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Important story on what a “tariff-free” deal means in practice and why it’s not enough for two economies as closely integrated.

Tariffs are removed on goods that meet rules of origin. This is a complex and nuanced area of customs.

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Important to remember that trade deals (FTAs) weren't designed with such a high degree of economic integration in mind.

So some of the standard RoO provisions will seem incredibly restrictive under the UK-EU deal.

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Minimal operations or insufficient processing is a standard part of an FTA. Most, if not all FTAs, include a provision on minimal processing – processing not considered sufficient to confer originating status even if rules of origin have been met.

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It is standard procedure not to apply cumulation when goods have only been subject to minimal processing.

To be able to cumulate origin and consider the final product of UK origin, the processing carried out in the UK needs to exceed minimal operations.

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The level of integration between the UK and the EU means that this will have significant consequences for a number of industries.

For example, in supply chains where goods are brought into the UK from the EU and reassembled, sorted or repackaged and re-exported to ROI.

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The @Foodanddrinkfed raised this issue and the impact it will have on UK food and drink businesses (same goes for a number of other industries)

Some practical examples of how it works were covered in a brilliant 🧵by @faisalislam 👇

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https://t.co/4chCLNW0l9
Again, important to remember that it's a common provision. Just not a common scenario because the goods don't normally go straight back to where they came from.

This is how it's usually used:

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Solution?

For goods that originate in the EU and meet the rules of origin on the way in, it would be quite simple.

The EU Commission already has a number of origin-related derogations. Some examples here 👇

/8

https://t.co/wDvdlDKKKc
But the question is whether or not the EU will have any incentive to do that...

This provision impacts the UK supply chains much more than EU ones...

/ends

More from Brexit

So many stories of new barriers to trade between UK and EU, but you might be thinking at some point these will run out. The government is certainly hoping so. Well they may slow down, but trade relations and regulations are not static, and changes will lead to further problems.

The likelihood of continued trade problems for a £650 bn trade relationship is why there should be a huge cross-government effort led by the Foreign Office and Department for International Trade to put in place the necessary resources to seek best results.

There isn't.

So the UK's relationship with the EU currently consists of two not particularly good deals and no consistent effort to manage current problems or prevent future ones. Joint committees are a second order problem to putting in place the right internal structures.

But that's been the consistent UK problem in relations with the EU since 2016. Lack of focus on getting the right internal structures, people, asks, strategy, too much attention on being tough and a single leader.

News just in. This doesn't necessarily mean the right structure being put into UK-EU relations. I suspect Frost's main role is to ensure no renegotiations with the EU.

Also, wonder what this says about the PM's trust in Michael Gove?

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