Trade Rules for Non-EU Countries

In addition to the rules and standards set out above, non-EU countries trade with the EU in accordance with WTO rules and, where relevant, EU Free Trade Agreement (FTA) commitments. Tariffs particularly affect the upstream ‘space manufacturing’ sector.

The EU Most Favoured Nation tariffs for ‘telecommunications’ and ‘other’ satellites are 3.2% and 4.2% respectively, and the tariff for launchers is also 4.2%. Parts for the aforementioned items are lower at 0% for telecommunications satellites and 1.7% for other satellites and launchers. EU tariffs on intermediate goods or inputs are also significant, although these are not space sector specific; for example, batteries, turbines and valves. Any goods imported under tariff preferences provided for by a Free Trade Agreement are likely to need to comply with preferential Rules ofOrigin.

Trade is also affected by a series of Non-Tariff Measures (NTMs). For goods, this includes compliance with EU technical standards and dual use controls, as well as the normal EU customs rules and procedure. In terms of procurement, in some cases aspects of the EU’s own space programmes are reserved for EU industry due to security concerns.

Services trade – particularly affecting ‘satellite applications and services’ and ‘space operators’ and ‘ancillary services’ – is determined by EU member states’ regulations, including restrictions on the establishment of commercial presence (affecting FDI) and the movement of business people (affecting inter alia intra-corporatetransferees).

International Rules and Standards

A number of international rules and standards apply to the space sector. There are five main UN Treaties, four of which place international legal obligations on the UK and other countries with respect to activity in outer space.

The UK develops its position in these UN bodies through its own legal and policy frameworks. Often these are in partnership with other Europeans, but none are subject to EU rules or formal EU coordination.

There are also voluntary international technology control regimes, such as the Wassenaar Arrangement and the Missile Technology Control Regime, to which the
UK and other EU Member States belong, and which apply to some space technologies.

The International Traffic in Arms Regulations (ITAR), operated by the USA, affects space export activity, since much of the space sector has military users as well as civil users (it is ‘dual-use’).37 EU companies have to comply with these requirements to use certain US sourced products, many of which are components for satellites, which has an impact on the manufacturing sub-sector. The use of non-ITAR technology is not controlled.

The key set of rules and regulations in satellite telecoms (the most commercial market) are set by access to spectrum which is managed through the World
Radiocommunications Conference. At this international gathering at the International Telecommunication Union in Geneva, Switzerland, terrestrial interests compete with satellite interests for valuable spectrum. The EU takes part in the meeting, but national agencies nominate their own policy objectives.

Standards and requirements for Earth observation data are set in various international bodies where the UK is represented and is influential.

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.

International agreements in manufactured goods, services, access to public procurement markets and collaboration on scientific research are relevant to the space sector. Non-EU states have negotiated agreements with the EU on space related matters, including participation in EU space programmes.

International Agreements

Galileo and EGNOS Satellite Navigation Programmes

Agreements have been reached covering collaboration on space related matters. For Galileo, the EU has Cooperation Agreements on satellite navigation with countries including China, Korea, Israel, Morocco, Norway, Switzerland, Ukraine and USA. Other agreements exist covering more extensive participation in the EU space programmes. Details of these can be found below:
o Switzerland has a Cooperation Agreement on the European Satellite Navigation Programmes to participate in parts of the Galileo and EGNOS programmes. The agreement sets out a series of principles of cooperation,including a principle of unrestricted trade in European satellite navigations goods in the EU and Switzerland. It grants Switzerland certain rights in theprogrammes.
o Cooperation agreements with the EU on aspects of the programme were signed with Korea (2006) and Ukraine (2013) covering co-operative activities in the areas of scientific research and training, industrial cooperation, trade and market development, standards, certification and regulatory measures, regional and local augmentations.
o Norway participates in elements of the programme. Norwegian companies are able to compete for contracts and Norway hosts parts of the system infrastructure on its territory. Participation in the programme is granted through the EEA agreement and a separate Cooperation Agreement on Satellite Navigation. Norway are currently negotiating access to PRS (thesecure signal).
o The United States and the EU are beginning negotiations to allow the US access to the Public Regulated Service.

Copernicus Earth Observation Programme

Norway and Iceland have an agreement with the EU providing for participation in the programme and access to data and services, including the right for their industries and institutions to bid for contracts. They participate fully in the EU programme committees, but without the right to vote. As above, these agreements include financial contributions by Norway and Iceland, provided for by the EEA Agreement.

The USA and Australia have signed cooperation agreements with the EU on a ‘no exchange of funds’ basis. Both countries provide contributions in the form of mirror sites to store and distribute data in their regions. In the case of the USA, there is also a reciprocal open data agreement on Earth observation data. Australia’s agreement enables fast access to Copernicus satellite data through the establishment of a regional data access and analysis hub.

Free Trade Agreements (Manufacturing Sub-Sector)

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 tradeagreement exists. EU MFN tariff rates vary depending on the good.

Tariffs particularly affect the upstream ‘space manufacturing’ sub-sector. Tariffs include those levied on final satellite products, and those levied on component parts of satellites. These are often not specific to the space sector, and include a variety of intermediary goods such as pressure-reducing valves, batteries, inertial navigation systems, and radar apparatus among many others.

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.