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The impact of Great Britain being outside the EU Customs Union...

Posted on 2 March 2021SharePrint

ChristmasWhen the UK (GB and NI) was part of the EU Customs Union, there were no duties payable when goods moved between the UK and the EU. The EU arrived at a Trade and Cooperation Agreement (TCA) with the UK which took effect on 1st January 2021. There is also the Northern Ireland Protocol, which has resulted in Northern Ireland (NI) remaining in the EU Single Market and being in the UK Customs Territory.

Many people expected that from 1st January 2021 there would still be no duties payable when goods moved between the UK and the EU, and there isn’t for goods that totally originated in the UK or the EU. Different scenarios have led to many instances where duty is now payable on trade between the EU and UK.  I discussed this issue with my colleague David Hooper who will be presenting The Impact of the EU-UK Trade Deal on 16th March.

David explained that this is happening where a GB company imports goods from an EU supplier that originated outside of the EU and have not been changed or altered. He also explained that EU companies are now incurring duties on goods that originated in the EU in the first place but have been sold back to the EU by GB companies without changing them or adding any value to them.

I wonder whether the brokers of the EU-UK Trade and Cooperation Agreement did not see the devil in these details. Hopefully they are revisiting the Agreement and looking for solutions to these problems. Maybe while GB remains outside the EU Customs Union there isn't a solution and companies in Scotland, England and Wales have to accept the disadvantages of this and hope that they will see some advantages. The challenge is knowing what those advantages are.

Many people are concluding that the TCA and the NI Protocol don’t sit together well. NI being in the EU Single Market and the UK Customs Territory is incongruous and will continue to introduce issues for some supply chains. I discussed this with Eric White who is an EU and international trade lawyer at Herbert Smith Freehills. His view is “The TCA and the NI Protocol create a number of distortions and some can be to the advantage of NI. That is a surprise to some but was predictable once the UK chose to leave the EU Customs Union and the European Commission agreed for Northern Ireland to remain in the EU single market.”

Written by Stephen Smith
Managing Director, UK Training (Worldwide) Limited

UK Training