Guidance

General rules to determine the origin of your products for trade between the UK and EU

Use these general provisions to help you determine the origin of your products.

From:
HM Revenue & Customs
Published
6 October 2021

General provisions

These general provisions set out the general rules for determining the origin of products traded under the Trade and Cooperation Agreement. They cover the basic ideas, of origin and how origin should be determined in specific instances, such as:

  • when a product has accessories or is part of a set
  • how packaging and materials used in production should be treated

They need to be read with the product-specific rule for a given product.

Key general provisions for EU trade

It is important that you are familiar with all the general provisions from the text of the Trade and Cooperation Agreement (TC), however this guidance explains some of the most important and more complex elements and gives examples to show how to apply them.

These include:

  • cumulation of origin
  • wholly obtained products
  • insufficient production
  • tolerance
  • accounting segregation

There are additional provisions that are not covered in this guidance. You can find more information on all the general provisions in the full Trade and Cooperation Agreement text.

Cumulation of origin

The relevant Trade and Cooperation Agreement Articles are:

Cumulation in the Trade and Cooperation Agreement

Cumulation is an important part of modern free trade agreements. It provides a system that allows originating products from one party to be treated as if they are originating in another when deciding if a goods is are able to meet a product-specific rule.

For example, this means products or materials originating in the EU can be considered as originating in the UK if those products are further processed in the UK or incorporated into another product before re-exporting to the EU.

Under the Trade and Cooperation Agreement arrangements, exporters are not only able to cumulate originating materials or products, also as well as processing or production carried out on non-originating materials (‘full bilateral cumulation’).

This means that all operations carried out in the UK or EU are taken into account when deciding if a good is able to meet a product-specific rule.

Full bilateral cumulation applies to both:

  • specific production processes (for example ‘combing’ or ‘making up’ in the manufacture of textiles products)
  • the value associated with such processing (for example in product-specific rules with value-add requirements)

Cumulation and insufficient production

If wanting to cumulate originating materials or production carried out on non-originating materials, an exporter may only apply cumulation where the working or processing carried out in their party has gone beyond the operations deemed ‘insufficient’ under the Trade and Cooperation Agreement’s ‘insufficient processing’ article.

For more information read section about insufficient production, where there are links to the full list of insufficient processing operations.

Procedure for applying full cumulation

Where an exported good has got its originating status through the application of full bilateral cumulation (for example where a UK exporter has met a product-specific rule through counting production carried on non-originating materials in the EU), the exporter of those goods must get a ‘supplier’s declaration’ from the supplier of the non-originating materials.

This declaration could either be in the form set out in Annex 6 (Supplier’s declaration) of the Trade and Cooperation Agreement, or an equivalent document that has the same information, describing the non-originating materials concerned in enough detail for their identification.

Find out more information on proving originating status and claiming a reduced rate of customs duty.

Applied examples of cumulation of originating materials

HS Code: 2002.90
Product: chopped tomatoes
Rule: production in which all the materials of chapter 7 used are wholly obtained

The rule requires all materials from chapter 7 (edible vegetables and certain roots and tubers) to be grown and harvested in the UK. However, with cumulation, UK producers can import EU tomatoes of HS heading 0702 (grown and harvested in the EU) and process them into chopped tomatoes.

The final product can then be exported back to the EU as an ‘originating’ product.

This is possible because (i) the tomatoes were wholly obtained (by cumulation), and (ii) the process carried out in the UK of chopping, cooking and canning the tomatoes as a combination goes beyond insufficient processing (read more about insufficient production).

HS code: 8408
Product: diesel engine
Rule: 50% MaxNOM

The rule requires that the engine contains a maximum 50% non-originating content (parts). When applying cumulation, EU content can be counted as ‘originating’ as well as UK content. This means that manufacturers only need to consider content that does not originate in the UK or EU.

This gives manufacturers greater sourcing options, as they can source engine parts in the UK or EU and count both towards the final origin calculation.

For example, if a UK-made engine that costs £2,000 includes an EU-originating crankshaft and piston worth £500 combined, those EU materials count 25% towards the ‘originating’ content of the engine if it is re-exported to the EU.

Applied examples of cumulation of processing

HS code: 620520
Product: cotton men’s shirts
Rule: weaving combined with making-up including cutting of fabric

The rule requires the specific processes set out (weaving, as well as making-up including cutting of fabric) to be carried out in the UK. However, with cumulation of processing, these processes can be divided between the UK and EU.

For example, the weaving of the fabric could be done in the EU, whilst the making-up of the shirt could be done in the UK. The final product can then be exported back to the EU tariff-free as an ‘originating’ product.

