Rules of Origin

Jan 12, 2021

Under the terms of the Agreement, where goods qualify as originating in the UK or EU, no customs duty will arise on import into either territory. This is known as the Rules of Origin and they are an intrinsic component of every free trade area. If the goods do not qualify as originating in the UK or EU, trade under World Trade Organisation rules will apply, which means tariffs will apply.

Rules of origin determine the ‘economic nationality’ of products when such products have been produced using materials or components in more than one country.

To qualify under the Rules of Origin and ensure that products benefit under the terms of the free trade agreement (zero tariffs and zero quotas), goods must be either wholly obtained from or manufactured in in the EU or UK or be substantially transformed/processed in the EU or UK, in line with the specific origin rules that apply to the product being exported.  There is a limit set on the value of non-originating materials that can be used in order to benefit from the Agreement. Chapter 2 of the Trade and Cooperation Agreement covers Rules of Origin.

It is important to clarify that “origin” does not mean where the goods have been shipped from but rather where they have been produced or manufactured. For example, if a British clothing retailer imports textiles from China and then ships the textiles straight to the EU, tariffs would be due on that import into the EU as the textiles were not substantially transformed in GB. The import is not regarded as being from GB, rather from China.

More information on what qualifies as substantial transformation and how it is defined can be found here

Proving origin

In order to benefit from no customs duties applying, the importer must declare that they hold proof that the goods comply with the Rules of Origin. A commercial invoice detailing same or other commercial documents that describe the goods should suffice. Otherwise, a self-declaration can be done. For example, in Ireland, where consignments exceed €6,000, EU exporters will need to be authorised by Revenue’s Registered Exporters system (REX) to provide this export statement of origin. 

For more information on the Rules of Origin, see the European Commission’s website and gov.uk.