Trade Agreement CH - GB: The Crux of Origin and Cumulation

Preference calculations in trade with the United Kingdom (UK) remain a challenge for Swiss exporters. However, as of June 9, 2021 and September 1, 2021, there will be some relief. What has changed in 2021 and what do Swiss exporters need to bear in mind to ensure that their goods pass through customs smoothly?

Goods produced in Switzerland with exports to the UK

Until now, problems with preference calculations have arisen, among other things, because the bilateral Trade and Cooperation Agreement (TCA) between the EU and the UK is not congruent in all aspects with the bilateral agreement between Switzerland and the UK. This mainly concerns the rules of origin. Swiss exporters had to contend with two major disadvantages: goods with preferential Swiss origin could be imported into the UK at preferential or duty-free rates, depending on the relevant customs tariff number. But compared to EU companies exporting to GB, Swiss companies had to meet stricter origin criteria:

1. In the agreed trade agreement between Switzerland and GB of February 11, 2019 (in force since January 1, 2021), "stricter" rules of origin applied than for EU countries. As a rule, only a value added of 60 - 70 percent led to a Swiss origin of the goods.
2. Input materials from the EU and Turkey used in production were classified as third country.

As of June 9, 2021, the disadvantage listed under point 2 no longer applies. The input materials from the EU and Turkey can now be added (cumulated) to the Swiss origin.

With the intended accession of GB to the revised PEM Convention (Pan-Euro-Mediterranean preferential rules of origin) on September 1, 2021, the second disadvantage - point 1 - will also cease to apply. The revised PEM Convention provides for "more liberal" rules of origin. As a rule, a value added of 50 percent is sufficient to obtain the origin of the goods. As a result, Swiss exporters will once again have equal footing with companies in the EU from September 1, 2021.

Trade agreement 2021: Apply old or new provisions?

The Swiss exporter can also choose whether to apply the new or the old rules from September 1, 2021. If he opts for the new, liberal rules, he must actively confirm this in the first shipment - by noting the new origin text. The origin text is supplemented with the additional words ".... according to the transitional rules for origin .... ". See the example of the text of the new declaration of origin:

The exporter (Approved Exporter; Authorization No. .........) of the goods covered by this commercial document declares that, unless otherwise indicated, these goods are preferential ................. originating goods in accordance with the transitional rules of origin.

Reexport of EU and Turkish goods by Swiss companies

The so-called through trade, i.e. the onward shipment of unchanged, preferential origin goods from the EU and Turkey is still not possible. If the Swiss exporter sends goods with EU and Turkish origin to the UK, he still cannot issue a preferential proof of origin. As a result, the recipient in the UK will have to pay customs duty. If the EU origin goods are transported directly from the EU to the UK, the import is duty-free.

Conclusion: Get support from logistics service providers

In view of the changes in the law, Swiss exporters should update their supplier information and check preference calculations and proofs of origin in detail before shipping. Internationally active forwarders in Switzerland, such as Dachser Spedition AG, offer their customers comprehensive support in this regard. The goal is to get shipments across customs borders to the UK smoothly, legally compliant, on time, and, if necessary, with a formally valid proof of origin.

Author
Mario Caccivio is Customs Representative European Logistics at Dachser Spedition AG (Switzerland). www.dachser.ch