30 Nov 2020
Brexit: UK Trade Agreement with Japan an Example on Rules of Origin
Now that the UK is no longer a member of the EU (and will cease to be within the EU Single Market and Customs Union from 1 January 2021), it has initiated trade discussions with a number of third countries.
In contrast to the difficulties the EU-UK trade negotiations are experiencing, discussions with trading partners such as Japan and Canada, have gone much more smoothly. Over the last number of weeks, the UK has secured deals with these countries which will replicate the existing preferential trade access currently possible under EU trade deals.
This achievement by the UK will avoid new tariffs being placed on many UK exports to those countries, from January. For Irish cooperatives operating on an all-Ireland basis there is some, limited, solace also to be found in these deals.
As previously discussed, Irish dairy products originating on an all-Ireland basis face new export barriers to third countries from January 1st. Inclusion of NI milk or processing in NI, could mean the products fall fowl of “rules of origin” set within EU trade agreements- meaning they would not get preferential access to those third country markets and would have additional tariffs applied.
The UK replicate trade agreement with Japan however has provided for “extended cumulation” within it rules of origin, allowing for raw material from the EU to be used in the production of products exported to Japan. Exports will have to undergo “sufficient processing” within the UK (including NI) in order to qualify for preferential access, however there is no limit put on the potential component of EU materials. It therefore means, for example, that any cheese produced in NI containing ROI milk, can be exported to Japan under preference.
While this does not address the significant issue facing the sector, as the general flow of milk is from north to south, not visa-versa, it does allow for some flexibility for those cooperatives with facilities in NI.
This framework for rules of origin is sought to be included within other trade deals to be negotiated by the UK as well- however it will of course be in the gift of the negotiating partner to allow and therefore there is no guarantee.
ICOS has been and continues to insist the EU adopt this position on “extended cumulation” with UK supply lines, within its own negotiations on rules of origin with third countries in the future, in order allow for products produced on an all-Ireland basis to continue to benefit from EU trade agreements.
Alison Graham – EU Affairs Executive