International Trade & Customs in the UK

Kramer International Law helps public sector and private clients reach their UK commercial goals, overcome global trade obstacles, and pursue international expansion opportunities.

We provide guidance to assist businesses in understanding the complexities of global trade law and the changing landscape of international trade in the UK following Brexit.

We assist clients in maximising international growth prospects by leveraging expertise across various legal fields, such as trade regulation, tariffs, sanctions, and sector-specific compliance.

Our services include inward investment, cross-border mergers and acquisitions (M&A) advice, as well as trade disputes and trade remedies, such as investigations by the Trade Remedies Authority (TRA).

Additionally, we offer targeted support on issues related to intellectual property (IP) rights, UK GDPR, environmental compliance, and supply chain management.

At Kramer International Law, we have expertise in UK-perspective export control and sanctions regimes, international trade law and policy (including WTO rules), trade and customs disputes, and foreign investment and national security-related issues.

We offer risk assessments and due diligence services to verify compliance with sanctions and export controls for any structure, joint venture, or contractual relationship. If export control licences are needed, we can assist in ensuring they are correctly obtained.

Multijurisdictional Advice and Training

We offer guidance on managing conflicting or overlapping sanctions obligations and blocking laws across different jurisdictions. Additionally, we assist our clients in reducing risks by drafting and implementing sanctions compliance policies and training programs for senior management, boards, employees, and agents.

We understand UK trade and negotiation practices, as well as their connection to policy and regulation. We blend legal expertise with a refined understanding of the international landscape to deliver success for clients.

In a swiftly changing global landscape, we assist clients in effectively managing the risks and opportunities associated with complex international trade agreements, such as those under the World Trade Organisation (WTO) and various bilateral and plurilateral treaties.

Kramer International Law’s UK International Trade & Customs team provides extensive global trade advice across various jurisdictions, merging strategic counsel with dispute resolution skills.

We assist clients in navigating complex regulations related to free trade agreements and preferential programs. We ensure compliance with substantial transformation and last country of production rules, and offer strategic guidance on preferential tariff rates and duty drawback programs.

Our extensive supply chain services encompass customs compliance and risk management advice, mandatory customs marking and labeling, and expert representation of businesses during customs audits and investigations.

We provide detailed advice on subsidy requirements across various jurisdictions, encompassing a broad range of industries and niche fields. Our knowledge of international trade law includes support for social and environmental standards (such as forced labour compliance), issues related to critical minerals supply chains, and obstacles in emerging sectors like digital markets and artificial intelligence. This expertise enables us to help businesses navigate the changing regulatory landscape effectively.

The UK has only established an independent trade policy since the end of the transition period on 31 December 2020, following its withdrawal from the EU. As a result, the legal framework for its international trade is still heavily influenced by its previous membership and the new arrangements outlined in the UK–EU Trade and Cooperation Agreement (TCA).

Key Aspects of the New Treaty Framework for UK Trade

The UK government states it firmly backs a multilateral, rules-based system for international trade. As an original WTO member, the UK has managed its own representation since leaving the EU on 31 January 2020. It also adheres to and gains from WTO multilateral agreements.

The UK has aligned its commitments under the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS) with the schedules of the EU, to which it had previously adhered.

TCA

The TCA is the new framework for trade between the UK and the EU, which is by far the UK’s most significant trading partner.

The TCA ensures ongoing tariff- and quota-free trade in goods between the parties, provided that these goods meet the applicable rules of origin and have the necessary documentation.

Importantly, the TCA functions under the UK–EU Withdrawal Agreement, which incorporates the Northern Ireland Protocol (the Protocol). This arrangement causes trade involving Northern Ireland to be handled differently, as it effectively remains part of the EU Single Market and Customs Union for most purposes. UK concerns regarding the Protocol's implementation prompted an agreement with the European Union on 27 February 2023, known as the Windsor Framework. This framework includes amendments to the Protocol and introduces new EU legislation. Among other changes, these:

· Significantly cut down paperwork linked to the current trusted trader scheme.

· Broaden opportunities for processing goods from Great Britain in Northern Ireland without these goods being considered at risk of entering the EU.

· Exclude specific EU agrifood and medicinal laws in Northern Ireland.

· Implement a trusted parcel courier program.

· Introduce specific flexibilities for the UK concerning value-added tax (VAT) and excise duty rates in Northern Ireland.

Replacement Free-Trade Agreements (FTAs)

The UK has negotiated numerous FTAs to replace the EU FTAs it previously participated in. Most of these new FTAs incorporate or restate the provisions of the EU FTAs they replace, with mainly technical modifications, allowing businesses to generally continue trading between the UK and the covered states and territories on the same basis as before. However, two specific types of modifications are especially worth noting:

1) Tariff Rate Quotas

Within an FTA context, tariff rate quotas limit the amount of certain goods (usually agricultural and fishery products) that qualify for preferential treatment. These quantities have been renegotiated and are naturally smaller than EU quotas, although the exact reasons for the reassessed figures have not been clarified.

