Starting 1st January the UK has implemented a new “Global Tariff” regime which closely mirrors the existing EU tariff regime. The tariff codes exactly match those used in the EU’s “Combined Nomenclature”. The UK General System of Preferences (GSP) will provide trade preferences to the same developing countries as the EU GSP.
The main point of difference between the UK and EU schedule, at least initially, is that it reduces tariffs on UK imports of a range of products, including some wood products. The UK is either reducing or totally removing tariffs for certain industries which are important in the EU, and therefore partially protected through EU tariffs, but which have little presence in the UK.
For wood products, the UK has a very long tradition of fulfilling its wider wood needs through imports, much more so than elsewhere in the EU, and is therefore more inclined to reduce wood import tariffs.
This is of no account for quite a few wood products. The EU already imposes zero-tariffs on all logs and rough sawn timber, together with all finished wood furniture, as well as for all types of wood fuel, including chips, pellets, charcoal, sleepers, tools, shuttering, shingles and shakes, posts and beams, glulam, tableware and kitchenware.
However, the UK is reducing tariffs for many wood products where these are imposed including:
The EU tariff of 2.5% that applies to all “sanded” sawnwood to be reduced to zero in the UK.
The EU tariff of 2% specific to tropical hardwood that is “planed” to be reduced to zero in the UK.
The EU tariff on veneers, which ranges between 3% to 6% depending on degree of processing and species, to be reduced to zero in the UK.
The EU 7% tariff on some plywood, including with outer ply of some (but not all) tropical hardwoods (4412110/44123190), other hardwood (44123300/4412400), and softwood (44123900), to be reduced to 6% in the UK.
The EU 7% tariff on MDF and other fibreboard, OSB and other particle board to be reduced to 6% in the UK.
The EU 2.5% tariff on picture frames and similar products made of tropical wood, to be reduced to 2% in the UK.
The EU 3% tariff on wooden doors and door frames, windows and window frames, parquet flooring panels, which applies to all wood species including tropical wood, to be reduced to 2% in the UK.
The EU’s 3% tariff on statuettes and jewelry and cutlery boxes made specifically of tropical wood, to be reduced to 2% in the UK.
The EU 4% tariff on wood packing cases, boxes, crates, box pallets and similar, to be reduced to zero in the UK.
The EU 5.6% tariff on bamboo and rattan furniture to be reduced to 4% in the UK.
The EU 2.7% tariff on wooden furniture components to be reduced to 2% in the UK.
The UK is retaining the existing 10% EU tariff on tropical hardwood plywood defined under 44123110 (that is faced with dark red meranti, light red meranti, white lauan, sipo, limba, obeche, okoumé, acajou d’Afrique, sapelli, virola, mahogany “Swietenia spp.”, palissandre de Rio, palissandre de Para or palissandre de rose).
Other wood products where the UK will retain the existing EU tariff are: laminates and veneered panels under 441294 and 441299, for which there is a tariff of 6% or 10% depending on the exact specification; bamboo plywood which will continue to be subject to a 10% tariff; and wood marquetry, subject to a 4% tariff.
The EU applies a quota system to just one wood product, allowing up to 650,000m3 of coniferous plywood to be imported duty-free each year after which 7% duty is applied. The UK will also apply a quota to this product in 2021, allowing the first 170,000 m3 of coniferous plywood to be imported duty free, after which 6% duty will be applied.
A key issue to be resolved through the on-going negotiations between the EU and UK is whether suppliers in the EU and UK will be subject to tariffs when trading with each other. In the event of “no deal” trade between the EU and UK will be on World Trade Organisation (WTO) Most Favoured Nation (MFN) rules.
Under these rules both partners would be obliged to apply the same tariffs on trade with each other as they do on trade with other WTO members where there is no comprehensive trade agreement.
Under a no-deal Brexit, UK imports from the EU will be subject to the same tariffs (and a quota system in the case of softwood plywood) as UK imports from countries outside the EU. Even if the UK simply adopts the EU’s existing tariff schedule, non-EU suppliers would now be trading on a level playing field with EU suppliers.
The exception to this would be suppliers in countries that have signed a Free Trade Agreement (FTA) with the EU but not subsequently with the UK. Like EU suppliers, they would now face tariffs that were previously not applicable for their trade with the UK. In practice this problem is mitigated by the UK’s ambitions to sign its own FTA’s with non-EU countries as soon as possible.
Amongst tropical countries, the EU has signed FTAs with Singapore (in 2019) and Vietnam (in August this year). There is also an “Association Agreement” with Central American countries (Honduras, Nicaragua, Panama, Costa Rica, El Salvador, Guatemala) and “Stepping-Stone Economic Partnership Agreements” with Ghana and Cote d’Ivoire, in place for several years offering lower tariffs.
The EU has also negotiated an FTA with the Mercosur countries (of which Brazil and Paraguay are tropical wood suppliers), but there has been resistance to ratification on the EU side, particularly from the French government. An EU-Mexico FTA is under negotiation.
The UK is trying to replicate these deals as soon as possible. The UK agreed to replicate the “Association Agreement” with Central American countries in August 2019. The “Stepping Stone Agreement” with Côte d’Ivoire was replicated in November this year providing immediate duty-free, quota-free access to all goods exported from the Côte d’Ivoire into the UK.
The UK signed an FTA with Singapore on 10th December and another with Vietnam on the next day, 11th December. The latter will see 99% of tariffs between the two countries eliminated after seven years.
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