Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

Manufacturers from outside of the EU wishing to export manufactured goods to the EU need to meet the requirements set out in any applicable EU legislation.

Importers and distributors of machinery and electronics from manufacturers based in third countries must satisfy themselves that the products comply with EU legislation including conformity assessment where required. These manufacturers would also need to comply with legislative requirements in their home country, and any othercountries, where they intend to market products.

Countries can use bilateral Mutual Recognition Agreements which allow conformity assessment bodies in either market to carry out product testing and certification to each other’s legislative requirements. The authorities in both parties agree to accept conformity assessment decisions issued by bodies recognised in one another’s markets. Manufacturers still need to ensure that products meet the requirements set out in the legislation where they plan to market the product. For example, the US has signed MRAs for telecommunications equipment with Israel, Japan and Mexico.

The EU has concluded MRAs with seven countries, covering a variety of sectors. Some of the EU’s bilateral MRAs have been integrated into FTAs. One example is CETA, where mutual recognition of conformity assessment covers eleven sectors, including electrical and electronic equipment; radio and telecommunications terminal equipment and machinery. CETA also contains provisions for voluntary cooperation on data exchange to support market surveillance activity and exchange of information about the development of technical regulations.

Other existing agreements, such as the EU-Swiss agreements and the EEA Agreement, provide for further mutual recognition. For example the EU-Swiss MRAs provide mutual recognition across around twenty product types, including those covered in CETA and measuring instruments, and are linked to an agreement that recognises Swiss legislation as equivalent. Where legislation is deemed equivalent, notified bodies’ certificates of conformity with the product rules in the EU will be recognised as proving conformity with Swiss legislation, and vice versa. They also cover cooperation on market surveillance of products already on sale.

In the EEA agreement, for industrialised goods, including machinery and electronics, EEA countries adopt EU product legislation into their domestic legislation, and goods that originate from these countries are treated as products from member states. The agreement also includes a system of surveillance and enforcement.

Trade in manufactured goods can be facilitated through the use of international standards, such as those developed by the International Standards Organisation (ISO) and the International Electrotechnical Commission (IEC). These are voluntary agreements on best practice for a given process or product. These standards are voluntary, and the majority are developed purely for commercial purposes, such as to support the interoperability of supply chains.

In some areas of electronics and machinery, product regulations are informed by international organisations which facilitate the development of common approaches across countries, drawing on best practice. These organisations bring together national regulators. For example, the International Organization of Legal Metrology is an intergovernmental treaty organisation that makes model regulations for weights and measures requirements. The work of these organisations can facilitate similar regulatory approaches across a number of countries, which in turn can help business in operating in a number of countries.

Customs

There are many customs facilitation arrangements in international agreements. These include the EU’s agreements with a number of third countries, such as Canada, Korea, and Switzerland. These agreements differ in the depth and scope of customs facilitation offered. Examples of customs facilitations include: simplifying customs procedures, advance electronic submission and processing of information before physical arrival of goods, and mutual recognition of inspections and documents certifying compliance with the other parties’ rules.

Tariffs

In the absence of a preferential trade agreement, goods imported into the EU from non-EU countries must pay a tariff. Tariffs are custom duties levied on imported goods. Under WTO Most Favoured Nation (MFN)), a country’s tariff schedule must be consistent for all countries it trades with, except those where a preferential trade agreement exists. EU MFN tariff rates vary depending on the good. The EU’s simple average of MFN applied duties is 1.9% for non-electrical machinery, and 2.8% for electrical machinery, and 2.6% for Manufacturing not elsewhere specified.

Rules of origin

The EU includes rules of origin in all of its FTAs, which are restrictions on the originating content of products that exporters must comply with to gain tariff preferences. These rules typically reflect both the supply chains of both the EU and its FTA partner. Many of the EU’s rules of origin arrangements are based on the Regional Convention on Pan-Euro-Mediterranean Preferential Rules of Origin, which includes provisions that allow producers to treat content from some third countries as if it comes from their own country. Several arrangements aim to reduce the administrative requirements associated with origin certification, including the EU’s Registered Exporter (REX) system, which lets businesses register for selfcertification of origin using an online system, avoiding paper certificates.