How are « rules of origin » affecting British companies?

The World Trade Organization (WTO) states that rules of origin are “the criteria for determining the country of origin of a product.” they allow to define “rights and restrictions applicable” to these products, especially under which circumstances they can be exported or imported.

Their classification will determine what tariffs need to be paid. It can jeopardize exports from British companies to the EU: for example, if a car does not comply with the rules of origin, the company can face a custom duty of 10%, which would not be viable for the business.

The UK-EU Free Trade Agreement promises free trade between the two countries, avoiding tariffs or quotas. However, companies have to comply with certain conditions.

One of them is known as rules of origin. If a British company wants to export tariff-free to the EU, their products should not contain more than a certain percentage of components non originating from the EU.

This is already affecting the supply chain of many British companies.

For business relying on importing foods from outside the EU to repackage or recondition them, it won’t be possible to export tariff-free to the EU because your product will not be considered to be made in UK. Most of the processing must be carried in the UK to steer clear of customs duties.

The answer is yes. This is especially an issue for the food industry and many organisations have complained about this. If goods are shipped from the EU to the United Kingdom and then are sent back to the EU, there will be punitive tariffs.

The deadline for rules of origin was set to the end of 2021 and provides the necessary documents which state that the rules of origin are followed.

However, there has been an exception for electric vehicles. Manufacturers will have until the end of 2026 to comply with those rules of origin.