UK businesses exporting to Canada have been urged to be vigilant over goods originating in the EU after new requirements came into force this month.
As of April 1, UK exporters can no longer class EU inputs as originating when trading with Canada after time-limited conditions set out in the UK-Canada Trade Continuity Agreement (TCA) lapsed.
David Hooper, founder of Hooper & Co International Trade Consultancy, has encouraged businesses to make urgent checks to avoid unexpected fines for them and their customers.
David said: “EU material used in UK manufacturing is now classed as non-originating, which could make things difficult for some companies when achieving the rules of origin set out in the UK-Canada TCA.
“We want businesses to be aware of this and speak to us if they are unsure, as it can be a complicated issue.
“Until now, traders have been able to class EU materials as originating when trading with Canada thanks to time-limited clauses.
“The TCA is a free trade agreement, which means if businesses have evidence that goods were made in the UK and meet the rules of origin in the agreement, then their Canadian customers benefit from paying preferential duties – as opposed to the standard rate for Most Favoured Nations.
“In some cases, this has been zero duty. After Brexit, the UK’s agreement with Canada was rolled over with the rules at the time, with Canadian authorities stating they would recognise material sourced from the EU as originating.
“Until this month, only non-EU material was recognised as non-originating and this was a huge plus for traders on both sides of the Atlantic. Unfortunately, this no longer applies as the agreement has not been renegotiated.
“If businesses don’t meet the requirements, they need to let their customers know as soon as possible and not sell under the UK-Canada TCA.
“A breach of the rules could result in fines and penalties, both for them and their customers. They should therefore check this urgently, or reach out to us for guidance on how to resolve any issues or concerns they have.”
To view the update visit https://www.gov.uk/government/publications/notice-to-traders-2024-rules-of-origin-update-for-canada/notice-to-traders-2024-update-on-use-of-eu-cumulation-clause-and-origin-quotas-in-trade-with-canada