The UK and EU secured a free trade agreement (FTA) on Christmas Eve 2020 which came into play one week later, on 31st December 2020 at 11pm.
The following is a summary of the key details affecting businesses and trade.
- No tariffs. In principle, the FTA allows traders to move goods between the UK and EU without paying duties. However, they must comply with ‘Rules of Origin’ included in the deal.
- Rules of Origin. This determines the economic nationality of goods. Under the agreement, the country where the processing takes place counts towards this.
- New customs procedures will apply. New customs and VAT rules will apply for UK and EU trade – including the requirement for companies to complete customs declarations.
- Independent SPS rules. Companies trading affected goods – agri-food producers and grocery retailers in particular – must now attain new certification and comply with border checks.
- Uncertainty remains for services. While the agreement gives clarity for most goods traders in the UK, it doesn’t shed as much light on the future of UK-EU services trade, particularly financial services.
- UK led standards. The UK can now set its own rules in areas such as environmental standards or labour law. However, both the UK and EU can implement tariffs should it find the its own businesses are put at an unfair disadvantage by too wide a divergence.
- Independence on state-aid. The UK government can now set its own subsidies for its domestic industries and businesses. However, companies in the EU can challenge government state-aid in the UK’s courts and UK companies can do the same in the EU.
- Mutual recognition for AEO. The UK and EU will recognise each other’s AEO (Authorised Economic Operator) schemes, allowing for AEO-approved firms to move goods more easily between the UK and EU.
- Changes for hauliers. Road haulage operators moving goods between the UK and EU will continue to do so without new permit requirements and will still be subject to similar standards for driver hours and professional qualifications. However, British truckers will nowbe limited to a single drop-off and a single pick-up when in Europe.
- Short term visits allowed. Short-term business visits to the EU will be allowed for up to 90 days in any 180-day month period. (In typical, non-restricted times).