Trade in goods has been saved
Trade in goods
Brexit deal analysis
What does the Trade Agreement say?
- The trade agreement sets definitions and common ground for the parties, e.g. in relation to the classification and valuation of goods under the World Trade Organization General Agreement on Tariffs and Trade (GATT) provisions.
- Most significantly, it eliminates customs duties on all trade in goods originating in the UK or the EU – representing the most extensive trade agreement on tariffs the EU has ever done (see our analysis on the Rules of Origin for further details).
- There are a number of other constructive measures in place to help facilitate trade, such as measures for the import of repaired and remanufactured goods, limits on the ability to impose import or export restrictions, and limits on fees and formalities in connection with import and export.
- The trade agreement confirms each party will have recourse to trade remedies such as anti-dumping and countervailing duties. Trade remedies protect domestic industries against injury caused by unfair trading practices.
How does this compare to what was expected?
The measures are in line with most modern EU Free Trade Agreements, and in some respects go further than the EU has before. The agreement provides a potential platform for greater facilitations, simplifications and information exchange in future, bearing in mind the significant level of trade between the UK and the EU.
The zero tariff zero quota market access provisions were what many had hoped for, but nevertheless represent a very positive result for businesses trading goods between the UK and the EU.
What are the actions for business?
Businesses will need to prepare for the impact of the loss of freedom of movement of goods between the UK and the EU. In particular, this means customs compliance obligations arise for goods moving between the UK and the EU. As already set out in the Border Operating Model, the UK will phase in the introduction of full border control measures – with a six-month period until import declarations need to be submitted for most goods. However, full border control measures will apply immediately in the EU from 1 January 2021.
In order to qualify for duty free access, businesses will need to check they meet the Rules of Origin in order to benefit from the preferential zero duty rate. In addition, businesses will need to manage a number of customs requirements, such as classifying and valuing goods and determining which goods are subject to licensing restrictions or prohibitions.
Business should review and monitor the details of the UK’s Trade Remedies policy by assessing the potential economic impact of trade remedies on particular supply chains (e.g. anti-dumping duty), and monitor their status and proposed duration.
Businesses should also monitor the development of the new FTA terms and associated guidance during 2021 and beyond in order to access any future
facilitations and simplifications.