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#Brexit thread: the 'Rules of origin' have emerged as an important potential headache in the new UK-EU trade framework, so our senior director and trade expert @StephenAdamsGC has put together a thread to explain some misconceptions... (1/)
The new deal eliminates tariffs on trade only where goods originate in the UK or EU. To originate, a good must be 'sufficiently transformed' - that is the imports it contains must be sufficiently changed or absorbed into another product with enough 'local value' (2/)
Sufficient transformation doesn’t cover simple inventory or minor change in the UK (or EU). So finished goods – eg clothes from Bangladesh or toys from China - will generally not be covered. (3/)
The deal allows companies to *cumulate* EU and UK goods for the purpose of origin – so German parts in a UK car going back to the EU are ok (4/)
.... but the EU input still has be transformed in some minimal way before it can count as British. It can’t just be stored in the UK. This provision is bad news for some retailers with UK-based inventory of EU goods for re-export to Ireland, or other parts of the EU. (5/)
Most FTAs contain provisions like this, but the underlying supply chains for finished goods in this case are much more integrated than they would generally be for FTA partners (6/)
In theory the deal could be tweaked to relax the insufficient transformation provisions. But that seems unlikely... (7/)
There are also some technical and practical fixes with bonded customs warehousing and the Common Transit Covention or the EU’s own rules on returned products in its customs code. (8/)
But, the EU may also see this as an asymmetrical problem, one that matters much more to the UK than the EU, and which simply requires UK firms to adapt their inventory models. (9/)
If you'd like to find out more, and ask questions to @StephenAdamsGC, and our GC UK expert team @alexwkdawson and @lilahhowson, please join us tomorrow Friday 12pm GMT for a discussion on opportunities post-Brexit.
Sign up here
https://bit.ly/2MyyMCq
Sign up here
https://bit.ly/2MyyMCq
For a more detailed explanation of the rule of origin issues in the context of the UK-EU FTA, please listen to our podcast from earlier this month, with @StephenAdamsGC alongside @alexwkdawson, our UK Policy lead.
You can listen to it here: https://bit.ly/2MuP13I
You can listen to it here: https://bit.ly/2MuP13I
If you want to know more of the granular detail, you can read our 2018 Report on Rules of origin, developed in partnership with the @Foodanddrinkfed and put together by senior director Stephen Adams and our trade practice lead @danicappa1
Read it here: https://bit.ly/3osDijp
Read it here: https://bit.ly/3osDijp
