Brexit: What are the rules of origin?
2 years ago
Post-Brexit, the UK have been made aware that trading, customs and duties are expected to have a slight twist with fees despite the Brexit free-trade deal. You can see more about the effects in our article ‘Brexit: How will this impact my business?’. But for now, I’m going to discuss the rules on goods that are set to cross the border.
The ‘rule of origin’ is a new key feature of trading which essentially determines whether an export is considered British or not. Sadly, it seemed that goods sold into the EU wouldn’t face custom duties, but it turns out that doesn’t apply to all goods, making it quite costly where this new set of rules is concerned.
All products must be made entirely in the UK or EU or transformed in such a substantial way that some type of value is added. An example would be if a British retailer imported goods from somewhere outside of the EU – we’ll use Asia as an example – then the retailer would need to pay a customs charge if they were to then export it to the EU again to sell.
Considering a huge proportion of sellers import from outside the EU for better quality and costs and then export to EU destinations, if they’re going to continue then they’ll have to pay custom duties.
Businesses do have every right to be miffed as they have essentially been blindsided by the rule of origin; they now have a major disadvantage when it comes to selling in the EU and had no time to prepare.