Great Britain’s transition under the Trade & Cooperation Agreement (TCA) to Third Country status vis-à-vis the EU’s Single Market is already affecting goods exporters significantly. For the 9 months to September, goods exports from the UK to the EU were down 12% compared to the same period in both 2018 and 2019. Goods exports from the UK to non-EU countries were also down, 8% compared to the same 9 months in 2018 and 12% compared to the same 9 months in 2019. This has occurred at the same time as other rich countries have surpassed pre-pandemic levels of trade.

However, the full impact is still yet to be felt. In this briefing, we introduce some of the new non-tariff barriers (NTBs) to trade coming in the next two years as the UK continues to transition to a separate regulatory and customs territory. Some are gradual, while Rules of Origin requirements and the introduction of import controls for Great Britain bring a “big bang” change next year.

We will explore these changes in the next pages. They can be summarised as follows:

• Regulatory divergence: Although the UK transferred EU product standards into UK law on 1^st January 2021, EU standards have continued to change independent of Great Britain’s, while the government also has signalled its intention to eliminate much of the law that was “retained” in January 2021. As standards evolve further apart, manufacturers may need to produce different products for the UK and EU, increasing costs as they lose economies of scale from single production processes.

• Safety marking: Indeed, the UK is creating a separate product standard (UK Conformity Assessed, or UKCA) to replace the Conformité Européenne (CE) safety mark. The UKCA will now be required from January 2023. If the different sets of requirements cannot be reconciled, then manufacturers will need to make different products for each market.

• As the balance of new products to old increases over time, costs will gradually increase as fewer products will be able to use existing CE certifications.

• Rules of Origin: To qualify as tariff free when exported from the UK to the EU products must demonstrate that a specific minimum proportion of their value is locally produced. To date this has required a declaration by the exporter.  From 1^st  January 2022, the EU will require documented evidence to support the declaration.

• The UK has yet to introduce controls on imports from the EU into Great Britain. These changes happen from 1^st  January (customs import declarations and pre notification of some food products) and from 1^st July (physical checks on animal and plant imports, safety, and security declarations).

Click here to read the full paper.