101 UK Brexit Notes

Connemara Programme October 16 2018 pg. 114 Business: Product Tariffs Classification Purpose This technical notice is one of a series which covers the movement of goods between the UK and the EU following EU exit. It should be read alongside Trading with the EU if there’s no Brexit deal and Trade Agreement Continuity. In the unlikely event that the UK leaves the EU on 29 March 2019 with no agreement in place, EU goods will be treated as goods from elsewhere in the world are treated now, until such a time as a preferential trading agreement can be established. The purpose of this notice is to set out the way in which businesses will identify their goods in the correct way, in order to establish what duties and specific rules apply, as a requirement of the declaration process (see the Trading with the EU if there’s no Brexit deal technical notice). This notice is particularly relevant to firms that currently trade predominantly with the EU, where the declaration process does not apply, and there are currently no tariffs on UK exports or imports to or from the EU. Before 29 March 2019 The UK is currently a member of the European Union, its Single Market and Customs Union, and so applies the EU’s Common Customs Tariff (CCT) at the external EU border.  For goods moving between EU countries, there are no customs duties, and no routine intervention during the movement of goods.  For goods entering the EU’s Customs Territory from the rest of the world (“third country goods”), an import declaration is required, customs formalities and checks are carried out – for example for compliance with EU regulations – and any customs duties must be paid. Imports from a country with which the EU has a free trade agreement may qualify for preferential rates of duty and rules of origin. Imports from a country with which the EU does not have a free trade agreement will be subject to the EU’s Most Favoured Nation (MFN) rates of duty and non-preferential rules of origin. This note does not describe transit, any other way in which goods are held under duty suspense, or where duty is paid in a member state other than that to which the good is imported (for example Single Authorisation for Special Procedures). See other notes on import procedures/special procedures. Customs processes centre on the provision of information to a customs authority by way of a declaration (see Trading with the EU if there’s no Brexit deal technical notice). This captures information necessary to collect the import duty due on a good, and to affect any controls necessary to ensure public safety, security, and health. The required data identifies the good itself, where it is from, and what it is worth, in addition to, for example, information about the importer and exporter. Once any duties have been paid on third country goods, and any other formalities complied with, those goods can move freely between member states (they are in “free circulation”) and are no longer subject to routine controls. After March 2019 if there’s no deal The government has made it clear that when the UK leaves the EU it is going to leave the EU’s single market and Customs Union. It is negotiating to secure an ambitious and comprehensive future economic partnership with the EU, which will allow frictionless movement of goods between the UK and the EU. However, in the event of “no deal”, goods traded between the UK and the EU after 23h on 29 March 2019 will be subject to the same requirements as third country goods, including the payment of duty. Under World Trade Organisation (WTO) rules, the principle of most-favoured-nation (MFN) treatment means that, unless a preferential agreement is in place, the same rate of duty, on the same good, must be charged to all WTO members equally. For UK exports to the EU, the EU will require payment of customs duty at the rate under the EU’s CCT. For goods imported to the UK from the EU, the UK will require payment of customs duty at the rate set by the UK Government. In preparing for “no deal” businesses will want to be aware of the following:  the Taxation (Cross-Border Trade) Bill will provide the necessary powers for the UK to set its own tariff once it leaves the EU  in a ‘no deal’ scenario, trade with the EU will be on non-preferential, WTO terms. This means that MFN tariffs and non-preferential rules of origin would apply to consignments between the UK and EU  the EU will apply its MFN rates to goods imported into the EU from the UK. The EU MFN rates are set out in the CCT, where they are listed as “erga omnes” (which translates as “towards all”), rather than stating a specific country. The EU may change these rates between now and March 2019, but this provides an indication  the UK will apply its MFN rates to goods imported into the UK from the EU. The government will determine and publish these new UK duty rates before we leave the EU. They may be different from the rates in the EU’s CCT