What Brexit means for Swiss exporters

What underlying conditions will apply to trade between the United Kingdom (UK) and Switzerland now that they have left the EU?

Clarifying opportunities and risks

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Trade Agreement

Trade Agreement

Negotiations on a potential EU-UK free trade agreement: EU law for Swiss exporters continues to be valid until the end of 2020

After the UK’s withdrawal, it is now up to the EU and the UK to negotiate a free trade agreement during the remaining transition period until the end of 2020 with the aim of signing it by the end of the year. EU law will continue to be applied in the UK during the transition period. This includes EU trade rules such as the EU VAT system and other tax-related directives, the rules of the internal market and the customs union.

Switzerland and the UK sign trade agreement valid from January 2021

Federal Councillor Guy Parmelin and the British Secretary of State for International Trade, Liam Fox, have signed a bilateral trade agreement in Bern on 11 February. The agreement ensures the continuation of the economic and commercial rights and obligations arising from the agreements between Switzerland and the European Union (EU). It lays the foundations for the two parties to continue their sound economic and trade relations once the United Kingdom has left the EU. The new agreement was concluded as part of the Federal Council’s ‘Mind the Gap’ strategy. It replicates the vast majority of the trade agreements with the EU that currently govern relations between Switzerland and the United Kingdom.

As part of its ‘Mind the Gap’ strategy, the Federal Council wishes to ensure that the existing mutual rights and obligations in its relationship with the UK will continue to apply as far as possible after the UK leaves the EU, and to expand them in certain areas. With this in mind Switzerland and the UK have already signed agreements on road transport, air transport and insurance. In December 2018 the Federal Council adopted an agreement on citizens’ rights with the United Kingdom.

Agreement covers Liechtenstein as well

An additional agreement between Switzerland, the United Kingdom and the Principality of Liechtenstein to extend the relevant provisions of the trade agreement to the territory of Liechtenstein under the Swiss-Liechtenstein Customs Union was also signed on 11 February 2019.

Uncertainties from January 2021

Not all agreements governing the economic and trade relations between Switzerland and the EU could be adopted within the framework of the trade agreement between Switzerland and the UK, as they still depend on the future solution agreed between the EU and UK. This has produced some gaps that continue to cause uncertainty:

  • The Mutual Recognition Agreement (MRA) has not been regulated for all product categories - this concerns the certification and approval of industrial products.
  • Several product categories of the agricultural agreement not yet covered by the EU-Switzerland agreement, this concerns technical regulations for these products
  • In matters of customs security and customs facilitation, Switzerland will be treated by the UK like an EU member state in the future, which means there is still uncertainty for the period after January 2021

In this detailed contribution from March 2020 (only in German), "Die Volkswirtschaft" clearly summarizes the existing uncertainties.

Customs Issues

Customs Issues

This step-by-step guide from the British government shows what needs to be taken into account when importing goods for UK companies - and explains how Swiss exporters may need to adapt if their goods are of EU origin.

What are the rates of duty applicable after the withdrawal? 
Until 31 December 2020, the current customs rates (EU) will remain in force. The standard UK tariffs for non-preferential goods, which will apply from 1 January 2021, can be found on the UK government's website here

A comprehensive overview of all tariff rates on agricultural products agreed between Switzerland and the United Kingdom can be found in the trade agreement starting on page 55. For industrial products, the exemption from customs duties, which is contractually agreed with the EU, will continue to apply in trade with the UK.

With which input materials may an origin cumulation be carried out?

Until 31 December 2020, EU goods will continue to retain their origin. The future arrangement will depend on whether the EU and the UK conclude a free trade agreement or an agreement on mutual administrative assistance when it comes to customs matters. If this happens, the Free Trade Agreement between Switzerland and the UK stipulates that Swiss companies can make use of cumulation rules when exporting goods with semi-finished materials originating in the EU to the UK.

In what form must a proof of origin be issued?
Valid proofs of origin are the movement certificate EUR 1 or EURO-Med as well as the declaration of origin on the invoice up to a value of CHF 10,300. Authorized exporters can continue to issue declarations of origin on the invoice regardless of the amount.

We have a warehouse in the EU. What needs to be considered at this point for deliveries to the UK?
During the transition period, the UK will still be part of the European Customs Union until the end of December 2020. After the end of the transitional period, it will no longer be possible to process the goods as an intra-community delivery. You will then have to export from the EU and then import into the UK. Especially important: For exports from the EU, the exporter under customs law must be based in the EU.