Wholly obtained

Relevant Trade and Cooperation Agreement article:

General introduction

Your goods are treated as ‘wholly obtained’ if they’re exclusively produced in a country covered in an agreement, without incorporating materials from any other country.

Wholly obtained in the Trade and Cooperation Agreement

Wholly obtained products automatically qualify for preferential treatment. These products are specified under the wholly obtained article, and you should refer to the full list of products which qualify for wholly obtained status and preferential treatment under the Trade and Cooperation Agreement.

Full list of products which qualify for wholly obtained status and preferential treatment under the Trade and Cooperation Agreement
Product Trade and Cooperation Agreement text Explanation
Minerals a) mineral products extracted or taken from its soil or from its seabed

j) products extracted from the seabed or subsoil outside any territorial sea provided that they have rights to exploit or work such seabed or subsoil		 Mineral products must be extracted or taken from the soil or seabed of the UK to be wholly obtained.
Plants, vegetables and fruit b) plants and vegetable products grown or harvested there Plant, vegetable or fruit must be grown and harvested in the UK to be wholly obtained.

Seedstock and propagation material, such as seeds, bulbs, cuttings and slips can be imported from third countries and then grown and harvested in the UK.
Livestock, meat and dairy c) live animals born and raised there
d) Products obtained from live animals raised there
e) products obtained from slaughtered animals born and raised there		 A live animal must be born and raised or reared continuously in the UK to be wholly obtained.

Meat has to be from a live animal born, reared, raised and slaughtered continuously in the UK to be wholly obtained.

Milk must come from a cow raised in the UK to be wholly obtained. Milk from imported dairy cows can be considered wholly obtained as would be considered as ‘raised’ in the UK.
Fish f) products obtained by hunting or fishing conducted there
g) products obtained from aquaculture there if aquatic organisms, including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants are born or raised from seed stock such as eggs, roes, fry, fingerlings, larvae, parr, smolts or other immature fish at a post-larval stage by intervention in the rearing or growth processes to enhance production such as regular stocking, feeding or protection from predators
h) products of sea fishing and other products taken from the sea outside any territorial sea by a vessel of a party
i) products made aboard of a factory ship of a party exclusively from products referred to in point (h)

2. The terms ‘vessel of a party’ and ‘factory ship of a party’ in points (h) and (i) of paragraph 1 mean a vessel and factory ship which:
  (a) is registered in a member state or in the United Kingdom
  (b) sails under the flag of a member state or of the United Kingdom, and
  (c) meets one of the following conditions:
    (i) is at least 50% owned by nationals of a member state or of the United Kingdom, or
    (ii) is owned by legal persons which each:
      a. have their head office and main place of business in the Union or the United Kingdom, and
      b. are at least 50% owned by public entities, nationals or legal persons of a member state or the United Kingdom.		 Fish farmed or caught in the UK are wholly obtained even if farmed from imported seed stock.

Fish caught in UK territorial waters will be considered wholly obtained.

Fish caught beyond this area will need to meet vessel requirements. For fish to be considered wholly obtained the vessel will need to be registered in the UK or EU, fly the UK or an EU member state flag, and either be at least 50% owned by UK or EU nationals, OR be owned by a company that has its headquarters in the UK or EU with at least at 50% UK or EU ownership.
Waste and Scrap k) waste and scrap resulting from production operations conducted there
l) waste and scrap derived from used products collected there, provided that those products are fit only for the recovery of raw materials.		 Waste and scrap will be considered wholly obtained when it is either:
– the result of production operations in the UK
– derived from used products collected in the UK

Insufficient production

A trade agreement includes a list of processes that, if carried out on non-originating materials, are considered such minor processing that they do not alone, give them originating status.

Even if a product meets its product specific rule, if the only processing carried out on non-originating materials is listed as ‘insufficient’, that product will not get originating status.

In cumulation of origin, cumulation does not apply for these purposes – if the only processing carried out on a product in the UK is insufficient, it will not meet the rules of origin even if the processing was carried out on EU-originating materials or if further processing (beyond insufficient) had previously been carried out in the EU.

Trade and Cooperation Agreement list of insufficient working or processes

The full list of processes which do not have originating status for the purposes of the Trade and Cooperation Agreement is available in Article 43 Insufficient Production. Completion of one or any combination of the included processes is insufficient to give originating status.

For example, ‘simple painting and polishing operations’ or ‘peeling, stoning and shelling, of fruits, nuts and vegetables’ are not considered to be significant manufacturing and as such do not get originating status by themselves.

Interpretation of the term ‘simple’

Some of the listed operations can be clearly identified as insufficient operations, such as the affixing of a label on the product. However, there are also some operations that need to be assessed further as they contain the term ‘simple’, for example ‘simple assembly’.

