Following the seemingly unwritten rule that all deals pertaining to Brexit must be completed at the eleventh hour, the Trade and Cooperation Agreement was secured with just days of the transition period to spare.
One month on, the dust is beginning to settle on the all-important document which will set the parameters for trade conducted between the UK and the EU for years to come. It’s a hefty tome which will require a good deal of scrutiny to unpack in full, but what will its main components mean for businesses?
Well, the answer to that question will largely depend on your line of business, the EU member state you are trading within, and the composition of your supply chain. The Agreement covers goods but not services and, whilst numerous general provisions are laid out, they will often have exceptions or conditions attached to them.
The big headline that immediately drew attention is that trade in most goods will be tariff and quota free. However, the new relationship will include some new trade barriers, additional costs, and adjustments to the operation of supply chains.
Rules of origin will be applied to goods in order to establish whether they qualify for preferential trade terms under the Agreement. Rules of origin determine the ‘economic nationality’ of products that comprise components or materials made in more than one country. Therefore, only those that were entirely manufactured or obtained in the UK or EU, or sufficiently processed there, will be exempt from tariffs and quotas.
Goods that were imported from elsewhere (or consist of imported components) may still be subject to customs duties depending on the nature of the goods and the arrangements in place with their country of origin. Exporters can also self-certify the origin of the goods, allowing traders to prove the origin of their products and limit the amount red tape involved.
All formalities required under EU and British Law apply to cross channel imports. A definition of international standards and recognition of international standard-setting bodies has been agreed to ensure that the UK and EU’s domestic product standards and technical regulations remain as compatible as possible whilst also protecting the right of both parties to regulate.
Ultimately, it’s hoped that the Trade and Cooperation Agreement will give businesses some much needed certainty and maintain favourable conditions for ongoing access to those trading across UK and EU markets. Several provisions are aimed at preventing unnecessary barriers and simplifying procedures to provide proof of compliance. Equally, the Agreement as a whole is designed to ensure a level playing field and fair competition.
N.B The provisions in the agreement do not govern trade in goods between the EU and Northern Ireland, where the Protocol on Ireland and Northern Ireland included in the Withdrawal Agreement will apply.
