trade of live animals and products of animal origin, meaning that agri-food traders will meet with extra costs and burdens.

These SPS border controls will include extensive checks, with specialised paperwork and frequent physical inspections required. The TCA sets out an objective to keep the frequency of checks to a minimum. These will be regularly reviewed by a new Trade Specialised Committee on Sanitary and Phytosanitary Measures to see if further facilitations are available without compromising biosecurity.

The UK intends to phase in checks for EU goods entering Great Britain under the UK’s Border Operating Model. But checks will also be required on goods moving from GB-NI, however the EU has agreed to mitigations and ‘grace-periods’ under the Northern Ireland Protocol. 

Guidance on importing exporting live animals and animal products can be seen here 

  1. Conformity Assessments

There is only limited mutual recognition of conformity assessments therefore most goods will need to undergo two sets of conformity assessments if they are to be placed on both the UK and EU markets. Some regulated sectors including organics and wine in the food sector will have streamlined conformity assessments, see below.

  • Wine – The TCA contains specific facilitations to the trade in wine. Producers will be allowed to self-certify conformity and quality of their wine, commons principles on labelling will apply and both the UK and the EU will commit to mutually recognise wines produced according to each other’s rules, as long as they remain in line with recommendations by the International Organisation of the Vine and Wine.  Read further here  
  • Organics – The TCA outlined equivalence in current EU and UK organic rules for all categories of organic produce. Organic products complying with EU law and certified by control bodies recognised by the EU will be accepted in the UK market and vice versa. The equivalence decision will be reviewed by the end of 2023.  Read further here  

Goods in flight

There is government guidance here if goods have started their transportation before the end of the transition period ie 11pm 31st December 2020 

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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