The new Brexit deal (the Trade and Cooperation Agreement) was concluded between the EU and the UK on Christmas Eve and started being provisionally applied as from New Year’s Day.

The deal is 1,246 pages long and some of its effects are still unknown. Nevertheless, a question that has been doing the rounds in Malta from the outset is how it will affect purchases of goods from the UK.

From a preliminary evaluation of the agreement it appears that the process will not be as efficient as when the UK was an EU member state.

Brexit has made purchasing from the UK less attractive

It also depends on whether the party purchasing is a business buying container loads of goods or an individual buying a product online. Yet, in principle, the purchase of goods will be governed by these elements:

• No tariffs (also referred to as customs duties) will have to be paid if the good being purchased from the UK is deemed to originate in the UK and/or the EU (the origin will be determined through the “rules of origin” of the agreement). However, if the good originates from elsewhere (say China or the US), then duties might need to be paid. This depends on what product it is and where it originates from. The same goes for quotas. The importation of goods originating in the UK and/or the EU will not be limited by quotas, while those originating from elsewhere might.

• It is pertinent to keep in mind that the tariff-free treatment of goods originating in the UK is not a perpetual given. The EU may introduce tariffs on certain products if it deems that the UK has lowered its standards for those products in a way that undermines fair competition with the EU.

• There will be customs checks and formalities to be observed that were not there before. These formalities would mainly entail processes that determine where the goods originate from (for the purposes underlined previously in this article) and whether the product in question is in line with EU standards. The latter obligation could be more onerous when it comes to foodstuffs and animal products.

• In principle, buyers will have to pay VAT upon importation in Malta at customs level (this assumes that VAT should then not be paid in the UK as VAT should only be paid once).

It is realistic not to overstate these processes as a serious hassle. Once everything falls into place and buyers find out how these principles apply to them, the rules will become routine, especially for those who regularly purchase and trade with the UK.

This said, the purchase of goods from the UK will not be as straightforward as before and in certain cases will come at a higher cost.

Indeed, Brexit has made purchasing from the UK less attractive.

Jan Micallef, lawyer specialised in European and international trade law

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