Brexit: the new EU-UK agreement
We are now in the very final stages of the transition period. Little has changed since the UK’s departure from the EU in January but that will not be the case in the New Year. Many important changes will happen on 1st January 2021, and here we highlight the top six for the bathroom sector.
Work continues on some form of agreement between the EU and UK but if this is unsuccessful then most favour national import tariffs will apply to EU27 exports to the UK after 1st January. New duties range from 6% on ceramic and plastic fixtures, 10% on glass fixtures, 6% on aluminium fixtures to 2% on brassware.
2. Customs processes
The UK will be out of the single market and customs union on 1st January, meaning new administrative and VAT obligations. Customs clearance at both export and import will be moving to electronic systems once it is ready. It is important that the accompanying invoice has all the necessary information to allow the freight forwarder to complete the online declaration to avoid delays. Most members will be familiar with exporting outside of the EU and in future should think along the same lines for the UK. It may be advisable to consult one of the main freight-forwarding companies to handle the process from collection to delivery to your UK customers, especially if this in Northern Ireland.
3. INCO Terms
It is important that companies selling to customers in the UK have the correct INCO terms, so it is advisable to check contracts now. The two INCO terms to avoid are Delivered Duty Paid (DDP) which will require the seller to get a UK EORI and VAT number or appoint an independent broker to act on their behalf. The other is Ex-Works (EXW) which could cause issues with VAT as you will need proof of export to avoid having to make a payment. It could be better to negotiate a change with your customer to Free Carrier (FCA) or Delivered at Place (DAP) which will simplify the procedure for both companies. UK companies already importing products from outside the EU will be familiar with the process.
4. Product marking
After 31st December there will be three different product marks that manufacturers, and others in the supply chain, may need to apply. They are the CE mark, the UK’s new conformity mark (UKCA) and the UK(NI) mark which will be additional to CE in some circumstances. The rules governing these marks will depend on where the product is intended to be used. UKCA will be optional in Great Britain from 1st January 2021 and mandatory from 2022. CE will be acceptable until the end of 2021. Both UKCA and CE markings can be used on a single product to claim conformity with the separate EU and UK legal regimes. At the outset, the UK’s ruleset will be the same as the EU acquis although future divergence is possible.
5. Water regulations
CE marking and conformity with harmonised standards have been removed as a route to compliance with Regulation 4 of the Water Supply (Water Fittings) Regulations by a piece of amending legislation. Despite this, Government officials have assured us that the intention of the amendment was not to change the regulatory expectations and that hENs will become British ‘designated’ standards, and therefore one of the remaining routes to compliance.
6. Complications in the Irish Sea
The trade dynamics between Great Britain, Northern Ireland and the Republic of Ireland are about to get complicated. Product marking is one granular example for our sector, but there more generally trade flows will need to be different. Treating the UK and ROI as one territory could lead to double duties on goods if you’re not careful. It is recommended you consult a customs expert to confirm requirements.
Chief Executive at BMA, UK