How to apply rules of origin to your product

What rules of origin are

Rules of origin (ROO) determine the “economic nationality” of exported and imported goods. They are used to assess how much of a product comes from a particular country and how much value was added to it during manufacture. ROO can be found in trade agreements and other legal instruments between countries. Origin is where the goods were grown, produced or manufactured, and it may differ from the country they are shipped or bought from (GOV.UK).

Enlarge

How ROO affect your business

A product's country of origin can determine the rate of duty, and sometimes whether it can be exported to a particular country at all. The UK has concluded trade agreements that provide preferential (lower or zero) tariff rates for goods originating in the UK, but to benefit you must be able to demonstrate the origin of your product. Applying ROO correctly lets the importer pay lower or zero duty, which reduces their costs and may make your exports more competitive.

When to consider ROO when planning exports

ROO apply to trade between the UK and the EU under the TCA, as well as to some other countries with which the UK has trade agreements. Requirements and preferential rates differ depending on where you export; outside the EU the rules vary between countries.

Exporting to the EU and to the UK under the TCA

Under the Trade and Cooperation Agreement (TCA), goods originating in the UK that are sent to EU markets may benefit from a zero rate of duty, and likewise goods originating in the EU sent to the UK. Simply shipping or buying goods in the UK does not mean they have UK origin. The preference is confirmed by the exporter's statement on origin on the invoice or another commercial document, or by the importer's knowledge — an EUR.1 certificate is not used under the TCA (GOV.UK). For exports from the EU, the statement on origin for consignments above EUR 6,000 is made by an exporter registered in the REX system; the rules are explained in statement on origin and the REX system in UK–EU trade.

What “sufficiently worked or processed” means

Goods are treated as wholly obtained if they are produced exclusively in a country covered by the agreement, without materials from any other country (for example extracted minerals, or animals born and raised there). If materials from other countries were used, they must be “sufficiently worked or processed” in that country. The specific rule for your product is set by the trade agreement, according to its tariff heading (GOV.UK). There are three main types of rule:

1. The value-added (ad valorem) rule — the value of non-originating materials must not exceed a set percentage of the product's ex-works price.
2. Change of tariff classification — the finished product must fall in a different heading (or chapter) of the tariff than the non-originating materials used, e.g. “manufacture from materials of any heading except that of the product”.
3. Manufacture from specified materials or by a specified process — the agreement states which materials or what process the product must be made from or by.

Simple operations (for example sticking on a label, simple packing or simple assembly) are insufficient working or processing — they do not confer origin. More on when the rules really let you avoid duty: UK–EU rules of origin and how to correctly determine the origin of goods.

Checklist: does your product qualify for UK origin?

Ask yourself four questions:

1. Is the product wholly obtained in the UK (for example extracted, grown or made solely from British materials)?
2. If it contains materials from other countries — does it meet the specific rule for its tariff heading in the relevant agreement?
3. Do the operations carried out in the UK go beyond insufficient working or processing (simple operations)?
4. Do you hold documentation (for example supplier declarations, value calculations, material classification data) that lets you demonstrate origin and issue a statement on origin?

Where to get help

Rules of origin can be complicated, so talking to an international trade adviser is a good first step. Ultimate responsibility for applying the rules correctly always rests with your business. If you want to check the origin of your product before shipping, get in touch.

Watch the video: How to Apply Rules of Origin to Your Product

Frequently asked questions