Tesco seeks clarification over ‘confusing’ Brexit tariff rules

Tesco is in talks with the Irish and UK governments in a bid to resolve confusion over post-Brexit tariff rules that could hit its shops here.

The news came as Minister of State for business Damien English warned businesses in the Republic to "actively" claim the zero tariff on goods imported from the UK.

Under the Brexit trade deal struck on Christmas Eve, goods imported here from the UK are subject to zero tariffs, once they originate in that jurisdiction, while goods sold from here to Britain benefit from a similar concession for EU products.

However, rules defining where products originate sparked controversy this week when it emerged that big chains such as Tesco and Marks & Spencer face possible tariffs when re-exporting goods to the EU.

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The rules state that EU-origin goods that circulate freely in the UK before being re-exported to the bloc, including the Republic, can incur tariffs, adding to their cost.

Tesco said it was in talks with the UK and Irish governments to find a satisfactory resolution to the problem as quickly as possible.

William Bain, policy adviser with the British Retail Consortium, said that the rules failed to genuinely reflect the reality of EU-UK supply networks.

The consortium, which represents more than 170 UK retailers, is working with members on short-term options and is seeking talk to the UK government and the EU about longer-term solutions to mitigate the effects of the new tariffs.

"Tariff free does not feel like tariff free when you read the fine print [of the deal]," said Marks & Spencer chief executive, Steve Rowe.

“For big businesses there will be time-consuming work-arounds but for a lot of others this means paying tariffs or rebasing into the EU.”

Complex rules

British retailers are blaming complex rules governing how origin is defined, which Marks & Spencer chairman Archie Norman said made unravelling the genome sequence seem simple.

There are varying limits on the percentage of a product that can come from outside the EU but allow it to still qualify as a non-tariff product under the free trade agreement.

For example, in dairy it is 20 per cent by weight but for white chocolate it is 40 per cent by weight.

Meanwhile, Damien English, Minister of State for business, warned importers on Friday that they needed to “actively claim” the zero tariff on goods coming from the UK.

“Importers must show the goods they are importing are proven to be UK in origin as required by the rules of origin in the agreement and actively claim the zero rate,” he stressed.

A statement from the UK supplier showing that the goods largely originated there, on an invoice or other document that identifies the product, can support the claim.

Alternatively, importers can use documents or records from the exporter or manufacturer showing the goods’ origin.

‘Good news’

Mr English said the EU-UK deal was good news for businesses with long-standing relationships with the Republic’s nearest trading partner. He stressed they had to meet the requirements to avail of the zero rate.

Similarly, exporters to the UK benefit from a zero tariff once the goods are largely of EU origin.

They can supply a statement showing this on an invoice or other document that identifies the products, or they can provide other supporting material, including that provided by the manufacturer, to allow the UK importer to claim the rate.

Government departments and Revenue have various free supports to aid businesses in dealing with the UK under the new post-Brexit regime, Mr English said.