UK Trade Agreement with Australia and New Zealand FAQ

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To help you understand what the FTA with Australia and New Zealand means for you and your business, we’ve created this handy FAQ.

Q. What do the Trade Agreements mean for UK companies trading with Australia and New Zealand?

A. It means that tariffs are eliminated on imports of all UK goods entering Australia directly from the UK, and 99% of goods entering the UK directly from Australia, provided they meet origin rules. Some imports from Australia will continue to attract tariffs e.g. agricultural goods, however this will be phased out over the next 10 years. Agricultural and food imports from New Zealand and will be subject to tariff free quotas. There are provisions covering technical barriers to trade, and sanitary and phytosanitary (SPS) measures relating to animal and plant health, as well as food safety.

 The agreements also have provisions covering trade in services, digital trade, public procurement and intellectual property. UK citizens aged under 35 will be able to travel and work in Australia more easily.

Q. How do I determine if my goods meet the origin rules to qualify for tariff free trade?

A.  You can check the specific rules for your product using the UK government website check export tariff customs. Some rules require a change to the tariff number at a two-digit or four-digit level. Some set a maximum level of non-originating material (materials or components not originating in the United Kingdom).

To find the rules for your product you will need your product tariff number. See exporter factsheet to tariff classification for guidance.

Some describe specific processes that must take place in order to qualify. Some rules are a combination of the above.

Q. Do the customs authorities require proof of origin?

A. The importer of the goods can claim duty free import by providing evidence of origin, that can either take the form of;

a. a declaration from the exporter

b. or, if the importer is relying on their own knowledge, they must hold evidence of origin and may be required to present it to customs on request.

Q. What form does a declaration of preferential origin take?

A. There is no specific form for the declaration, which can be made on the invoice or on a separate form.

The government website has templates to assist and guide you, but their use is not mandatory.

Q. What other benefits are there for exporters of products?

A. The agreements contain provisions for simpler customs procedures, completion of clearance for complying declarations within 48 hours and an expedited procedure for clearance within six hours. Traders in food and agricultural goods will potentially benefit from commitments on sanitary and phytosanitary measures.

Free Trade Agreements

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What are Free Trade Agreements (FTAs), and what do they impact?

This article informs you what Free Trade Agreements are, and how they might impact trade that you conduct internationally.

What is an FTA?

Basically, FTAs are agreements made between countries that are intended to reduce/eliminate trade barriers across international borders. This doesn’t mean however, that they come without regulations and oversight. A nation might allow free trade with another nation that forbids the import of specific things. These might include:

  • Drugs not approved by its regulators
  • Unvaccinated animals
  • Processed foods that don’t meet its standards.

For example, the United Kingdom signed an FTA with the EU during the Brexit transition period, known as the EU-UK Trade and Cooperation Agreement (TCA).

Does the presence of FTAs with other countries affect my business?

Yes! If the UK has an FTA with a country you’re trading with, this can affect your documentation obligations, or even make you eligible for duty/tariff reductions. This has to do with declaring origin.

Certificates of Origin

Anyone exporter/importer should be aware of the need to declare the origin of goods (If you’re not, check out our article on this here). If Certificates of Origin (COs) are your preferred method of declaring origin, then you may be eligible to receive a preferential COs. Preferential COs certify that goods in a consignment are eligible for reduced tariffs or exemptions. Consequently, this is decided based upon the existence of a preferential FTA between the UK and the country you’re trading with.

To apply for a Certificate of Origin, you can contact us at [email protected]

UK-Japan Comprehensive Economic Partnership Agreement (CEPA)

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Effective: 01/01/2021

The agreement dictates the terms of trade between the UK and Japan, replacing the agreement that the UK benefitted from as members of the European Union. The CEPA also goes further in some key areas.

Trading Relationship

Total trade in goods and services between the UK and Japan was £23.9bn in the four quarters to the end of Q1 2021.

  • Total UK exports to Japan = £12.2bn
  • Total UK imports from Japan = £11.6bn
  • Japan was the UK’s 11th largest trading partner in this period.
  • In 2020, the North East exported £400 million worth of goods to Japan. 7.5% of the total of UK goods exports to Japan.
  • The North East also imported £600 million of goods from Japan. 8.0% of the total of Japanese goods imports to the UK.

The UK Government have produced a document outlining a number of benefits of this agreement, which is available here.

Tariffs

Tariffs on the majority of goods traded between the UK and Japan have been carried over from the agreement between the EU and Japan, but some have been reduced further. There are also plans to gradually reduce tariffs over time, as part of the agreement, such as tariffs on textiles and handbags which are set to be reduced to 0% by 2028 and 2033 respectively.

There are a number of Tariff Rate Quotas (TRQs), that limit the quantity of products that qualify for reduced tariff access, that continue to apply to UK exporters. They are listed here.

You can check tariffs and customs procedures for exporting to Japan here.

You can check tariffs and customs procedures for importing goods to the UK here. 

Rules of Origin

In order to gain preferential access to the Japanese markets, goods will need to be proven to be of UK origin.

Guidance on product-specific rules of origin can be found here.

The UK agreement with Japan has slightly more liberal rules for some food and textile products than the agreement between Japan and the EU. Approximately £88.2 million more of UK exports are set to receive preferential than under the EU-Japan agreement.

The requirements for claiming preferential origin have remained unchanged. A clam should be based upon a statement of origin by the exporter that the product is originating in the UK, or the importer’s knowledge that the product is originating.

Goods do not require a statement of origin if they are:

                Entering Japan and are below 200,000 yen in value

                Entering the UK and are below £1,000 in value

Trade in Services

In addition to granting service firms access to each other’s markets, the agreement goes beyond the agreement signed between Japan and the EU, in areas of service trade, in a number of ways. This includes the ability for UK financial firms to not have to store financial data in Japan and saving business costs.

The agreement also includes a streamlined process for UK companies applying for licenses to operate in Japan and greater mobility for people travelling to Japan for business. For example, VISA applications will be accelerated and spouses of people on business trips will now be allowed to enter the labour market in Japan.

Consumption Tax

‘Consumption tax’ is Japan’s version of VAT and is charged at every point in a sales chain, including upon import. Guidance on Japanese consumption tax is available here.

The consumption tax is currently set at 10%, with a reduced rate of 8% for some products, mostly foodstuffs.

An international, non-resident trader will be required to appoint a Japanese resident tax agent who is responsible for all communications between the company and the Japanese tax authorities.