EU-UK Trade and Cooperation Agreement: relevant aspects for the footwear industry

After year-long intensive negotiations, on the 24^th of December 2020 the European Union and the United Kingdom reached an agreement on the terms of their future cooperation, the EU-UK TCA.

CEC welcomes the Brexit agreement and is pleased about the zero-tariffs and zero-quotas deal. However, difficulties, delays and confusion are expected to arise due to border controls. Considering that 35% of extra EU27 footwear exports were directed to the UK in 2019, simplified customs and administrative procedures are urgently needed at UK/EU borders which are essential to reduce the negative economic impact of Brexit.

The agreement on trade consists of two main aspects:

• It provides for zero tariffs and zero quotas as of 1^st of January 2021 on all goods that comply with the appropriate rules of origin.
• New border controls will be introduced (i.e., safety checks and customs declarations). As a result, EU footwear companies will need to follow the procedures for third countries. EU customs authorities will check documents and conduct control from 1^st of January 2021. The UK has established three phases in terms of border controls:
  • From 1 January 2021: businesses importing standard goods will need to meet minimum customs requirements (i.e.  keeping customs records), but will have up to 6 months to submit customs declarations. Checks will be carried out on certain high risk categories of goods. Any import duties due can be deferred until the customs declaration is submitted.
  • From 1 April 2021: businesses will need to pre-notify movements of products of animal origin and regulated plants and plant products. In addition, the necessary health documentation is required to be submitted.
  • From 1 July 2021: full border controls will be effective. All traders will need to submit complete customs declarations and pay any applicable import duties, at the time of importation.

The procedure at UK borders and the import preparations are detailed here and in the following two documents:

• How to import goods from the EU into GB from January 2021
• How to export goods from GB into the EU from January 2021

Useful documents published by the European Commission:

• EU-UK TCA Full agreement in principle
• DG TAXUD: Taxation and Customs: Questions and Answers on the impact of the UK’s withdrawal from the EU, its Single Market and Customs Union
• DG TAXUD: Taxation and Customs: Information relating to the UK no longer being covered by EU preferential trade arrangements with third countries
• Questions & Answers on the EU-UK TCA

As a Brexit consequence, the UK will no longer follow the EU’s trade policy and will not be part of EU trade deals. Separate talks are being held by the UK authorities in order to reach trade deals with important trade partners.

Proof of origin

Goods from the EU-UK free trade area complying with the appropriate rules of origin will not be subject to customs duties. The importer will have to prove that the goods are originated from the other party. UK importers have to prove that they are importing goods with EU origin and the other way around.

The preferential treatment (zero tariffs) is subject to the submission of a claim by the importer, which is usually based on a “Statement of Origin” made out by the exporter on the invoice. The importer should request their suppliers to include this statement in all invoices.

Customs’ authorities may request additional information (before or after the products are released) to prove that they comply with the specific rules of origin.

Goods which fail to satisfy the relevant preferential origin rules will be subject to the Common Customs Tariff of the EU or the Global UK Tariff.

The exporter should include in the invoice a statement of origin using the text bellow:

The exporter of the products covered by this document (Exporter Reference No … (a)) declares that, except where otherwise clearly indicated, these products are of … (b) preferential origin.

……………………………………………………………………………………………………(c)

(Place and date)

……………………………………………………………………………………………………

(Name of the exporter)

a) Indicate the reference number by which the exporter is identified. For the Union exporter, this will be the number assigned in accordance with the laws and regulations of the Union. For the United Kingdom exporter, this will be the number assigned in accordance with the laws and regulations applicable within the United Kingdom. Where the exporter has not been assigned a number, this field may be left blank.

b) Indicate the origin of the product: the United Kingdom or the European Union (do not mention the specific member country).

c) Place and date may be omitted if the information is contained on the document itself.

Rules of origin for footwear

The EU-UK TCA sets the general rules in force in the European Union, which have a higher degree of flexibility than those established in recent EU Free Trade Agreements.

Footwear can incorporate any imported component except uppers affixed to insoles. Both uppers can be imported providing that the assembly of the insole and the sole is made in the UK, then the product can be exported to the EU free of duties. The same procedure for EU exports to the UK.

It is important to mention that the EU is a single party, meaning that the assembly operations can take place in different countries of the EU and even so the product can be exported to UK free of duties.

CE marking and the new UKCA marking for Personal Protective Equipment (PPE)

The UKCA (UK Conformity Assessed) marking is a new UK product marking that is used for goods being placed on the market in Great Britain. It covers most goods which previously required the CE marking.

In order to give companies time to adapt to the new requirements, a transition period of one year will be provided. Manufacturers will then be able to use the CE marking until the 1^st of January 2022.

Existing stocks of PPE manufactured and certified by the CE marking, before the 1^st of January 2021, can still be sold in the United Kingdom. From the 1st of January 2022 onwards, only PPE with a UCKA marking can be sold in the United Kingdom. The UKCA brand will not be recognised by the EU.

The UKCA marking will only be issued by UK organisations. This certificate will be similar to the CE marking procedure. Until the 1^st of January 2023, the UKCA can be attached in the form of a label or on the packaging of the PPE; from that date onwards, it will have to be attached on the PPE, like the CE marking.

More information and guidance could be found here.

UK’s Participation in European programmes

The agreement enables the UK’s continued participation in a number of flagship EU programmes for the period 2021-2027, subject to a financial contribution by the UK to the EU budget.