Understanding Rules of Origin and Tariff-Free Trading with the EU

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Defra EU Rules of Origin Business
Guidance Presentation
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What are Rules of Origin?
Defra EU Rules of Origin Business Guidance
Trading with the EU
To trade with the EU tariff-free after the transition period you will need
to comply with RoO.
RoO are designed to ensure that only producers party to the EU-UK
Free Trade Agreement (FTA) benefit from tariff reductions.
You and your suppliers will need to know where your materials or
ingredients come from - both ingredients imported from abroad and
ingredients bought within the UK.
Rules for each product, which
 
determine the imported ingredients you
can use, will be specified in the EU-UK FTA.
You will need to complete the RoO certification process to prove that
your good is eligible for tariff reductions.
3
Defra EU Rules of Origin Business Guidance
Products that are automatically eligible for
preferential treatment (UK “wholly originating”)
Plants and vegetable products grown or harvested in the UK;
Products obtained solely from live animals raised in the UK or
slaughtered animals born and raised in the UK;
Products obtained from aquaculture in the UK;
Fish caught within UK territorial waters;
Fish caught beyond territorial waters by vessels registered in UK or
EU and flagged in the UK or by EU Member States, and meeting UK
or EU ownership requirements.
4
Defra EU Rules of Origin Business Guidance
General principles
You may use EU-originating materials in your final good, provided
that the EU material undergoes further processing in the UK
(bilateral cumulation).
If a rule limits the use of non-originating materials, the final product
could be considered UK originating if the value or weight of
applicable non-originating materials used does not exceed 15 per
cent of the net weight of the final product or, for fisheries products,
10 per cent of the value (ex-works price) of the final product
(tolerance).
5
Defra EU Rules of Origin Business Guidance
Change of Tariff Classification (CTC) Rules
CTC rules are used across the EU-UK FTA for many different
products. They can be accompanied by content restrictions
and exclusions for imported inputs.
Products are classified by names and numbers using the
Harmonised System (HS). The main categorisations are
chapters (2 digits), headings (4 digits) and subheadings (6
digits). You can find the classification for your product at the
Government’s 
Trade Tariff site
.
As an example of how CTC rules and HS codes work, take
chocolate products of HS Chapter 18.
If non-originating milk from Chapter 4 was used in a chocolate
bar of Chapter 18 this would meet a Chapter Change (CC) rule
(imported content is from a different chapter).
If non-originating cocoa from heading 18.01 was used in
chocolate of 18.06 this would meet a Change of Heading
(CTH) rule (imported content is from a different heading).
If a non-originating unfilled chocolate under subheading
1801.31 was processed into filled chocolate of 1806.32 this
would meet a Change of Sub-Heading (CTSH) rule (imported
content is from a different subheading).
6
Defra EU Rules of Origin Business Guidance
This guidance applies after the transition period ends.
For further information on the points covered in this presentation you
can refer to the more detailed Defra EU Rules of Origin Business
Guidance document.
7
Defra EU Rules of Origin Business Guidance
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The rule for Chapter 2 is wholly obtained. This means that all meat products must be obtained from slaughtered animals
born and raised in the UK. The rule for preparations of meat in Chapter 16 is production in which live animals, meat, and
preparations of meat used are wholly obtained. Bilateral cumulation would allow the use of EU content if processing
goes beyond insufficient.
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Live pigs
from the
EU
Pigs are slaughtered
Factory produces chicken nuggets
Bilateral cumulation with the EU
applies as
 skilled butchery
 goes
beyond insufficient processing
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Factory produces bacon
Factory produces ham
Bilateral cumulation with the EU
does not apply as only
slaughtering is considered
insufficient processing
Meat imported from outside the
UK or EU cannot be used
Live pigs
from the
EU 
Pigs are slaughtered
Bilateral cumulation with the EU
applies as processing goes
beyond insufficient processing
The beef sirloin is
dry aged for 30 days
Bilateral cumulation with the EU applies
as dry ageing (giving the meat new
flavour) goes beyond insufficient
processing
Chicken
meat from
Thailand or
Brazil
Pork loin
from the
EU
Beef sirloin
from the
EU
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The rule for Chapter 3 is wholly obtained. This means fish must be farmed or caught within 0-12 nautical miles. For fish caught outside UK territorial seas,
vessels must be UK or EU registered, UK or EU Member State flagged and have a 50% UK or EU ownership structure. 
The rule for preparations of fish in
Chapter 16 is wholly obtained, with some exceptions. For preparations of surimi and certain other processed products, fish from Chapter 3 can be imported and
used in the product. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient.
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Haddock 
from Icelandic
vessel
The haddock is processed into haddock fillets
Whitefish from chapter 3
can be imported from
outside the UK and EU.
Note: This rule only applies
to certain products in the
chapter
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Haddock from
UK vessel
Fish from
Norway
(Chapter 3)
The haddock is processed into haddock fillets
The fish is processed into fish fingers (1604.19)
Salmon
Seedstock
from
Norway
Salmon is raised
The salmon is processed
into fresh and processed
products
Fish farmed from imported
seedstock can be considered
wholly obtained
Fish caught by a non-
UK or EU vessel
cannot be used
The rule has been
met as the fish was
caught by a UK