Operations are considered ‘simple’ if neither special skills nor machines, apparatus or equipment especially produced or installed are needed for carrying out those operations.

Applied agri-food and manufacturing examples

This section has applied agri-food and manufacturing examples demonstrating the insufficient production provisions within the Trade and Cooperation Agreement.

Agri-food examples

HS code: 0406.20
Product: grated cheese
Rule: production in which both:

  • all the materials of chapter 4 used are wholly obtained
  • the total weight of non-originating materials of headings 17.01 and 17.02 does not go over 20% of the weight of the product

Cheese is imported from the EU and grated in the UK. The ‘cutting’ process is qualified by the word ‘simple’ in the insufficient processing text.

Therefore, if the only operation that is performed on the cheese is grating in a manner that does not need special skills or a machine especially produced or installed for the processing, then the grated cheese would not be originating in the UK.

This is true even though the input cheese would otherwise be considered originating by virtue of bilateral cumulation.

HS code: 081190
Product: frozen nuts
Rule: production in which both:

  • all the materials of chapter 8 used are wholly obtained
  • the total weight of non-originating materials of headings 17.01 and 17.02 does not go over 20% of the weight of the product

Nuts from the EU can be used if the processing goes beyond insufficient. All shelling of nuts is an insufficient process, so even if machinery is used for the processing the shelling will be considered insufficient to confer origin. This is because the ‘simple’ qualifier does not apply in this instance.

Manufactured goods example

HS code: 9403
Product: wooden table
Rule: MaxNOM 50%.

A wooden desk is assembled in the UK by fixing a non-originating desktop to non-originating table legs (using only non-originating materials). These materials make up 40% of the ex-works price of the final product (the remaining 60% being made up of other costs, for example, labour and brand).

Although the final product meets the product-specific rules of origin (as the non-originating materials make up less than the maximum 50% threshold for non-originating content), it will not be considered originating in the UK if the only processing that takes place in the UK is classified as ‘simple assembly’ (see see Article 43 (o)).

This would be true even if either the desktop or table legs, or both, were sourced from the EU, as bilateral cumulation could not apply in these circumstances.

However, if a wooden desk is assembled in the UK by fixing a non-originating desktop to UK-originating table legs, this would count as going beyond insufficient processing.

As in the first scenario, the table would meet the product-specific rules of origin (maximum 50% non-originating content). In this circumstance the table would be considered ‘UK originating’ because it incorporates UK-originating inputs, which have necessarily undergone more than insufficient processing.

Tolerance

Relevant Trade and Cooperation Agreement articles:

General tolerance in the Trade and Cooperation Agreement

Tolerance is a relaxation of the rules of origin under certain conditions. It means that, even if a product does not meet its product-specific rules, it can still be originating if only a limited amount of non-originating materials are used in the production of that product.

Tolerance can only be applied to certain types of product-specific rules.

For example, tolerance can be applied when using a ‘Change in Tariff Heading’ rule – this rule typically prevents the use of non-originating material from within the same Tariff Heading (at 4-digit level) as the final product. Applying tolerance means a small amount of non-originating content of the same heading can be used and the product will be considered originating, as long as the total amount of non-originating material used in the product does not go over the limits.

If a product-specific rule requires the final product to be wholly obtained, or needs a value threshold to be met, then tolerance cannot be applied in addition. However, if a rule requires that materials used in the production of the final product must be wholly obtained, tolerance can apply to those materials (when a small amount of those materials could be not wholly obtained).

Specific tolerance rules in the Trade and Cooperation Agreement

The Trade and Cooperation Agreement allows a tolerance of 15% by weight of the final product for agri-food goods and 10% by value of the value the final product for manufactured goods (except clothing and textiles).

Textile and clothing products classified under HS50-63 are subject to specific tolerance thresholds, which are detailed in Notes 7 and 8 (page 1014 to 1019) of Annex 2 (introductory notes to the product-specific rules of origin).

Applied agri-food and manufacturing examples

This section gives applied agri-food and manufacturing examples demonstrating the general tolerance rules within the Trade and Cooperation Agreement.

Agri-food examples

HS code: 0813.50
Product: mixtures of dried fruit and nuts
Rule: production in which both:

  • all the materials of chapter 8 used are wholly obtained
  • the total weight of non-originating materials of headings 17.01 and 17.02 does not go over 20% of the weight of the product

According to the rule, edible fruit and nuts and peel of citrus fruit or melons (chapter 8) must be grown or harvested in the UK or EU (using bilateral cumulation). There is also a requirement for non-originating sugar (headings 17.01 and 17.02) to make up 20% or less of the weight of the product.