2) Rules of Origin

Rules of origin are the standards that determine whether goods are considered to originate from a party to an FTA, making them eligible for preferential tariff treatment by another party.

The condition in replacement FTAs that UK exports must originate in the UK to qualify for preferential treatment is much more restrictive than the original EU FTAs, which required UK (and EU) exports to originate in the EU.

The UK has successfully negotiated extended cumulation agreements with its partners. This means that most businesses exporting goods with EU content from the UK to these partner countries will still benefit from preferential treatment. Since the EU has not secured similar extended cumulation with these countries and objects to diagonal cumulation with the UK—even under the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (the PEM Convention)—certain identical goods might receive different treatments. If final processing and export happen in the UK, they could qualify for preferences, but if they occur in the EU, they might not.

The UK’s extended cumulation concept typically includes three main elements:

a) Cumulation of Materials with the EU

Materials from the EU included in a UK product will be regarded as originating in the UK, as long as the UK processing exceeds mere minimal operations (simple steps that do not confer origin). Likewise, EU-origin materials used in a product in the other country will be considered as originating there, provided that the processing in that country is more than just insufficient processing.

b) Cumulation of Production with the EU

Materials worked on or processed in the EU will be deemed to have been processed in the UK if there is subsequent UK processing that exceeds minimal processing. Likewise, materials processed in the EU will be considered as processed by the counterparty if there is subsequent processing in that country beyond minimal processing.

c) Continuation of any Pre-existing Third Party Cumulation

Where the counterparties to the new FTAs are also parties to the PEM Convention, cumulation will generally be allowed under the same conditions specified in the PEM Convention, despite the UK not being a signatory. Additionally, the new FTAs involving parties that are members of the Cotonou Agreement (the African, Caribbean, and Pacific Group of States) include provisions that still allow for cumulation with specific other states.

New FTAs

The UK has a bold plan for its network of FTAs. New FTAs with Australia and New Zealand are now in effect. The UK has signed the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), and existing members are working on ratifying the UK’s accession.

Key Aspects of the Domestic Legal Framework for Cross-Border Trade into UK

Import Duties

The main law governing import duties is the Taxation (Cross-border Trade) Act 2018 (the “Taxation Act”). Separate rules apply to imports into Northern Ireland because of the Protocol.

Chargeable goods (i.e., all goods other than domestic goods) that are imported must typically be notified to His Majesty's Revenue and Customs (HMRC) within three hours of their arrival. If these goods have not already been declared under a customs procedure, the declaration must be made within 90 days of presentation; a temporary storage declaration is also required for the period until they are officially declared for a customs procedure.

A customs declaration will be for either the free-circulation procedure—which involves paying any import duty and turning chargeable goods into domestic goods that can freely circulate within Great Britain—or for one of five specialized customs procedures:

1) The storage procedure permits goods to be stored in premises approved by HMRC or in a free zone without incurring import duty liability, subject to conditions.

2) The transit procedure permits goods to be transported within Great Britain without incurring import duty liability, subject to conditions.

3) The inward processing procedure enables goods to be processed in Great Britain without paying import duty, provided certain conditions are met. Qualified processing includes activities like repairing, integrating into other products, using specific manufacturing accessories, and destruction. This process can also be used to perform operations necessary for regulatory compliance before goods are released for free circulation. Additionally, it allows for operations that preserve the goods, enhance their appearance and marketability, or prepare them for distribution or resale.

4) The authorized use procedure allows businesses to defer or reduce import duties on goods used for specific purposes like processing, repair, or maintenance. It requires prior approval from HMRC, a customs declaration with the authorisation number, and compliance with strict conditions regarding how the goods are used and the outcomes (such as producing new products). The scheme applies to specific commodity codes, involves declaring goods under this scheme (similar to end-use), and ensures goods are not used for other purposes or sold without paying full duty.

5) The temporary admission procedure allows importing goods duty-free for specific purposes such as shows, repairs, or samples, with an agreement to re-export them within a specified timeframe (from months to years). This prevents duties, but the goods must remain in their original condition, requiring HMRC approval and designated documentation managed through customs declarations.

In principle, any person established in the UK who can present or arrange the presentation of the goods—such as the importer or their customs agent—may make a declaration. However, authorisation is necessary for all declarations except for those under the free-circulation, storage (at approved HMRC premises), and transit procedures.

Liability for import duty is formally established when HMRC accepts a declaration for the free-circulation, authorised use, or temporary admission procedures. Typically, the person who makes the declaration is liable. However, other individuals—such as anyone on whose behalf the declaration is made or an undisclosed or unauthorized customs agent—may also be liable. When multiple parties are liable, they will be so jointly and severally.