vessel
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The rule for this chapter requires wholly obtained dairy ingredients. Therefore, all dairy inputs must be obtained from live animals raised in the
UK. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. The rule also states that non-originating sugar
cannot exceed 20% of the weight of your final product.
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Milk from the UK
and refined cane
sugar from Belize
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Use of non-UK or EU sugar is
permitted if it does not exceed the
weight thresholds
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Bulk yoghurt
from the EU
The yoghurt is only labelled
Bilateral cumulation with the EU
does not apply as 'labelling' is an
insufficient process
The milk is pasteurised or
made into cheese
The rule has been met
as the milk is from cows
born and raised in the
UK
Milk from cows born
and raised in the UK
Milk from imported
EU dairy cows
The milk is processed
Bilateral cumulation with the
EU applies as processing
goes beyond
insufficient processing
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Factory produces flour
Wheat from
Canada
Factory produces flour
The rules has not been met as cereals
imported from outside the UK or EU
cannot be used when directly exporting
flour.
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Factory produces flour
Wheat from
Canada
Factory puffs wheat
Flour from
Turkey
Factory turns into pasta
 The rule has been met as
imported flour from outside the
UK and EU can be used
Wheat from
Canada
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Products of the milling industry must be wholly obtained which means produced from UK-originating cereals. Preparations of cereals in Chapter
19 can use imported cereals, flours and other products of the milling industry. There are, however, restrictions on non-originating meat, fish,
aquatic invertebrates, rice, starches, inulin and sugar. Dairy used must be wholly obtained which means that 
all dairy inputs must be obtained
from live animals raised in the UK 
Bilateral
 cumulation would allow the use of EU content if processing goes beyond insufficient.
Factory produces cereal bars
Factory produces bread
Factory produces pasta
The rules has been met
for products
manufactured from
wheat imported from
outside the UK and
EU provided the dairy
used is from the UK or EU
and non-originating
weight thresholds for
sugar are met.
Wheat from
Canada
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The rule for these chapters is wholly obtained which means that all vegetables and fruit must be grown and harvested in the UK. Bilateral
cumulation would allow the use of EU content if processing goes beyond insufficient. 
The rule for Chapter 8 also states that non-originating sugar
cannot exceed 20% of the weight of your final product.
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Mixed
vegetables
 from the UK
and EU
Vegetable
seeds from
outside UK
or EU
Vegetables are grown and harvested in UK
Vegetables produced from
imported seeds, bulbs,
cuttings etc. can be
considered wholly obtained
Vegetables are diced, mixed
and packaged with machinery
installed for that specific
purpose
Bilateral cumulation with the EU
applies as automated processing
goes beyond insufficient.
Bananas
are
imported
from the
EU
A wholesaler combines bananas with other UK-
grown fresh fruit for onward export
The rules has not been met
for bananas as EU originating
content must be further
processed
Nuts are
imported
from the
EU
Nuts are shelled
Bilateral cumulation does not
apply as 'shelling' is an
insufficient process
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The rule for this chapter is change of heading which means that fruit, nut and vegetables from chapter 7 and 8 can be imported as well as processed fruit, nut
and vegetables from different headings within chapter 20. There are, however, wholly obtained requirements for tomatoes and mushroom meaning they need to
be grown and harvested in the UK. The rule also states that non-originating sugar cannot exceed 40% of the weight of your final product. Bilateral cumulation
would allow the use of EU content if processing goes beyond insufficient.
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Tomatoes
 from the UK
and EU
Oranges from
Morocco
Oranges are processed into
marmalade
The rules has been met as imported
oranges from outside the UK and
EU can be used.provided non-
originating weight thresholds for sugar
are met
Tomatoes are processed into
tinned tomatoes
Bilateral cumulation with the EU
applies as processing goes
beyond insufficient. Therefore, even
though tomatoes need to be wholly
obtained, the rule is met.
Mushrooms
 from
China
Mushrooms are processed into tinned
mushrooms
The rules has not been met
as imported mushrooms from
outside the UK or EU cannot
be used due to the wholly
obtaiend requirement for
mushrooms
Mixed
fruit from
the UK, EU
and Brazil
Fruit is processed
into fruit juice
The rules has been met as imported
fruit from outside the UK and
EU can be used provided non-
originating weight
thresholds for sugar are met
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Chocolate of 1806 has a change of heading rule, with requirements for wholly obtained dairy and non-originating
sugar not exceeding 40% of the weight or 30% of the value. 
Bilateral cumulation would allow the use of EU
content if processing goes beyond insufficient.
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Bilateral cumulation with the EU
applies and allows for EU sugar to be
used when processed into a chocolate
bar. A chocolate bar is in a different
heading to cocoa beans so use of
imported cocoa beans from outside UK
and EU is permitted.
Cocoa beans
from Ghana,
refined beet sugar
from the
EU and milk from
the UK
Cocoa beans
from Ghana,
refined cane
sugar from
Belize and
milk from the
UK
Cocoa beans
from Ghana,
refined
beet sugar from
the UK and
refined cane
from Belize and
milk from the
UK
Beans are processed into a
cocoa liquor and this is mixed
with sugar and milk to produce
chocolate.
 
