Exporting Goods to the EU

Signed on the 30 December 2020, the EU–UK Trade and Cooperation Agreement (TCA) is the agreement that sets out terms for post-Brexit free trade between the UK and the EU.  It also includes provisions for the relationship between the UK and the European Atomic Energy Community, Euratom.  Although the TCA avoids the significant impact that a no-deal Brexit would have resulted in, the agreement does introduce complications when trading with the EU.

On the whole, the TCA is similar to free trade agreements the UK has in place with other countries, with some additional benefits as well as some additional commitments.

From day one of the new agreement, no tariffs or quotas applied to goods traded between the UK and the EU.  This is unusual in most FTAs which usually retain tariffs in some industries.  There are some caveats that can cause a tariff to apply, such as in the event of a breach of the TCA, or when goods do not meet the rules of origin.

When it comes to customs and VAT, and goods traded between the UK and EU must satisfy all customs controls; the UK’s controls generally reflect those of the EU.  Traders must complete safety & security declarations, and import/export declarations, which had caused fear among importers and exporters that this would lead to delays at customs control.

With regards to VAT, the agreement allows for co-operation between governments, but this does not change the main impact of Brexit being that exported goods are zero-rated for, and imported goods are subject to, VAT.

For UK-based manufacturing companies, post-Brexit conditions now stipulate that they prove that their goods are produced in accordance with any standards that are required before those goods can be offered for sale in the EU.  The element of exporting to the EU does not change in a considerable manner, however.

Exporting to Northern Ireland from the UK has involved some fraught negotiation and compromise on the part of the UK government.  Northern Ireland’s “soft border” with the Republic of Ireland has made ensuring the Republic’s position in the European single market while also maintaining Northern Ireland’s access to the UK market difficult.  As of 1 January 2021, Northern Ireland benefits from a “best of both worlds” scenario: it retains access to the EU single market for goods while also remaining in the UK customs territory.  Northern Ireland also remains aligned to various EU rules and standards.

The Trade and Cooperation Agreement is very much a work in progress. With review periods at five year intervals, it may well change.  Looking ahead for the short-term, it is likely that business will continue to find its feet through 2021, adapting as quickly as possible whilst trying to mitigate issues and problems that are certain to arise.