The Rules of Origin

Since leaving the EU, those in the UK have had to get used to new rules and regulations, particularly those in the logistics industry One of the biggest changes has been the introduction of ‘Rules of Origin’. In this blog we will detail what rules of origin are, how they affect importers and exporters as well as the requirements.

What are Rules of Origin?

In short, Origin is the economic nationality of a product or shipment. Rules of origin are in place to help determine where goods have come from. There are two different types of origin; non-preferential and preferential.

Non-preferential rules of origin are used to determine where goods have come from. Non-preferential rules of origin can be used to determine what trade policy measures apply to imported goods, as well as for statistical purposes. Rules of origin are based on two key principles; wholly obtained and last substantial transformation. Wholly obtained refers to goods obtained in one country without the addition of any non-originating materials. Whilst the last substantial transformation refers to goods where more than one country was involved in the production. In this case, the country where the last substantial transformation took place is noted as the origin.

Preferential rules of origins are used to determine the origin of goods under trade agreements. This type of ‘rule of origin’ helps to establish whether goods qualify for preferential tariffs under trade deals. There are a range of requirements that goods must comply with in order to be eligible for preferential rates, you can find out more about these here.

How do Rules of Origin affect importers and exporters?

Rules of origin will now play a key role in the declaration of goods process. Every time goods are imported or exported they will need the correct rules of origin applied for customs declaration. This will be particularly important for those importing goods as trade deals may be in place offering preferential tariffs or reduced rates. If the incorrect origin is applied this could lead to non-compliance, fraud and potentially fines. It is important to note that although the exporter is responsible for determining and providing the proof of origin for goods, the importer is liable if the origin is incorrect.

What are the requirements in the UK?

Since the UK left the EU Single Market, UK businesses can no longer take advantage of EU Free Trade agreements. Whilst the UK government has agreed to roll over many EU Free trade agreements with continuity agreements, it is vital you check whether your goods are subject to the new rules of origin and tariffs. You can find more information about the requirements in the BCC Rules of Origin guide.

Where can I find further information?

If you think you are going to be affected by the changes that come into effect on 1st January 2022 then there are lots of resources available online. HRMC has put together a range of webinars and videos to provide guidance and also have a helpline.
Call 0300 322 9434 to speak to the HRMC Customs and International Trade team. There are also a wide range of resources available here.