Beans are processed into a cocoa
liquor and this is mixed with sugar and
milk to produce chocolate. Half the
sugar is EU beet sugar and half is
cane sugar from Belize. If the total
weight of sugar is 60% of the total
weight of the chocolate bar, then 30%
of the weight belongs to Belize sugar.
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Bilateral cumulation with the EU
applies and allows for EU beet
sugar to be used. Use of sugar
from Belize is permitted as long
as it does not go beyond the
weight or value thresholds.
Meeting the threshold can be
averaged over multiple
shipments.
A chocolate bar is in a different
heading to cocoa beans so use of
imported cocoa beans s from
outside UK and EU is permitted.
Use of non UK or EU sugar is
permitted if it does not exceed the
weight or value thresholds.
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The rule for animal feed is change of heading, with meat and dairy having to be wholly obtained and weight restrictions on non-originating
cereals (except rice and maize), starches and residues, and sugar. 
Bilateral cumulation would allow the use of EU content if processing goes
beyond insufficient.
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A factory processes the
inputs into pet food
Meat cannot be
sourced from outside
the UK or EU.
Meat from
New
Zealand and
rice from
India
Meat, dairy
and sugar
from the
UK, rice
from India
A factory processes the
inputs into pet food
The use of imported
rice is permitted. The
other ingredients are
UK wholly obtained.
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Fish from
Norway,
dairy and
oats from
the US
A factory processes
the inputs into pet food
Proving Origin When Importing Goods
In order for your business to pay preferential tariffs when importing into the UK, you will
need to claim preference as part of your customs declaration to HMRC.  You will need to
hold proof that the goods you are importing qualify as originating.
For example, under the EU-UK FTA, the claim for preference is made on the basis of
either: 
a ‘statement on origin’ which declares the goods to be originating; or
‘importer’s knowledge’ that the goods are originating.
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.
Other agreements may set out alternative methods for claiming preference. For example,
older agreements can require a paper ‘certificate of origin’ to be provided by the exporter.
16
Defra EU Rules of Origin Business Guidance
Proving Origin When Exporting Goods
In order for your customer to claim preference when they import your goods into their country,
you need to ensure that your goods meet the Product-Specific Rules of origin (PSRs).
If your goods do meet the PSRs, you will need to hold evidence of this. You may also require
separate declarations from your suppliers. 
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.
Under some older agreements, you cannot self-certify that goods are originating, and you may
need to provide your customer with a ‘certificate of origin’ obtained through your local Chamber
of Commerce or HMRC.
17
Defra EU Rules of Origin Business Guidance
Rules of Origin Five Steps Process: Trading the EU after 1
st
 January 2021
1.
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19
Defra EU Rules of Origin Business Guidance
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Rules of Origin (RoO) determine the economic nationality of a product, impacting tariffs and restrictions. To trade tariff-free with the EU, compliance with RoO is crucial. Specific rules dictate ingredient sourcing, with certification processes ensuring eligibility for tariff reductions. Certain products are automatically eligible for preferential treatment. Using EU-origin materials in the UK may require further processing. Legislation prevails over guidance materials.


