Brexit Free Trade Agreement Rules of Origin: What You Need to Know

The Brexit Free Trade Agreement (FTA) has brought new rules of origin for the trade of goods between the European Union (EU) and the United Kingdom (UK). These rules are important because they determine whether a product qualifies for preferential treatment under the FTA. In other words, if a product meets the rules of origin, it can enter the EU or UK market without paying tariffs. Here’s what you need to know about the Brexit Free Trade Agreement rules of origin.

What Are Rules of Origin?

Rules of origin are the criteria used to determine the country of origin of a product for the purposes of trade. These rules are important because they determine whether a product qualifies for preferential treatment under a free trade agreement. In general, a product must be made in the country that has a free trade agreement with the importing country in order to receive tariff-free treatment.

What Are the Rules of Origin Under the Brexit FTA?

The rules of origin under the Brexit FTA are quite complex. They vary depending on the specific product and the materials used to make it. In general, a product must meet one of the following criteria to qualify for preferential treatment:

1. It must be wholly obtained or produced in the EU or UK. This means that the product and its components must be sourced entirely from the EU or UK.

2. It must be sufficiently worked or processed in the EU or UK. This means that the product must undergo a substantial transformation in the EU or UK, so that it is no longer considered to be the same product that was imported.

3. It must meet the product-specific rules of origin. These rules vary depending on the product and are designed to prevent tariff evasion. For example, a car must have a certain percentage of its value added in the EU or UK to qualify for preferential treatment.

What Are the Challenges of Meeting the Rules of Origin?

Meeting the rules of origin can be a challenge for businesses that operate across multiple countries and source materials from different regions. For example, a car manufacturer may source its parts from various countries and assemble them in the UK. Under the new rules of origin, the car may not qualify for preferential treatment if it doesn’t meet the product-specific rules of origin. This could result in the car being subject to tariffs when it is exported to the EU.

To address this challenge, businesses may need to adjust their supply chains and sourcing strategies to ensure that their products meet the rules of origin under the Brexit FTA. This may involve sourcing more materials from the EU or UK or changing the way products are manufactured.

In Conclusion

The Brexit Free Trade Agreement rules of origin are complex and vary depending on the specific product and materials used to make it. Businesses that operate across multiple countries and source materials from different regions may face challenges in meeting the rules of origin. However, with careful planning and adjustments to their supply chains, businesses can ensure that their products qualify for preferential treatment under the Brexit FTA.