Meat Management Column: Rules of Origin & Brexit

This column was originally published in Meat Management in March 2020.

Where is a product from? A seemingly simple question, but (as is often the case in international trade) one with a complex answer. The UK’s membership of the single market has allowed businesses to establish integrated supply chains; chickens can be slaughtered in an approved non-EU country, imported and processed in one EU member state, turned into chicken nuggets in a second member state, then exported around the EU and possibly also outside the EU. In a post-Brexit world, this may not be so simple.

To prove goods’ economic nationality and establish their eligibility for access to lower tariffs under a free trade agreement (FTA), preferential rules of origin (RoOs) are implemented. These rules prevent tariff circumvention by ensuring that only goods originating in FTA partner countries benefit from the reduced duty.

Currently, there are no origin requirements for trade between the UK and EU. For example, Thai chicken can be imported into the UK and, once customs cleared, processed into a chicken curry ready meal (using rice and spices from elsewhere in Asia and tomatoes and spices from the UK) for dispatch to the EU with no tariffs or origin certification.

After Brexit, the UK and EU are aiming to have an FTA-based trading relationship. This will contain a chapter on RoOs, which will set out the criteria for accessing the preferential tariff rate under the FTA. For some meat tariff lines, RoOs are straight forward. Say the agreement has a tariff of zero on fresh poultry meat; then it is likely that any poultry meat from birds born and raised in either the UK or EU would be eligible to be traded duty free.

However, things become more complicated when considering manufactured products with multiple ingredients with multiple origins. The origin criteria for manufactured foods under the EU Canada agreement (CETA) stipulates that meat and fish products (tariff heading 16) can benefit from preferential tariffs if processing has changed their tariff heading – but not if the original heading was chapter 02 (which it would be in most cases as this chapter covers unprocessed  meat). As such, the UK manufactured chicken curry ready meal being shipped to the EU made from imported meat would have to pay the full tariff of 276.5EUR/100kg.

Why not just use British chicken? The UK is not self-sufficient in the production of chicken breast meat. Increasing production would only see more wings/legs/feet produced in need of export markets. You can read more about this in our paper The Self-Sufficiency Myth, available on the IMTA website.

We don’t know what the RoOs will look like between the UK and EU as the agreement has not yet been negotiated. It is clear, however, that a RoO chapter based on that in the CETA agreement would not be sufficient for many in the UK food sector. The above example is taken from a report published by FDF, NABIM and Global last year which provides recommendations for the government on what a UK-EU origin regime might look like. The report is an excellent explainer and contains more detail than this article. If you use imported inputs in manufacturing products for export (to the EU or third countries), I would encourage you to read it.

Many like to say that Brexit is ‘done’, but really, it’s only just beginning.