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  1. Defra EU Rules of Origin Business Guidance Presentation These guidance documents are of an explanatory and illustrative nature. Legislation takes precedence over the content of these documents and should always be consulted.

  2. What are Rules of Origin? Rules of Origin (RoO) are used to determine the economic nationality of a product and by customs authorities to classify where an export has come from in order to work out tariffs and restrictions. Under a free trade agreement (FTA), exporters must prove that a good is originating according to preferential RoO in order to access preferential tariff rates. RoO in FTAs prevent third countries from accessing, at a preferential rate, the markets of countries with whom they do not have a trade deal. Preferential RoO are used for the purpose of granting access to preferential tariff rates, for example a zero tariff, agreed between FTA partner countries. If rules cannot be met the importer would pay the MFN tariff, which for agri-food products can be very high. General provisions provide the guiding principles and conditions for acquiring originating status for products. General provisions relevant to agri-food products include Wholly Obtained, Bilateral Cumulation, Insufficient Processing, Tolerance and Accounting Segregation. Product-specific rules (PSRs) are a list of specific rules for all products in the Harmonised System (HS). These vary according to the agreement. Defra EU Rules of Origin Business Guidance

  3. Trading with the EU To trade with the EU tariff-free after the transition period you will need to comply with RoO. RoO are designed to ensure that only producers party to the EU-UK Free Trade Agreement (FTA) benefit from tariff reductions. You and your suppliers will need to know where your materials or ingredients come from - both ingredients imported from abroad and ingredients bought within the UK. Rules for each product, which determine the imported ingredients you can use, will be specified in the EU-UK FTA. You will need to complete the RoO certification process to prove that your good is eligible for tariff reductions. Defra EU Rules of Origin Business Guidance 3

  4. Products that are automatically eligible for preferential treatment (UK wholly originating ) Plants and vegetable products grown or harvested in the UK; Products obtained solely from live animals raised in the UK or slaughtered animals born and raised in the UK; Products obtained from aquaculture in the UK; Fish caught within UK territorial waters; Fish caught beyond territorial waters by vessels registered in UK or EU and flagged in the UK or by EU Member States, and meeting UK or EU ownership requirements. Defra EU Rules of Origin Business Guidance 4

