On 24 December 2020, the UK finally agreed a Trade and Cooperation Agreement (TCA) with the EU, which came into effect on 1 January 2021.
Although there is a great relief that the UK did not crash out without a deal, there are still plenty of administrative hurdles for electronics manufacturers — and, indeed, any business moving goods between the UK and Europe — to overcome. However, the document (all 1,250 pages of it!) does at least bring some much-needed clarity on the rules we now all have to work to.
So, let us take a look at a couple of the crucial rules that are likely to impact electronics supply chains…
Tariffs and rules of origin
Many manufacturers were eager to hear which trading rules would apply after the end of the transition period — most notably, whether or not we would face any tariffs.
Although the ‘zero tariffs’ headlines were reassuring, there is a little more to them than meets the eye. The TCA states there will be tariff-free, quota-free access for products traded between the UK and EU. However, for goods to qualify, they must meet the ‘rules of origin’ requirements, which ensure the goods really do come from the EU or the UK.
The rules of origin vary depending on the product. For example, gas and diesel vehicles will need to be made up of 55% parts from the EU or the UK to qualify, whilst electric and hybrid vehicles must be made up of 40% UK/EU parts (increasing to 45% by 2026).
According to the TCA, materials originating from the EU and production carried out within the EU on non-originating materials may be considered originating in the UK and vice versa. This is known as bilateral cumulation. Once a product has gained originating status, it is regarded as 100% originating, meaning any non-originating materials within it will not be taken into account if incorporated in the production of a further product. The rules do not cover goods from any other third countries that both the UK and the EU have free-trade agreements with.
Naturally, these rules are accompanied by several new customs procedures and formalities. As a result, companies will need to complete additional paperwork and declarations when moving goods between the UK and the EU.
What does this mean for EC and our customers?
The TCA (or the avoidance of a no-deal outcome) does not remove the need for businesses to make changes to their operations – far from it.
The UK is giving importers a six-month grace period to prepare, but the EU is not following suit. As a result, there will be a considerable administrative burden on the electronics manufacturing industry, at least in the short term.
This disruption and friction will eventually ease, but in the meantime, it is vital that manufacturers assess their supply chains and where their goods originate from so that they can remain transparent and reduce additional costs or complications.
EC Electronics already has a strong presence in both the UK and Europe, meaning we are well placed to tackle these new trading rules and provide our customers with a range of options. A well-balanced supply chain includes elements from many regions and is all about having choices — and that is something we always aim to provide our customers with.
If you have any concerns about how Brexit might affect your upcoming electronics manufacturing project, please do not hesitate to get in touch. We would be happy to help.