Brexit – what does the EU-UK trade deal mean for NZ companies
Changes related to the UK’s departure from the EU’s customs union and single market came in on January 1, 2021.
On 24 December, the UK and EU finalised a free trade agreement, the UK and EU Trade and Cooperation Agreement, that sets out the terms of their trade from 1 January 2021.
What is in the deal
The free trade agreement (FTA) between the UK and EU provides for zero quotas and zero tariffs on the export of goods produced in the UK and EU, as long as the goods comply with rules of origin (RoO) requirements.
Rules of Origin – to claim preferential rates of duty, products must originate in the UK or EU. If the goods do not meet RoO requirements, exporters will need to pay customs duty.
Goods exported from New Zealand to the UK and then on EU (or vice versa), without any processing, may face tariffs entering the UK and then again entering the EU unless special customs procedures are used or sent in transit. Prior to 1 January 2021, goods entering the UK from NZ and paying the appropriate tariff were considered to be in free circulation with the rest of the single market (i.e.the European Union) and would not incur an additional tariff.
Data – The FTA also provided for a temporary arrangement to allow personal data to continue being transferred from the EU to the UK for up to six months, until a data adequacy decision has been made.
Sanitary and phytosanitary standards (SPS) - The UK and EU continue to have mostly aligned SPS arrangements, however the FTA provides for the UK to implement their own independent SPS rules and controls in the future.
The FTA did not provide for a future recognition mechanism for SPS measures, therefore companies trading agri-foods and other affected goods will need to confirm certification going forward to ensure compliance with both regions and border checks.
For a more comprehensive overview of what the FTA does and doesn't include, you can read the UK thinktank, The Institute for Government's, overview - UK–EU future relationship: the deal.
What does this mean for NZ exporters?
Even though an FTA has been reached between the UK and EU, New Zealand companies that carry out trade between the two regions will see changes to their trade. There is now a customs border between Great Britain (GB) and the EU, with exports and imports facing customs and regulatory controls. There is added complexity when supply chains go through Northern Ireland – please contact NZTE if you have any questions on this.
Exporters that operate in the region should understand how the changes in trade may affect them.
As New Zealand does not currently have FTAs with either the UK or EU, for the most part, trade from New Zealand to the UK or to the EU should continue as it does now. There may be some exceptions to this, including changes in VAT for low value consignments and the application of the new UK tariff schedule –we encourage you to stay connected with your logistics and distribution partners in market to understand how any changes may affect you.
To help ensure continuity and stability in the arrangements underpinning our trade, New Zealand and the UK have signed the following bilateral agreements:
Sanitary Measures Applicable to Trade in Live Animals and Animal Products (the Veterinary Agreement)
Mutual Recognition in Relation to Conformity Assessment (the Mutual Recognition Agreement)
Customs Agreement for Mutual Assistance on Administrative Matters.
These agreements came into effect on 1 January 2021 at the conclusion of the transition period. These agreements ensure continuation of arrangements New Zealand had in place with the UK as a result of similar agreements concluded earlier between New Zealand and the EU. (Read a statement containing more detail on the Veterinary Agreement and Mutual Recognition Agreement.)
We also have continuity arrangements in place for:
exports of New Zealand organic products
conformity checks for the inspection of fresh fruit and vegetables prior to export (in New Zealand's case, specifically apples, pears and kiwifruit)
fisheries catch certification.
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