  5. General principles You may use EU-originating materials in your final good, provided that the EU material undergoes further processing in the UK (bilateral cumulation). If a rule limits the use of non-originating materials, the final product could be considered UK originating if the value or weight of applicable non-originating materials used does not exceed 15 per cent of the net weight of the final product or, for fisheries products, 10 per cent of the value (ex-works price) of the final product (tolerance). Defra EU Rules of Origin Business Guidance 5

  6. Change of Tariff Classification (CTC) Rules CTC rules are used across the EU-UK FTA for many different products. They can be accompanied by content restrictions and exclusions for imported inputs. Products are classified by names and numbers using the Harmonised System (HS). The main categorisations are chapters (2 digits), headings (4 digits) and subheadings (6 digits). You can find the classification for your product at the Government s Trade Tariff site. Categorisation HS Code 18 Description As an example of how CTC rules and HS codes work, take chocolate products of HS Chapter 18. If non-originating milk from Chapter 4 was used in a chocolate bar of Chapter 18 this would meet a Chapter Change (CC) rule (imported content is from a different chapter). Cocoa and cocoa preparations Cocoa beans Not filled chocolate in blocks, slabs or bars Chapter If non-originating cocoa from heading 18.01 was used in chocolate of 18.06 this would meet a Change of Heading (CTH) rule (imported content is from a different heading). 18.01 1806.32 Heading Subheading If a non-originating unfilled chocolate under subheading 1801.31 was processed into filled chocolate of 1806.32 this would meet a Change of Sub-Heading (CTSH) rule (imported content is from a different subheading). 6 Defra EU Rules of Origin Business Guidance

  7. This guidance applies after the transition period ends. For further information on the points covered in this presentation you can refer to the more detailed Defra EU Rules of Origin Business Guidance document. Defra EU Rules of Origin Business Guidance 7

  8. Example 1 Meat products of Chapters 2 (Meat and edible meat offal) and 16 (Preparations of meat) The rule for Chapter 2 is wholly obtained. This means that all meat products must be obtained from slaughtered animals born and raised in the UK. The rule for preparations of meat in Chapter 16 is production in which live animals, meat, and preparations of meat used are wholly obtained. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. UK Processing Ingredients Live pigs from the EU Pigs are slaughtered Factory produces ham Sufficient Processing? (PSR) Bilateral cumulation with the EU applies as skilled butchery goes beyond insufficient processing Bilateral cumulation with the EU does not apply as only slaughtering is considered insufficient processing Live pigs from the EU Pigs are slaughtered Pork loin from the EU Bilateral cumulation with the EU applies as processing goes beyond insufficient processing Factory produces bacon Chicken meat from Thailand or Brazil Meat imported from outside the UK or EU cannot be used Factory produces chicken nuggets Beef sirloin from the EU Bilateral cumulation with the EU applies as dry ageing (giving the meat new flavour) goes beyond insufficient processing The beef sirloin is dry aged for 30 days

  9. Example 2 Fish products of Chapters 3 (Fish and crustaceans, molluscs and other aquatic invertebrates) and 16 (Preparations of fish or of crustaceans, molluscs or other aquatic invertebrates) The rule for Chapter 3 is wholly obtained. This means fish must be farmed or caught within 0-12 nautical miles. For fish caught outside UK territorial seas, vessels must be UK or EU registered, UK or EU Member State flagged and have a 50% UK or EU ownership structure. The rule for preparations of fish in Chapter 16 is wholly obtained, with some exceptions. For preparations of surimi and certain other processed products, fish from Chapter 3 can be imported and used in the product. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. UK Processing Ingredients Sufficient Processing? (PSR) Haddock from Icelandic vessel Fish caught by a non- UK or EU vessel cannot be used The haddock is processed into haddock fillets The rule has been met as the fish was caught by a UK vessel Haddock from UK vessel The haddock is processed into haddock fillets Salmon Seedstock from Norway Fish farmed from imported seedstock can be considered wholly obtained The salmon is processed into fresh and processed products Salmon is raised Whitefish from chapter 3 can be imported from outside the UK and EU. Note: This rule only applies to certain products in the chapter Fish from Norway (Chapter 3) The fish is processed into fish fingers (1604.19)