The tolerance rule allows the use of non-originating ingredients forbidden by the rule, in this case edible fruit and nuts or other products within chapter 8, however, the total weight of the non-originating materials cannot go over 15% of the net weight of the product.

This would allow the final product (mixtures of dried fruit and nuts) to obtain originating status.

Tolerance would not apply to sugar in this example as it is already subject to a weight restriction.

HS code: 1509
Product: olive oil
Rule: production in which all the vegetable materials used are wholly obtained

According to the rule, olives used in olive oil must be grown or harvested in the UK (or EU by cumulation). The tolerance rule allows the use of non-originating olives (that if used would mean the origin rule is not met), if the total weight of non-originating olives does not go over 15% of the net weight of the product.

This would allow the final product (olive oil) to obtain originating status.

Manufactured goods example

HS code: 9503
Product: dolls
Rule: CTH (non-originating material used in the production of a doll must be from a different heading than the doll)

Doll’s eyes fall into the same heading as a doll.

The rule states that all non-originating parts must fall under a different heading to that of the final product, meaning the doll’s eyes must be originating for the final doll to be originating.

However, applying the tolerance rule, non-originating doll’s eyes that make up 10% or less of the ex-works price of the doll may be used, and the final doll would still be considered originating.

The total non-originating material from within the same heading as the doll may not make up more than 10% of the ex-works price of the doll.

Accounting segregation

Relevant Trade and Cooperation Agreement article:

Originating and non-originating fungible materials may be used in the production of a product without being physically separated during storage, if an accounting segregation method is used.

Fungible materials are materials that are of the same kind and commercial quality, with the same technical and physical characteristics, and which cannot be distinguished from one another for origin purposes.

An example of a fungible material is sugar. ‘Originating’ and non-originating sugar are fungible and as such can be stored together, and the volumes used in the production of a final product managed through accounting methods. This is particularly helpful if businesses need to keep their non-originating materials to a certain threshold.

Additionally, Trade and Cooperation Agreement allows fungible products of HS10, 15, 27, 28, 29, headings 3201 through 3207, and headings 3901 through 3914 to be stored in a party before exportation without being physically separated if an accounting segregation method is used.

Fungible products may be exported without any further processing, provided the stock of originating materials is enough to cover the quantity of product exported.

For example, this means that UK manufacturers of ethylene (HS2901) can store originating and non-originating ethylene in the same tank before exporting to the EU if an accounting segregation method is used.

UK manufacturers have to make sure that the amount of materials or product that is receiving originating status through accounting segregation does not go over the amount that would receive originating status through physical segregation.

Accounting segregation involves applying an inventory management system which should:

  • allow HMRC to verify compliance and make sure that no more materials receive originating status than would have if the materials were physically separated
  • specify the quantity of originating and non-originating materials, including dates when they were purchased
  • specify the quantity of products using fungible materials that are supplied to customers

Applied agri-food and manufacturing examples

Agri-food examples

HS code: 1806
Product: chocolate bar
Rule: CTH, provided that all the materials of chapter 4 used are wholly obtained and either the:

  • total weight of non-originating materials of headings 17.01 and 17.02 used does not go over 40% of the weight of the product
  • value of non-originating materials of headings 17.01 and 17.02 used does not go over 30% of the ex-works price of the product

For this product, accounting segregation can be used to manage the volume of the fungible materials (sugar) in the finished product (chocolate bar). It would not be necessary to prove that each single product was within the threshold limits. An inventory management system could be used to prove that threshold was met over a number of shipments as agreed with customs authorities.

If businesses used a mixture of originating and non-originating sugar over the year, then businesses do not have to make sure that in each single product (chocolate bar) the non-originating threshold did not go over the limit (40% weight of the final weight of the product) – but rather over a specific time and number of exported chocolate bars (based on agreement with UK customs authority) that the threshold did not go over the limit for all the chocolate bars exported under preference.

HS code: 1001.11
Product: wheat seed
Rule: production in which all the materials of chapter 10 used are wholly obtained.

In this example, product level accounting segregation is used to store together fungible products.

Accounting segregation can be used to manage the volume of the fungible products (wheat seed) to be exported.

It would not be necessary to prove that all wheat seed was wholly obtained. An inventory management system could be used to prove that the quantity of wheat seed exported tariff free does not go over the quantity of originating wheat seed available, over a number of shipments as agreed with customs authorities.

Therefore, if you export a mixture of originating and non-originating wheat seed over the year then you do not have to make sure that all of the wheat seed is originating, but rather over a specific time and quantity of wheat seed (based on agreement with the UK customs authority) that the quantity of product being exported tariff free does not go over the quantity of originating product that is being stored.

Published 6 October 2021
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