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The new UK Global Tariff (UKGT) published on 19 May 2020 allows you to determine what tariffs will apply on the sale of goods from ROI to GB if an FTA is not agreed before the end of the Transition Period.

For NI based businesses the UKGT will apply to imports into NI from anywhere outside the rest of the UK and the EU (unless the goods are at risk of movement to the EU in which case EU tariffs may apply).

The UKGT is a schedule of customs duty rates which the UK will apply to imports of goods from 1 January 2021 unless an FTA or other preferential arrangement is in place. It will replace the EU Common External Tariff (CET) which the UK currently applies.

Importantly, no tariffs should apply for direct imports into NI from ROI or other EU countries.

Understanding the impact of these tariffs may prompt businesses to revisit previous Brexit planning and a further review of supply chains. We have set out below our detailed comments on the UKGT and its potential impact on your business.

Our comments

Many businesses previously carried out Brexit impact assessments based on the UK’s provisional Tariff.

The provisional Tariff, published by the UK in March 2019, was notable for the application of nil duties on 87% of imports into the UK.

By contrast, the new UK Global Tariff provides that approx. 60% of goods brought into the UK will be at the nil rate compared to approx. 47% currently.

The UK has also taken the opportunity to simplify its tariff regime and to eliminate low and nuisance tariffs. However, the UK is maintaining high tariffs that are largely aligned to the EU CET on sectors it wishes to protect, including the agricultural, automotive and ceramics industries.

One could interpret from the new UKGT that the UK has moved from a policy perspective from that proposed in the March 2019 provisional Tariff: from seeking to be a low or zero-tariff trading zone to one that liberalises and simplifies tariffs in targeted areas but is less dramatic and wide ranging. The intention also seems to be to promote sectors such as renewable energy, energy efficiency and certain other manufacturing sectors where tariff cuts will apply. The UK has also taken the opportunity to eliminate tariffs on certain products where UK domestic production is zero, or very low, for example, cotton, textile fibres and wood are mentioned.  

The introduction of tariffs on goods imported into GB from the EU will represent a significant cost and competition issue for Irish and EU exporters who currently sell product Duty free into GB. Irish businesses will now, in the absence of an FTA, find themselves selling product into the UK which may attract potentially high rates of Duty at the end of the Transition Period. As a result, the prospect of an FTA being concluded between the EU and the UK will take on even greater significance.

The publication of the UKGT will allow Irish businesses trading with GB to fully assess the impact of duty costs on the export of goods to GB from ROI from the end of the Transition Period if an FTA is not reached between the UK and the EU.

It is important that businesses refresh their impact assessment to take account of the newly announced duty rates and potential costs to their business from 1 January 2021, in particular, where planning decisions may have been made based on the provisional Tariff regime published in March 2019.

For NI businesses, the publication of the UKGT is also important as it sets out the tariff rates that will apply to imports of goods into NI from the rest of the world outside the rest of GB and the EU (which are not at risk of subsequently being moved into the EU). Many of the rates for higher tariff sectors such as food, drink, agriculture, as well as retail are not materially different from those currently applying to NI business importing goods from third countries under the CET but there will be changes for some NI businesses importing product from third countries (outside GB and the EU) under the new UKGT.

In addition, it is important to note that goods attracting lower tariffs under the UKGT than the CET may create further commercial and administrative issues, for example, in applying rules of origin on trade with the EU and on the NI-GB sea border. This makes the agreement of an FTA all the more important.

Businesses should continue to review the potential Customs Duty impact on their supply chains as the UK’s new trading arrangements with EU and non-EU countries develop.

Some of the key UK Global Tariff measures include:

  1. The Meursing table (currently used to determine tariff codes and hence duties) is being scrapped by the UK which should result in a significant reduction in the complexity faced by businesses in determining the rate of customs duty applicable to over 13,000 goods.
  2. The agricultural sector will be deeply affected by high customs duties imposed on imports of goods into the UK, including beef (up to 12%+£254GBP/100kg), poultry (up to £85/100kg), lamb (12%+£260GBP/100kg), butter (£158/100kg) and cheese (£139GBP/100kg). The proposed UK duties are broadly the same as those currently applied by the EU to imports from third (Non-EU) countries.
  3. The life sciences sector will welcome the UK’s announcement that, similar to the EU tariff schedule, UK imports of finished pharmaceutical products will not attract customs duties. However, Active Pharmaceutical Ingredients (APIs) and key chemicals to produce APIs will see a duty imposition of 6%.
  4. Most medical devices will be subject to nil customs duties.
  5. A 0% rate of customs duty applies to imports of aircraft and helicopters of all weights as well as many aircraft parts. This is helpful for the airline and aviation leasing sector.
  6. Irish exporters of bread and other bakery products will note the application of duties of 8% on many of their products sold from Ireland into the GB market.
  7. Existing (“nuisance”) tariffs of less than 2% will be abolished.

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