  10. Example 3 Dairy products of Chapter 4 (Dairy produce; birds eggs; natural honey; edible products of animal origin, not elsewhere specified or included) The rule for this chapter requires wholly obtained dairy ingredients. Therefore, all dairy inputs must be obtained from live animals raised in the UK. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. The rule also states that non-originating sugar cannot exceed 20% of the weight of your final product. Sufficient Processing? (PSR) Ingredients UK Processing The rule has been met as the milk is from cows born and raised in the UK The milk is pasteurised or made into cheese Milk from cows born and raised in the UK Bilateral cumulation with the EU applies as processing goes beyond insufficient processing . The milk is processed Milk from imported EU dairy cows Yogurt is produced. The weight of the sugar used does not exceed 20% the weight of the yogurt. Use of non-UK or EU sugar is permitted if it does not exceed the weight thresholds Milk from the UK and refined cane sugar from Belize Bilateral cumulation with the EU does not apply as 'labelling' is an insufficient process Bulk yoghurt from the EU The yoghurt is only labelled

  11. Example 4 Flour products of Chapters 11 (Products of the milling industry; malt; starches; inulin; wheat gluten) and 19 (Preparations of cereals, flour, starch or milk; pastrycooks products) Products of the milling industry must be wholly obtained which means produced from UK-originating cereals. Preparations of cereals in Chapter 19 can use imported cereals, flours and other products of the milling industry. There are, however, restrictions on non-originating meat, fish, aquatic invertebrates, rice, starches, inulin and sugar. Dairy used must be wholly obtained which means that all dairy inputs must be obtained from live animals raised in the UK Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. Sufficient Processing? (PSR) Ingredients UK Processing The rules has not been met as cereals imported from outside the UK or EU cannot be used when directly exporting flour. Wheat from Canada Factory produces flour Wheat from Canada Factory produces cereal bars Factory puffs wheat The rules has been met for products manufactured from wheat imported from outside the UK and EU provided the dairy used is from the UK or EU and non-originating weight thresholds for sugar are met. Wheat from Canada Factory produces flour Factory produces bread Wheat from Canada Factory produces flour Factory produces pasta The rule has been met as imported flour from outside the UK and EU can be used Flour from Turkey Factory turns into pasta

  12. Example 5 Fruit, nut and vegetable products of Chapters 7 (Edible vegetables and certain roots and tubers) and 8 (Edible fruit and nuts; peel of citrus fruit or melons) The rule for these chapters is wholly obtained which means that all vegetables and fruit must be grown and harvested in the UK. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. The rule for Chapter 8 also states that non-originating sugar cannot exceed 20% of the weight of your final product. UK Processing Ingredients Sufficient Processing? (PSR) Bilateral cumulation with the EU applies as automated processing goes beyond insufficient. Mixed vegetables from the UK and EU Vegetables are diced, mixed and packaged with machinery installed for that specific purpose Vegetable seeds from outside UK or EU Vegetables produced from imported seeds, bulbs, cuttings etc. can be considered wholly obtained Vegetables are grown and harvested in UK Bananas are imported from the EU The rules has not been met for bananas as EU originating content must be further processed A wholesaler combines bananas with other UK- grown fresh fruit for onward export Nuts are imported from the EU Bilateral cumulation does not apply as 'shelling' is an insufficient process Nuts are shelled

