Page 7 - Industrial Technology EXTRA - Brexit Briefing

BREXIT BRIEFING

Let’s look at some examples. If you’re a UK cumulation agreement, the battery packs good being exported back to the EU. All
company manufacturing fruit smoothies, the could imported from the EU, incorporated operations carried out in the UK or EU are
commodity code is 2009. The origin rule is into a UK manufactured vehicle and then taken into account when determining origin.
Change of Tariff Heading (CTH) – ie it has to exported back into the EU. Processing must be more than the
change first four digits. If you’re importing a processes listed in the Insufficient
smoothie and just adding some sugar or Evidence of origin Processing Article (Article ORIG.7).
adding a little bit more fruit, then it wouldn’t Evidence of origin is different to other UK
qualify for a change of tariff heading. But if trade deals. Because of the volume of goods EXAMPLE 3: FOOD AND BEVERAGE
you’re sourcing all the raw fruits, they would involved, efforts have been made to make
l A tin of chopped tomatoes processed
fall under Chapter 8, and they are going to this as simple as possible. There will be no
in the UK
be sufficiently processed, and the finished requirement for an EUR1 Preference

product would be classified as 2009. Certificate to be issued for movement of
goods between the UK and EU. Instead, the
In this example, you could import fruit from trade agreement allows the use of two
the EU under bilateral cumulation, and they different types of evidence – invoice
could be included in the UK origin because declaration or importer’s knowledge.

there is a change of tariff heading. The

smoothie can then be exported to the EU With the invoice declaration, a statement of
classed as a UK originating product. The origin is included by the exporter. On the
only potential issue would be the sugar declaration, the UK exporter needs to state u HS code: 2002.90
content (under Chapter 17): any non- their EORI number, while EU exporters u Origin rule: Production in which all
originating sugar content cannot exceed require registration for REX (Registered materials of Chapter 7 used are wholly
40%. If you’re importing large quantities of Exporter status). There is currently no obtained
sugar from outside the EU, if 40% by weight monetary limit.
l Rule requires tomatoes to be produced in
of the smoothing contains non-originating the UK
sugar, then it would not qualify. The second option is importers knowledge.
l However, with cumulation, a UK producer
The this allows an importer to claim a
can import EU tomatoes and process them
EXAMPLE 2: AUTOMOTIVE PRODUCTION preferential duty rate based on their own into chopped tomatoes
knowledge about the originating status of
l Hybrid motor vehicle manufactured l The finished product can be re-exported
in the UK imported products. This might apply if you’re back to the EU as a UK originating product
shipping under DDP terms: you’re the

importer, you’re claiming the preference, you
would have knowledge of how that product
was built up for the rule of origin, so you Let’s consider a tin of chopped tomatoes,
could use importers knowledge rather than where the raw tomatoes are processed in the
the statement of origin. UK. In this instance we have to look at the 6-

digit tariff code, 2002.90, with the origin rule

As part of the trade deal there is being production in which all of the materials
responsibility on both parties to provide used are wholly obtained.
u HS codes: 8702 to 8704 mutual assistance to monitor the evidence
u Origin rule: MaxNOM 45% (EXW) and for origin purposes. Bilateral cumulation means the tomatoes
battery packs of heading 85.07 of a kind don’t have to be sourced in the UK, they can
used as the primary source of electrical Bilaterial cumulation be brought in from the EU, processed
power for propulsion of the vehicle must Under the UK/EU trade agreement, bilateral sufficiently to change the tariff heading, and
be originating cumulation has been accepted. This covers, then exported to the EU as a finished product
l Rule requires a maximum of 45% (by for example, UK origin parts being exported of UK origin.
value) of non-originating materials to be to the EU for processing, and EU finished
used and battery packs must be originating product incorporating that UK origin being
shipped back to the UK. In that case, the
l Cumulation allows EU originating goods to
be imported for the use in the UK finished product would be specified as being
calculation if used in or assembled onto of EU origin, and there would be no duty
the finished vehicle because the original export into the EU
would have a statement of origin as well,
stating that they are UK origin parts.
In our second example, let’s look at the
manufacture of an electric or hybrid motor This allows the reduction in any customs
vehicle, covered by HS codes 8702 to 8704. duties crossing borders where there are EU
Here we must not exceed specified and UK products.
maximum amounts of non-originating
material. So where you’ve got an ex-works Full bilateral cumulation allows an exporter
price of, say, £100, provided less that £45 of both to use originating materials and
that ex-works price is made up of non- products, and to carry out processing or
originating material, then it would qualify. production on non-originating materials. It
means that even if a EU intermediate product
With this particular rule of origin, it adds in is not itself deemed as originating from the
that the battery packs have to be of EU, UK firms can count the EU value-added
originating nature. But with the bilateral in that product when using the input in a final

INDUSTRIAL TECHNOLOGY EXTRA – WINTER 2021 7