Brexit and the EU–UK free trade agreement: dos and don’ts when drafting rules of origin

Author:Roberto Soprano
Position:Private and Economic Law, Vrije Universiteit Brussel Faculteit Recht en Criminologie, Elsene, Belgium
Pages:96-107
SUMMARY

Purpose The purpose of this paper is to highlight the pros and cons of different models of the European Union (EU)-style Rules of Origin (RoO) that could be chosen by negotiators for a future UK-EU Free Trade Agreement (FTA). It will also underline the impact that any choice would have on economic operators and certain criteria that should be evaluated before taking any decisions on the... (see full summary)

 
FREE EXCERPT
Brexit and the EUUK free trade
agreement: dos and donts when
drafting rules of origin
Roberto Soprano
Private and Economic Law,
Vrije Universiteit Brussel Faculteit Recht en Criminologie, Elsene, Belgium
Abstract
Purpose The purpose of this paper is to highlight the prosand cons of different models of the European
Union (EU)-style Rules of Origin (RoO)that could be chosen by negotiators for a future UKEU Free Trade
Agreement (FTA). It will also underline the impactthat any choice would have on economic operators and
certain criteriathat should be evaluated before taking any decisions on the adoption of RoO.
Design/methodology/approach The paper will describe three different RoO models that could be
chosen by negotiators.For each of them, it analyses the pros and cons and the impact on economic operators.
Findings The choice of a RoO would have an impact on future EUUK trade relations.It will affect the
utilizationrate of the FTA as well as investment (and divestment) corporate strategiesin the UK and EU.
Originality/value The paper introduces differentcriteria to evaluate the impact of RoO that should be
taken into consideration by negotiators. It emphasizes that RoO should be simple, predictable, coherent, IT
compatibleand easily adaptable.
Keywords European Union, WTO, Brexit, Free trade agreement, Tariffs, Rules of origin
Paper type Research paper
1. Introduction
On 29 March 2019, the United Kingdom (UK) will formally withdraw from the European
Union (EU). Although it is still not clear if the UK and the EU will reach an agreement to
regulate several aspects of Brexit, ranging from the free circulation of citizens to nancial
matters, before that date, they do need, sooner or later, to nd a solution to regulate their
trade in goods relations. In fact,every good that nowadays is freely transferred from the UK
to the EU and vice versa will be subjectto customs controls and possibly to tariffs.
Many corporations have expressedtheir deep concerns about Brexit. They are planning
to relocate their production facilities, as the reintroduction of customs borders and tariffs
could negatively affecttheir margins and supply chain operations.
In addition, UK goods would no longer be eligible for tariff preferences when exported
to countries with whom the EU has concluded Free Trade Agreements (FTAs). Despite
thefactthatthelargestpartofUKgrossdomesticproduct(GDP)isbasedonservices,its
industrial and agricultural sectors may still benet from preferential access in FTA
partner markets. Moreover, FTAs tie links with allies and former colonies. Therefore, the
UK might be willing to negotiate with third countries new FTAs, allowing its goods to be
imported at preferential rates.
Moreover, Brexit will alsoaffect EU exporters as UK goods, in the absence of cumulation
clauses, would be treated as non-preferential for the calculation of preferential origin of
goods manufactured in the EU. This may affect exports of EU producers towards FTA
partner countries.
JITLP
18,2
96
Received29 November 2018
Revised20 January 2019
Accepted4 March 2019
Journalof International Trade
Lawand Policy
Vol.18 No. 2, 2019
pp. 96-107
© Emerald Publishing Limited
1477-0024
DOI 10.1108/JITLP-11-2018-0053
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1477-0024.htm

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