Negotiations on a potential EU-UK free trade agreement: EU law for Swiss exporters continues to be valid until the end of 2020
After the UK’s withdrawal, it is now up to the EU and the UK to negotiate a free trade agreement during the remaining transition period until the end of 2020 with the aim of signing it by the end of the year. EU law will continue to be applied in the UK during the transition period. This includes EU trade rules such as the EU VAT system and other tax-related directives, the rules of the internal market and the customs union.
Switzerland and the UK sign trade agreement valid from January 2021
Federal Councillor Guy Parmelin and the British Secretary of State for International Trade, Liam Fox, have signed a bilateral trade agreement in Bern on 11 February. The agreement ensures the continuation of the economic and commercial rights and obligations arising from the agreements between Switzerland and the European Union (EU). It lays the foundations for the two parties to continue their sound economic and trade relations once the United Kingdom has left the EU. The new agreement was concluded as part of the Federal Council’s ‘Mind the Gap’ strategy. It replicates the vast majority of the trade agreements with the EU that currently govern relations between Switzerland and the United Kingdom.
As part of its ‘Mind the Gap’ strategy, the Federal Council wishes to ensure that the existing mutual rights and obligations in its relationship with the UK will continue to apply as far as possible after the UK leaves the EU, and to expand them in certain areas. With this in mind Switzerland and the UK have already signed agreements on road transport, air transport and insurance. In December 2018 the Federal Council adopted an agreement on citizens’ rights with the United Kingdom.
Agreement covers Liechtenstein as well
An additional agreement between Switzerland, the United Kingdom and the Principality of Liechtenstein to extend the relevant provisions of the trade agreement to the territory of Liechtenstein under the Swiss-Liechtenstein Customs Union was also signed today.
Uncertainties from January 2021
Not all agreements governing the economic and trade relations between Switzerland and the EU could be adopted within the framework of the trade agreement between Switzerland and the UK, as they still depend on the future solution agreed between the EU and UK. This has produced some gaps that continue to cause uncertainty:
- The Mutual Recognition Agreement (MRA) has not been regulated for all product categories - this concerns the certification and approval of industrial products.
- Several product categories of the agricultural agreement not yet covered by the EU-Switzerland agreement, this concerns technical regulations for these products
- In matters of customs security and customs facilitation, Switzerland will be treated by the UK like an EU member state in the future, which means there is still uncertainty for the period after January 2021
In this detailed contribution from March 2020, "Die Volkswirtschaft" clearly summarizes the existing uncertainties.
In particular, this situation means it is still unclear as to what extent Swiss goods with materials originating in the EU can be shipped with reduced duties under the new Switzerland-UK FTA, and how goods shipped from an EU warehouse will be cleared through customs.
The regulation regarding the provision of personal services on site, such as consulting services, is also still outstanding.
Important practical questions for Swiss exporters - as of September 3, 2020
- This step-by-step guide from the British government shows what needs to be taken into account when importing goods for UK companies - and explains how Swiss exporters may need to adapt if their goods are of EU origin.
- What are the rates of duty applicable after the withdrawal?
Until 31 December 2020, the current customs rates (EU) will remain in force. The standard UK tariffs for non-preferential goods, which will apply from 1 January 2021, can be found on the UK government's website here. A comprehensive overview of all tariff rates on agricultural products agreed between Switzerland and the United Kingdom can be found in the trade agreement starting on page 55. For industrial products, the exemption from customs duties, which is contractually agreed with the EU, will continue to apply in trade with the UK.
- With which input materials may an origin cumulation be carried out?
Until 31 December 2020, EU goods will continue to retain their origin. The future arrangement will depend on whether the EU and the UK conclude a free trade agreement or an agreement on mutual administrative assistance when it comes to customs matters. If this happens, the Free Trade Agreement between Switzerland and the UK stipulates that Swiss companies can make use of cumulation rules when exporting goods with semi-finished materials originating in the EU to the UK.
- In what form must a proof of origin be issued?
Valid proofs of origin are the movement certificate EUR 1 or EURO-Med as well as the declaration of origin on the invoice up to a value of CHF 10,300. Authorized exporters can continue to issue declarations of origin on the invoice regardless of the amount.
- We have a warehouse in the EU. Is it possible that stored originating goods cannot be delivered preferentially due to the direct shipment clause?
During the transition period until the end of December 2020, the UK is still part of the European Customs Union.
- What does brexit mean for customs and transport handling?
During the transition period until the end of December 2020, customs and transport procedures will remain unchanged.
Changes will be introduced in three stages
In order to give companies more time to adapt to the new conditions for importing goods, the introduction will take place in stages up until July 1, 2021. The measures are to be introduced irrespective of the outcome of the negotiations on future relations, which means they are to enter into force even if both parties agree on a free trade agreement. They will only apply to imports from the EU.
The measures differ according to the product category
From January 2021:
- Advance declarations (entry summary declarations/safety and security declarations) will be waived for a period of six months for all goods.
- For most goods, complete import declarations can be lodged retrospectively for a period of up to six months.
- If customs duties must be paid, there is the possibility of deferring payment. Payment is due on the date on which the complete import declaration is lodged.
- For goods subject to authorization or monitoring, a complete import declaration is required at the time of import. These include tobacco, alcohol or toxic chemicals, for example. The import requirements for goods from third countries will start applying to these products on January 1, 2021.
- For live animals and high-risk plants and plant products, advance notification and health certificates are required. Although document checks will be used, they will not be carried out on the spot during the actual import. Physical checks for high-risk goods will be carried out at the place of destination of the goods or at some other authorized place of reception.
From April 2021:
- For all goods of animal origin, such as meat, honey or dairy products, and for all plants and plant products, advance declarations and health certificates will be required.
From July 2021:
- From this date, the simplified rules will no longer apply. Complete import declarations must then be lodged at the time of import.
- Advance declarations (entry summary declarations/safety and security declarations) will become mandatory for all imports.
- Physical checks and sampling of SPS goods will be increased. The checks will take place at the UK border inspection posts.
Do you have export administrative questions? Our EXPORTHELP will be happy to support you.
Would you like to clarify your individual risks and opportunities in the British market? Our export consultant NADJA KOLB is at your disposal at all times.