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.

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.69. As set out above, the EU imposes 0 per cent Most Favoured Nation (MFN) tariffs on all semi-finished and finished steel products.9 However, the picture is more varied across the end goods which steel products are processed into, and some of these have non-zero MFN tariffs. The EU’s simple average of MFN applied duties is 2 per cent across all metals and minerals, and 4.3 per cent for transport equipment.

Tariffs can also be used for trade defence purposes. This includes temporarily increasing tariff rates to restrict imports of specific goods deemed to be injuring domestic production due to ‘dumping’ by a third country at below normal prices. For example, in 2016 the EU determined that steel from China was being exported to the EU below market price. The EU applied a 74 per cent tariff to this Chinese steel to ensure EU producers were able to remain competitive. Tariffs can also be imposed as countervailing duties to offset the effects of subsidies made to producers of the goods in the exporting country.

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.