The import duty amount in a typical case is outlined in the document titled “Tariff of the United Kingdom,” which is currently enforced through the Customs Tariff (Establishment) (EU Exit) Regulations 2020. The new UK Global Tariff (UKGT), though based on the EU’s Common External Tariff, has several key differences. Overall, it aims to simplify and liberalize UK Most Favoured Nation duties compared to those of the EU.

Import duties have been removed for a broad selection of goods, including:

· Goods previously subject to duties of less than 2 per cent (nuisance duties).

· Goods not manufactured (or made in tiny amounts) in the UK.

· Goods that are “key inputs to production”.

· Goods that are environmentally friendly or “green”.

Agricultural duties have been streamlined, and a zero percent autonomous tariff rate quota for 260,000 tonnes of raw cane sugar has been established.

Only slight modifications have been made to the UKGT since its introduction.

Import duty may be modified from the typical case under specific circumstances.

· The import is eligible under a free trade agreement or a trade preference scheme for qualifying developing countries.

· The UK has implemented tariff rate quotas.

· The duties have been temporarily put on hold.

· Anti-dumping, countervailing duties, safeguards, or special agricultural safeguards have been implemented.

· The UK is responding to an international trade dispute.

His Majesty's Treasury might also offer general relief measures.

The UK continues to uphold trade preference schemes for developing countries. The previous EU-based Generalised System of Preferences (GSP) has been replaced by the Developing Countries Trading Scheme (DCTS). This new scheme offers lower tariffs, more flexible rules of origin, and fewer conditional requirements compared to the GSP.

Imposition of Anti-Dumping and Countervailing Duties

The Trade Act 2021 established the Trade Remedies Authority (TRA), a body corporate tasked with investigating anti-dumping and countervailing duties as outlined in the Taxation Act and related laws. The TRA advises the Secretary of State for Business and Trade (the “Secretary of State”) on both provisional and final remedies.

The TRA

The TRA operates as an independent body at arm’s length from government, sponsored by the Department for Business and Trade (DBT).

The TRA may initiate an investigation when a UK industry applies to it to do so. The TRA welcomes applications from any business operating in the UK and offers advice and support to all parties considering an application.

The responsibilities of the TRA are to carry out:

· Dumping and subsidy investigations.

· Safeguard investigations.

· Reviews of EU trade remedy measures now transitioned into UK law

· Reviews connected with existing UK measures

The TRA is also responsible for raising awareness of the trade remedies regime in the UK.

Initiation of TRA Investigations

Applications for the initiation of an investigation may be made by or on behalf of UK industry. To be “by or on behalf of UK industry”, the application must meet two criteria:

1) It must be supported by UK producers whose collective output is at least 25 per cent of UK production of like goods, and must not be opposed by UK producers with collective output of 25 per cent or greater.

2) UK industry must have at least 1 per cent UK market share in the relevant product. However, the TRA may waive this requirement or even apply a higher threshold if it believes it to be appropriate.

The TRA can only, and must, initiate a dumping or subsidisation investigation if it is satisfied that the application contains sufficient evidence of dumping or subsidisation causing injury to UK industry and it appears from the evidence that the following criteria are met:

· The volume of dumped or subsidised goods (actual or potential) is more than “negligible”. The volume of dumped goods is negligible when the exporting jurisdiction accounts for less than 3 per cent of imports of like goods into the United Kingdom or 7 per cent of imports of like goods when considered alongside dumped like goods from other exporting jurisdictions.

· The volume of subsidised goods will be considered negligible on the same basis as for dumped goods, except that higher thresholds of 4 per cent and 9 per cent will apply in respect of developing jurisdictions.

· The injury is more than negligible.

· The dumping margin or subsidy amount is more than “minimal”. The dumping margin is minimal if it is less than 2 per cent of the export price. The subsidy amount will be minimal if it is less than 1 per cent of the value, or 2 per cent in respect of developing countries and territories.

Importantly, a subsidisation investigation may not be launched before the TRA has invited the relevant foreign jurisdictions to participate in consultations.

In addition, when initiating an investigation the TRA must publish notice of its decision to commence that investigation, notifying the Secretary of State and interested parties, and notifying the relevant governments.

Moreover, the full text of the application must be communicated to the relevant government and, if practicable, to any overseas exporters known to the TRA in connection with the application.

Conduct of Investigations

The TRA sets a registration period during which interested parties and any other persons may make contact with the TRA. To the extent practicable, it must issue questionnaires to 1) all interested parties, 2) those who have made contact with the TRA for the purpose of participating in an investigation, 3) all UK producers, importers and overseas exporters (or their associations) identified in the UK industry application.

In certain circumstances, the TRA can issue questionnaires to only a sample of interested parties.

The TRA may cobnduct visits within the UK and abroad before the publication of a statement of essential facts, as well as hold hearings either at the request of any interested party or on its own initiative.