Goods of Swiss origin that have been definitively imported into the EU and that are stored there, will lose their preferential origin as of January 1, 2021, in accordance with the CH-UK trade agreement. However, if unprocessed goods are delivered back to Switzerland, and then re-exported from there to the UK, they will still have preferential status. Goods stored in a bonded warehouse, however, will retain their stated origin, and can be shipped directly to the UK.

What does brexit mean for customs and transport handling?
During the transition period until the end of December 2020, customs and transport procedures will remain unchanged.

Goods that are still in transit when the transition period ends will continue to be considered as preferential goods, provided that a movement certificate from the exporting country is retrospectively issued within 12 months.

Who needs a GB-EORI number?
Anyone involved in a customs declaration for import or export in the UK requires an EORI number as before. After the transition period starting on 01 January 2021, it must begin with GB; EORI numbers from EU member states are no longer accepted. Further information on the GB-EORI number and how to apply for it can be found here.

UK regulators

UK regulators

UK REACH
After the end of the transitional period, the EU REACH registration will no longer apply for sales of chemicals to the UK (with the exception of Northern Ireland). It will be replaced by UK REACH. Only UK company registrations will be transferred to UK REACH automatically; all other registrations will have to be resubmitted. UK importers are obliged to ensure registration on import. For this purpose, a “Downstream User Import Notification (DUIN)" must be applied for via the competent authority, after which registration must take place. Depending on the substances’ quantity and hazard profile, registration must be completed within 2, 4 or 6 years. Further information is available here.

Food labeling
Likewise, after following the withdrawal from the EU, the EU  labeling rules for foodstuffs will no longer apply for deliveries to the UK (with the exception of Northern Ireland). The exact content of the new rules is not yet clear.

UKCA
At the end of the transitional period, the CE conformity marking will be replaced in the UK by the UKCA. For most products, CE marking will be accepted until 1 January 2022 and for medical devices until 1 January 2023. Provided that there is no adjustment to the relevant EU regulations and thus a deviation from the UK regulations.

For goods placed on the UK market before 1 January 2021 the CE marking does not need to be replaced.

For deliveries to Northern Ireland a CE marking is still required.

Further information on the application and the transition periods can be found here.

Shipping from the EU

Shipping from the EU

In order to give companies more time to adapt to the new conditions for importing goods, the introduction will take place in stages up until July 1, 2021. The measures are to be introduced irrespective of the outcome of the negotiations on future relations, which means they are to enter into force even if both parties agree on a free trade agreement. They will only apply to imports from the EU.

The measures differ according to the product category

From January 2021:

  • Advance declarations (entry summary declarations/safety and security declarations) will be waived for a period of six months for all goods.  
  • For most goods, complete import declarations can be lodged retrospectively for a period of up to six months.
  • If customs duties must be paid, there is the possibility of deferring payment. Payment is due on the date on which the complete import declaration is lodged.
  • For goods subject to authorization or monitoring, a complete import declaration is required at the time of import. These include tobacco, alcohol or toxic chemicals, for example. The import requirements for goods from third countries will start applying to these products on January 1, 2021.
  • For live animals and high-risk plants and plant products, advance notification and health certificates are required. Although document checks will be used, they will not be carried out on the spot during the actual import. Physical checks for high-risk goods will be carried out at the place of destination of the goods or at some other authorized place of reception.

From April 2021:

  • For all goods of animal origin, such as meat, honey or dairy products, and for all plants and plant products, advance declarations and health certificates will be required.

From July 2021:

  • From this date, the simplified rules will no longer apply. Complete import declarations must then be lodged at the time of import.
  • Advance declarations (entry summary declarations/safety and security declarations) will become mandatory for all imports.
  • Physical checks and sampling of SPS goods will be increased. The checks will take place at the UK border inspection posts.

We have a warehouse in the EU. What needs to be considered at this point for deliveries to the UK?
During the transition period, the UK will still be part of the European Customs Union until the end of December 2020. After the end of the transitional period, it will no longer be possible to process the goods as an intra-community delivery. You will then have to export from the EU and then import into the UK. Especially important: For exports from the EU, the exporter under customs law must be based in the EU.

Goods of Swiss origin that have been definitively imported into the EU and that are stored there, will lose their preferential origin as of January 1, 2021, in accordance with the CH-UK trade agreement. However, if unprocessed goods are delivered back to Switzerland, and then re-exported from there to the UK, they will still have preferential status. Goods stored in a bonded warehouse, however, will retain their stated origin, and can be shipped directly to the UK.

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