  13. Example 6 Processed Fruit, nut and vegetable products of Chapters 20 (preperations of vegetbales, fruit, nuts or other parts of plants) The rule for this chapter is change of heading which means that fruit, nut and vegetables from chapter 7 and 8 can be imported as well as processed fruit, nut and vegetables from different headings within chapter 20. There are, however, wholly obtained requirements for tomatoes and mushroom meaning they need to be grown and harvested in the UK. The rule also states that non-originating sugar cannot exceed 40% of the weight of your final product. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. UK Processing Ingredients Sufficient Processing? (PSR) Bilateral cumulation with the EU applies as processing goes beyond insufficient. Therefore, even though tomatoes need to be wholly obtained, the rule is met. Tomatoes are processed into tinned tomatoes Tomatoes from the UK and EU The rules has been met as imported oranges from outside the UK and EU can be used.provided non- originating weight thresholds for sugar are met Oranges from Morocco Oranges are processed into marmalade The rules has not been met as imported mushrooms from outside the UK or EU cannot be used due to the wholly obtaiend requirement for mushrooms Mushrooms from China Mushrooms are processed into tinned mushrooms Mixed fruit from the UK, EU and Brazil The rules has been met as imported fruit from outside the UK and EU can be used provided non- originating weight thresholds for sugar are met Fruit is processed into fruit juice

  14. Example 7 Chocolate products of Chapter 18 (Cocoa and cocoa preparations) Chocolate of 1806 has a change of heading rule, with requirements for wholly obtained dairy and non-originating sugar not exceeding 40% of the weight or 30% of the value. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. UK Processing Ingredients Sufficient Processing? (PSR) Cocoa beans from Ghana, refined beet sugar from the EU and milk from the UK Bilateral cumulation with the EU applies and allows for EU sugar to be used when processed into a chocolate bar. A chocolate bar is in a different heading to cocoa beans so use of imported cocoa beans from outside UK and EU is permitted. Beans are processed into a cocoa liquor and this is mixed with sugar and milk to produce chocolate. A chocolate bar is in a different heading to cocoa beans so use of imported cocoa beans s from outside UK and EU is permitted. Use of non UK or EU sugar is permitted if it does not exceed the weight or value thresholds. Cocoa beans from Ghana, refined cane sugar from Belize and milk from the UK Beans are processed into a cocoa liquor and this is mixed with sugar and milk to produce chocolate. The value of the sugar used does not exceed 30% the value of the chocolate bar. Cocoa beans from Ghana, refined beet sugar from the UK and refined cane from Belize and milk from the UK Beans are processed into a cocoa liquor and this is mixed with sugar and milk to produce chocolate. Half the sugar is EU beet sugar and half is cane sugar from Belize. If the total weight of sugar is 60% of the total weight of the chocolate bar, then 30% of the weight belongs to Belize sugar. Bilateral cumulation with the EU applies and allows for EU beet sugar to be used. Use of sugar from Belize is permitted as long as it does not go beyond the weight or value thresholds. Meeting the threshold can be averaged over multiple shipments.

  15. Example 8 Animal feed products of Chapter 23 (Residues and waste from the food industries; prepared animal fodder) The rule for animal feed is change of heading, with meat and dairy having to be wholly obtained and weight restrictions on non-originating cereals (except rice and maize), starches and residues, and sugar. Bilateral cumulation would allow the use of EU content if processing goes beyond insufficient. Sufficient Processing? (PSR) Ingredients UK Processing Meat from New Zealand and rice from India Meat cannot be sourced from outside the UK or EU. A factory processes the inputs into pet food Meat, dairy and sugar from the UK, rice from India The use of imported rice is permitted. The other ingredients are UK wholly obtained. A factory processes the inputs into pet food Fish from Norway, dairy and oats from the US The use of imported fish is permitted but dairy and oats must be sourced from the UK or EU A factory processes the inputs into pet food