In UK dumping investigations, the TRA is not allowed to use the “comparable price” (the price of like goods destined for consumption in the exporting jurisdiction) if the “particular market situation” does not enable a proper comparison with the export price. Such a situation includes when prices are “artificially low”, “there is significant barter trade”, or “prices reflect non-commercial factors”.

During its investigation, the TRA may provisionally determine that dumped or subsidised goods have caused, or are causing, injury to UK industry in respect of those goods, as long as it is satisfied that interested parties have had an adequate opportunity to provide information.

The TRA must make a final determination as to whether dumped or subsidised goods have caused, or are causing, injury to UK industry in respect of those goods. Prior to doing so, the TRA must publish a “statement of essential facts” revealing the basis for its intended decision and set a period within which those who have provided information may make comments.

TRA Recommendations and the Role of the Secretary of State

Following a definitive or provisional determination, the TRA must make a recommendation to the Secretary of State as to remedies. The TRA may recommend one or a range of potential remedies. Recommended definitive remedies take the form of additional import duty calculated on the basis of “lesser duty”, i.e. the lesser of the margin of dumping or amount of subsidy and the amount the TRA believes would be adequate to eliminate the injury from UK industry.

However, under certain circumstances, as an alternative the TRA can recommend acceptance of undertakings from exporters or the foreign government at issue. When it comes to provisional recommended remedies, the TRA may accept guarantees from importers of the goods in question in lieu of possible additional import duty.

Once the TRA has made a recommendation to impose definitive or provisional remedies, the Secretary of State decides whether to accept or reject that recommendation. Alternatively, the Secretary of State may request a reassessment if the TRA has not considered relevant information, has made an error, or there exist exceptional circumstances.

The Secretary of State can only reject a recommendation of the TRA if it is satisfied that it is not in the public interest to accept it. In considering whether it is in the public interest, the Secretary of State must have regard to the TRA’s advice as to whether a given remedy would satisfy the “economic interest test” (defined below). If the Secretary of State rejects the TRA’s recommendation, it can apply an alternative remedy.

Moreover, where it considers it in the public interest, the Secretary of State can revoke a definitive remedy.

The economic interest test is met if the application of the remedy will be in the economic interest of the UK. The following factors must be considered by the Secretary of State or the TRA in making a decision in this regard:

· The injury caused by the dumped or the subsidised goods.

· The economic significance of the affected industries and consumers in the UK.

· The probable impact on affected industries and consumers in the UK.

· The probable impact on particular geographical areas and groups in the UK.

· The probable consequences for the competitive environment and the structure of markets for goods in the UK.

It is noteworthy that there is a legislative presumption that the economic interest test has been met.

Challenging Decisions (Reconsideration & Appeal)

Most determinations and recommendations the TRA makes can be challenged by any interested party within one month of the day after the relevant notice was published, comes into effect or, for non-published decisions, the day after the applicant was notified of the decision. The TRA will then reconsider the decision on its merits. In so doing, the TRA may request further information, conduct a hearing, and refer disputes on points of law to the Upper Tribunal (Tax and Chancery Chamber) (the “Upper Tribunal”).

Any interested party may appeal most reconsidered decisions to the Upper Tribunal, and may do the same for determinations made by the Secretary of State. The Upper Tribunal must apply the same principles that a court would apply in the context of a judicial review.

The TRA exists to defend the UK against unfair international trade practices. It investigates whether new trade remedies are needed to prevent injury to UK industries caused by unfair trading practices and make recommendations on appropriate measures to defend UK economic interests.

HS Code (Harmonised System Code)

The HS is a global nomenclature from the World Customs Organization (WCO) for classifying traded products, used by over 200 countries.

The UK uses its own “Commodity Codes”, which start with the 6-digit HS code and add more digits for UK-specific details (8 total digits for export, 10 total digits for import).

Export Controls

In the UK, the export of dual-use (civilian with potential military use) items is governed by the The Export Control Joint Unit (ECJU), which administers the UK’s system of export controls and licensing for both dual-use and military items. ECJU is part of the Department for Business and Trade (DBT), as is the TRA.

Sanctions

The UK utilises sanctions to fulfil a range of purposes, including supporting foreign policy and national security objectives, maintaining international peace and security, and preventing terrorism. Sanction measures include arms embargoes, trade sanctions, and other trade restrictions.

The Foreign, Commonwealth & Development Office (FCDO) is responsible for overall UK policy on sanctions. The Department for Business and Trade (DBT), however, implements trade sanctions and other trade restrictions and has overall responsibility for trade sanctions licensing.

The UK implements a range of sanctions regimes pursuant to regulations established under the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”). SAMLA provides the legal basis for the UK to impose, update and remove sanctions. These sanctions regimes apply to all of the UK, including Northern Ireland.

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