Despite the Brexit trade deal clinched on Christmas Eve, businesses across the UK have quickly discovered that many of them must now pay duties on exports bound for the EU. The development is part of trade disruption that has become increasingly evident this year after Britain’s divorce from the bloc was finalised on December 31. Trade has also been badly hampered by new coronavirus border restrictions, with the roll-out of testing for lorry drivers, as Britain races to curb a rampant variant of the deadly virus.
At the heart of the Brexit deal, which came into force on January 1, is the so-called “rules of origin” condition applied to all goods crossing the border.
The rules of origin, a key aspect of all major trade deals, can rapidly turn into a costly headache for businesses.
Under the Brexit provision, any goods will be subject to a customs levy if it arrives in Britain from abroad and is then exported back into the EU.
If a British clothing retailer imports Chinese-made textiles, for example, then it would have to pay a customs charge if it re-exports the items into a member nation of the EU’s single market and customs union.Insurance Loans Mortgage Attorney Credit Lawyer
Put simply, the rules therefore determine whether an export is considered British or not.
Brexit deal betrayal as EU's 'deliberate move not to include CETA facilitation' exposed (Image: GETTY / CETA)
Raoul Ruparel, who advised former Prime Theresa May during her Brexit negotiations with the EU as part of his role with Deloitte, blamed the disruption on the EU.
Mr Ruparel argued that a facilitation for rules of origin was granted to Canada in CETA but not to Britain.
He explained on Twitter: "As I and others have said, a lot of the disruption we are seeing is the result of the fact that the UK and the EU went for a free trade agreement (FTA) rather than another form of relationship.
"However, there is an interesting point on rules of origin, where a facilitation included in CETA was not included in the UK deal.
"Under CETA a product exported from one party to the other then returned without any processing can still qualify for preferential tariff on return. But it can't under the UK deal."
He noted that one of the challenges businesses are facing is that products moved from the EU to the UK and then back to EU are no longer eligible for preferential tariffs even if they haven't undergone processing.
Mr Ruprael added: "While there are ways around this – using transit, customs warehouses or returned goods relief – they are more complicated than the simpler process found under CETA."
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