  16. Proving Origin When Importing Goods In order for your business to pay preferential tariffs when importing into the UK, you will need to claim preference as part of your customs declaration to HMRC. You will need to hold proof that the goods you are importing qualify as originating. For example, under the EU-UK FTA, the claim for preference is made on the basis of either: a statement on origin which declares the goods to be originating; or importer s knowledge that the goods are originating. If you are using a statement on origin, this should be provided to you by the exporter on a commercial document. If you wish to use importer s knowledge , you will need to obtain sufficient evidence that the goods qualify as originating. This may involve the exporter providing a range of supporting documentation, but there is no specific requirement for the exporter to provide a statement on origin. Other agreements may set out alternative methods for claiming preference. For example, older agreements can require a paper certificate of origin to be provided by the exporter. Defra EU Rules of Origin Business Guidance 16

  17. Proving Origin When Exporting Goods In order for your customer to claim preference when they import your goods into their country, you need to ensure that your goods meet the Product-Specific Rules of origin (PSRs). If your goods do meet the PSRs, you will need to hold evidence of this. You may also require separate declarations from your suppliers. Under most modern agreements, you can self-declare that your goods are originating. Under the EU-UK FTA, you can make out a statement on origin on a commercial document and send this to your customer. This is a statement declaring the goods to be originating and can be used by your customer as the basis of their preference claim. Some agreements, including the EU-UK FTA, also allow importers to claim preference based on knowledge they hold ( importer s knowledge ), rather than through a statement on origin. Where this option is used, you do not need to provide your customer with a statement on origin, though your customer may ask you to provide them with a range of information about the goods to support their preference claim. Under some older agreements, you cannot self-certify that goods are originating, and you may need to provide your customer with a certificate of origin obtained through your local Chamber of Commerce or HMRC. Defra EU Rules of Origin Business Guidance 17

  18. Rules of Origin Five Steps Process: Trading the EU after 1st January 2021 1. Understand your supply chains If you are importing or exporting goods to the EU, they will only be eligible for zero tariffs if they acquire originating status. You will need to know the status of your materials, where they have come from and what processing on the materials has occurred. This may involve requiring supplier declarations, which detail invoices, delivery notes and other information to identify goods. 2. Check your commodity codes Commodity codes are used to ensure goods have the correct tariff classification. Using the wrong codes for your products in customs declarations risks paying the wrong tariff. You can check your commodity code at the Government s Trade Tariff site. 3. Check the Product Specific Rule (PSR) for your commodity code Does your product originate in the UK or EU? If it has been produced exclusively from materials originating in the UK, it will be considered UK originating. If you are using imported content, you will need to have met any processing requirements in the PSR. The following provisions will help you comply with PSRs: tolerance, cumulation, sets, accounting segregation, insufficient production. Check the Defra EU Rules of Origin Business Guidance for more information. 4. Complete certification process You will need to prove to HMRC that you can claim preference for the goods you are importing or give the person receiving your goods evidence of the origin so they can claim preference. The type of proof can vary. An exporter can make a statement on origin which has enough detail to identify the goods. The importer can claim preference based on this declaration. The importer can also claim preference through importer s knowledge. This will be through knowledge you have obtained about the goods e.g., supporting documents., records, evidence. 5. Meet transport requirements Originating products transported between the UK and EU cannot be further processed in a third country (non-UK/EU). However, transhipment and some operations such as preserving of products can be carried out in third countries under customs control without the good losing originating status (non-alteration).

  19. Rules of Origin Administration Easements To reduce the administration burdens for UK importers and exporters there are two easements in place for the first six months and first year. For importers, goods moving from the EU to the UK between 1 Jan 2021 and 30 June 2021, traders will have up to six months to submit a full customs declaration and pay any necessary tariffs. This also includes declaring any proof of origin. For exporters, until 31 December 2021 for goods moving into the EU from the UK or into the UK from the EU, traders do not need suppliers declarations from business suppliers at the time the goods are exported. Defra EU Rules of Origin Business Guidance 19

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