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15th February 2021

Rules of origin: Why are they causing a headache for businesses?

Following the end of the transition period from the UK’s exit from the European Union on January 1, businesses have been trying to make sense of the new arrangements for exporting inside and outside of the EU.

Leading business organisation Chambers Wales’ recently strengthened international team are using their expertise to support businesses through new trading procedures including rules of origin.

Many UK exporters are finding that goods that they expected to export tariff and quota free do not meet the origin rules, putting their goods at a disadvantage compared to their European competitors. With new processes and paperwork causing challenges for businesses, shipments are being held up and consequently leading to increasing concerns about the impact on the economy.

What are rules of origin?

Rules of origin are used to attribute a country of origin to a product in order to determine its economic nationality. The rules are written into all trade agreements to protect a country’s core production from low cost imports and to ensure that reduced tariffs covered by the agreement are only available to goods originating in the countries that have signed the agreement. As part of the EU’s internal market there was no need for rules of origin as all goods moved around the single market.

What has changed?

The new rules only allow goods of UK origin to move into the EU tariff and quota free. With modern supply chains, parts come from all over the world, creating challenges for businesses as they try to understand whether their products meet the threshold for conferring UK origin on their exported products.

There are four types of rule that a product may be required to meet in order to confer origin including wholly obtained, change of tariff code, value added/percentage rule and specified processes. Businesses are responsible for checking their product commodity codes to ensure the goods can be classed of UK origin, as the rules vary depending upon the product.

What can businesses do to avoid substantial extra cost?

To export goods from the UK to the EU, businesses will now need to make a statement of origin and may need to obtain a certificate of origin, confirming where the goods and their components originate from, depending upon the end use of the goods.

For exports outside the EU, businesses may also need a UK EUR1 preference certificate to allow goods to be exported to countries where the UK has a trade agreement in place, allowing businesses to avoid having to pay tariffs and duties at the importing border.

How can Chambers Wales help?

Chambers Wales has extensive experience in supporting internationally trading businesses. Having issued certificates of origin for exports to countries outside of the EU for years, the recently strengthened international team are able to curate end-to-end solutions to ensure that businesses are compliant.

Chambers Wales also offer accredited British Chambers of Commerce training courses on importing and exporting requirements, in addition to the Foundation Award in International Trade.

Jo Price, Director of International at Chambers Wales, said: “With the ability to connect our members to any market in the world, we are well placed to help our members grow their business globally.

“Chambers Wales are much more than a customs intermediary and documentation service. We offer businesses in Wales an end-to-end international trade solution. We provide support to companies who are navigating the changes to trading with the European Union through expert advice and accredited training to ensure our members can continue to trade on the global stage.”

For further support on international trade, visit https://cw-seswm.com/international/.

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