Case Study: EU Duty Free Imports with Rules of Origin

We worked with a fashion house to determine the origin status of their products under the EU/UK trade agreement.

In this Case Study on EU Rules of Origin we help a client in the UK fashion and textile sector. The UK fashion sector is greatly impacted by Brexit. Shipments from the UK to the EU are suddenly subject to high rates of duty. Accurately determining the Rules of Origin of product is now critical for EU sales.

The Transaction: UK fashion house exports to the EU

A UK fashion house exporting to the EU is, post-Brexit, incurring a high rate of import duty when they products arrive at EU borders. EU customers refused to pick up this additional cost and asked for the fashion house to provide the origin of the goods. Under the UK/EU Trade Agreement, products meeting the origin rules would enter the EU free of duty. However, determining the origin status of their products was a challenge for this UK-based company.

The Solution: EU Rules of Origin with procurement, cost accounting and audit trail

The origin of the goods was complicated as it often is in the textile and fashion sector. Some products had material sourced in the UK, other had material sourced abroad with weaving done in the UK. There were material with no processing at all in the UK, for instance article fully manufactured in Turkey. Some partially manufactured in Turkey and returned to the UK for the finishing. There were also some article manufactured in Morocco and shipped directly to the EU. The tasks was to untangle this transactions and set a clear process for future transactions.

The implementation: Alegrant’s experts in action

We worked with the procurement department to identify the suppliers, their involvement and the processing done to map the sourcing and production process. It became clear that some transactions were well outside the Rules of Origin. Working with the finance department we looked at the value-chain and eliminate another group of articles not meeting the rules. We then calculate the cost of the originating material and the labour of the remaining article and found that the finish articles met the Rules of Origin.

We prepare procedures so the client save time and money implementing compliant processes. For instance to apply the statement of origin, origin declarations.. We then built an audit trail for their Customs compliance so they can demonstrate the origin of their products should they face a customs audit. Finally, we train the team so they can enter new markets confidently benefiting from trade agreement and 0% duty.

Additional ressources

EU/UK Trade Agreement

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