uk customs alert

Milestone for UK import preparations: UKGT and UK trade agreements

This week's release of the UKGT marks an important milestone for customs preparations. A summary and how it impacts UK imports outside of trade agreements.

What the UKGT launch means for UK imports 2021

Under normal circumstances, this week's milestone on Brexit customs preparations may have come in with drums beating and trumpets sounding. But with all markets focusing on covid-19 and the first easing of lockdown measures within the scope of their relevant national guidelines, it has gone by fairly unnoticed. 

Either way though, the publication of the "UKGT" in May is important. The UKGT is the UK Global Tariff. Its release on May 19, 2020 came with a series of UK announcements. You can find the key facts and relevant links here. 

  • The UKGT replaces the currently applicable EU's Common External Tariff (CET)
  • UKGT applies from January 1, 2021 – i.e. the EU's CET applies until December 31, 2020

News story: Government has announced the UK' new MFN tariff regime

News story: UK's new Global Tariff will replace the EU Tariff in January 

What the UKGT covers

This new UK Global Tariff will apply to all goods that are imported into the United Kingdom. As part of this, the UK government will introduce its "Most Favoured Nation" (MFN) tariff policy effective, January 1, 2021. And will consequently not be participating in the EU’s January 2021 suspension round.

What the UKGT does not cover

  • Exempt goods, as those under duty relief or tariff suspension
  • Preferential goods, i.e. those under the Generalized Scheme of Preferences
  • Goods from countries that the UK has trade agreements with
  • Any other import duties, such as VAT
  • Any precise details of trade remedy measures
  • Any other restrictions, e.g. antidumping, countervailing or safeguards

Additional notes on TRQs

Tariff-rate quotas, or TRQs, allow a limited quantity of a product to be imported at zero or lower import duty rates than the normal tariff rate for that product. If the limits are exceeded, the higher duty rate applies. As part of the UKGT, these limits may be expressed in units of: 

  • Weight
  • Volume
  • Quantity
  • Value 

If TRCs apply to your products, you can request to import a limited amount at a lower duty rate. Note that some TRCs only apply when the goods are imported from certain countries. The UK government will make further advice available later this year in line with the UK goods schedule at the WTO (World Trade Organization). 

What's covered by trade agreements

The new UKGT will apply to goods imported into the UK from countries with which trade agreements are not in place. For the rest, terms of applicable UK agreements will apply. Until the end of the Brexit Transition Period, UK trade is covered by existing EU trade agreements, but these will no longer apply after December 31, 2020. 

Negotiations have been underway for some time with all UK trading partners. As a basis for the future, currently applicable EU agreements are worked with, but it still involves a great level of detail to go through. It's a massive task that won't be completed by the end of 2020. You can find the current status in the next chapter. 

The most prominent and one of the most relevant ones, is the negotiation on the future partnership between the EU and the UK. The third round has just ended in mid-May. As the second one in April, it was also held as video conference. But in comparison, only "slight progress" was made this time, as EU chief negotiator Michel Barnier said in his statement on May 15, 2020. The next round is currently set to commence in the first week of June.

Brexit Tool Kit for Traders

Duty rates for UK imports are not the only thing that will change after the Brexit Transition Period in January 2021. Get checklists, guides, and everything that traders need to prepare UK cross-border trade operations.

Promoted benefits: UK imports and trade agreements

While the UKGT may not have been graced with much global attention when it was released, the UK government strongly emphasized the promotion of its benefits in their news alerts. These promoted benefits include: 

  • Simpler and easier to use than the EU's CET (and in GBP not EUR)
  • No tariffs below 2% - needless tariffs with admin-burden removed
  • Certain complex calculations eliminated (for example, on biscuits)
  • Tariff cuts on 100+ products that support a sustainable economy
  • Preferential access to the UK market for developing countries 
  • Removed UK tariffs on products the UK does not produce (e.g. olives)

And a noteworthy quote is included in the UK world news story released on May 20th: "For Turkey, UK’s aspiration is to continue with zero tariff trade on all goods traded in the EU-Turkey Customs Union, by implementing a FTA by the end of 2020". On trade agreements overall, however, there is still quite a way to go. You can find the status as of today listed below. For new updates, please refer to the UK government page below. 

Signed trade agreements 

  • Andean countries 
  • CARIFORUM trade bloc
  • Central America
  • Chile
  • Eastern and Southern Africa (ESA) trade bloc 
  • Faroe Islands
  • Georgia
  • Iceland and Norway
  • Israel
  • Jordan
  • Kosovo
  • Lebanon
  • Liechtenstein
  • Morocco
  • Pacific states
  • Palestinian Authority
  • South Korea
  • Southern Africa Customs Union and Mozambique (SACUM) trade bloc
  • Switzerland
  • Tunisia

Trade agreements in discussion

  • Albania (Western Balkans)
  • Algeria
  • Bosnia and Herzegovina (Western Balkans)
  • Cameroon (Central Africa)
  • Canada
  • Côte d’Ivoire
  • East African Community (EAC)
  • Egypt
  • Ghana (Western Africa)
  • Mexico
  • Moldova
  • Montenegro (Western Balkans)
  • North Macedonia (Western Balkans)
  • Serbia (Western Balkans)
  • Singapore
  • Ukraine
  • Trade with: Andorra, San Marino, and Turkey will be influenced by the trade agreement that the UK will reach with the EU, as they are part of customs unions with the EU. 

Mutual recognition agreements

Signed:

  • Australia
  • New Zealand
  • United States of America

Covered in trade agreements:

  • Switzerland (incorporates elements)
  • Israel (covers conformity assessment arrangements)
  • Japan (ongoing discussions, signed exchange of letters)

 Go to the UK government website for the latest status on trade agreements 

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