Brexit

What is next for Brexit?

The UK formally left the EU on 31 January 2020, and has entered a ‘transition period’ – an 11-month period ending on the 31 December 2020. During the transition period the two sides will negotiate a new free trade agreement. If an agreement cannot be agreed in time, then the UK faces the prospect of having to trade with ‘no deal’ in place.

Regardless of whether a trade agreement is put in place between the UK and EU, from 1 January 2021 Timber Trade Federation importer members will need to complete import procedures and due diligence when importing timber from the EU.

The first step all our members should take is to assess their EU purchases, identify the products involved and understand how these changes will affect them.

While we note there are a few circumstances where other companies may be responsible for these new procedures, as detailed below, these instances are very limited.

While there does remain some uncertainties around Brexit, the UK’s future trading relationship with Europe and the rest of the world is becoming clearer. Even in the case of a comprehensive free trade agreement, the Government has made clear the UK will no longer be a part of the custom union with the EU.

This means VAT and excise procedures will need to be applied to goods traded with the EU, in the same way that already applies for goods traded outside of the EU, and new due diligence requirements will be in place as a result of the adoption of UK Timber Regulations, with many timber businesses trading in the customs union who were previously classed as ‘Traders’ to become ‘Operators’.

From 1 January 2021 the new UK Global Tariff will apply to all imports unless (a) the country or region has a trade deal with the UK, (b) the developing country has GSP status with the UK, or (c) an open Product Quota has been registered with the WTO. You can find out more about how these tariffs will be applied on our website.

Most of the information in our ‘TTF Brexit Guide: preparing for a No Deal’ remains relevant today, whether a free trade agreement is achieved with the EU or otherwise.

When we leave the EU, will the UK have its own regulations to replace the EU Timber Regulation (EUTR)?

Yes, the UK government will implement its own UK Timber Regulation (UKTR).

While the UKTR has the same requirements as the EU Timber Regulation (EUTR) and Forest Law Enforcement Governance and Trade (FLEGT), it will lead to significant changes for most of our members.

As the UK will no longer be in a custom union with the EU, this means timber importers bringing wood in from EU countries will become ‘Operators’ (instead of their current status as ‘Traders’).

Importers and exporters will both need to ensure they have appropriate documentation to meet their obligations under UKTR.

These changes will encompass the vast majority of Timber Trade Federation members and those builders’ merchant chains who conduct their own timber importing activities, having an immediate impact on their due diligence procedures.

Under UKTR, Operators must collect and demonstrate much more detailed due diligence procedures. They are obliged to ensure there is ‘negligible risk’ of illegally- harvested timber entering their supply chains.

In the case of Timber Trade Federation members, under the TTF’s Responsible Purchasing Policy, Operators must also submit their due diligence actions to independent third-party audit, ensuring that customers can continue to buy ‘Timber you can Trust’.

The way in which the regulation is enforced would stay similar to now, but will apply to more companies who will have the responsibilities as Operators. The Office for Product Safety and Standards (OPSS) will continue to check that appropriate records are maintained by businesses. The enforcement will be mostly likely focus on high risk products and supply chains.

How will duty rates by determined with the UK Global Tariff after 1 January 2021?

From 1 January 2021, unless there is a free trade agreement in place, or it is a developing country under the UK Generalised Scheme of Preferences (GSP), the UK will trade with the country as laid out in the UK Global Tariff scheme.

Most wood products (154 codes of 200 codes) are duty free. For the other products (46 out of 200 codes), No Deal means UK Global Tariff rates will be imposed on all EU trade and all goods from outside of the EU.

Key products set to be affected by the UK Global Tariff include wood based panels. As part of preparing for 1 January 2021 you should familiarise yourself with the customs codes and any potential duty which will apply.

It is important to remember that duty payable will be determined by the Country of Origin of the product, not the Country of Import. We advise our members to train staff for custom mechanics using the UK Customs Academy.

Prepare to import goods into Great Britain from 1 January 2021

Make sure to check the above steps from the Government.

Our advice

Click through the tabs below to learn about what you need to do come 1 January 2021 as a timber importer.

Importers
Due Diligence
Advocacy
Regulations

Check if you are an importer

In most cases, Timber Trade Federation members will be both the Importer and Operator. As an Importer you will be responsible for the customs entry, and as an Operator, you will be responsible for completing due diligence on any timber and timber products.

Before bringing timber into the UK

From 1 January 2021, all importers bringing goods into the UK must follow the below steps to ensure you are complying with the new rules and regulations in place.

Get an Get an Economic Operator Registration and Identification (EORI) number that starts with GB.
Decide if you want to make customs declarations yourself or get help
You may need to buy specialist software to use simplified procedures.
You could be entitled to financial help to help your business complete customs declarations.
If you have authorisations to use special or simplified procedures check if they still apply.

Timber merchants will need to follow different processes for trading timber and timber products (timber) currently covered by EU law, as the UK will have its own law for trading timber. This law, called the UK Timber Regulations, will have the same requirements as existing EU rules.

The result of these changes mean you’ll need to show imports from the EU and European Economic Area (EEA) have been legally harvested. Businesses must follow these regulations now when they import timber from non-EU and EEA countries.

Timber importers will be classed as Operators

Importers and exporters will both need to ensure they have appropriate documentation to meet their obligations under UKTR.

If the timber has a Convention on International Trade in Endangered Species (CITES) import permit, the UK will recognise it as legally harvested. You will not need to carry out due diligence on this timber.

Who is responsible for Customs Procedures?

How the UK Global Tariff (UKGT) will affect timber importers

The UK will replace the EU’s Common External Tariff on 1 January 2021 at the end of the transition period with the UK Global Tariff (UKGT). The new tariff will be in pounds (£), not euros.

Under these rules, the majority of sawn and plane products coming from the EU will not attract duty, however some panel products from the EU will, where previously they did not. We are advocating for this to change.

Note the broader aim of the UKGT is to streamline and simplify nearly 6,000 tariff lines. These changes include scrapping unnecessary tariff variations, rounding tariffs down to standardised percentages, and eliminating tariffs below 2%.

Duty Rates

In summary the changes for the new UK Global Tariff within Chapter 44 for Wood and Wood Products are:

No increases in duty rates and no changes to products currently subject to 0% duty
Duty rates of 10% remain unchanged
Duty rates of 7% will be simplified down to 6%
Duty rates below 6% have been reduced and in most cases been liberalised to 0%
Full details by customs code are given in the linked UK Global Tariff Tool
GSP reductions where applicable should still apply but details are yet to be published.
More information is also awaited on the Coniferous Plywood Quota

Apply for a grant for UK Customs Academy courses

To help prepare the UK for new customs procedures, the Government has made available £50mn in government grant funding to cover the costs of any of the courses provided by the UK Customs Academy.

We encourage our members to apply for the grant and ensure any staff members who will be responsible for completing customs entry are supported to gain these qualifications. More information on applying for the grant, as well as details about courses, can be found on the UK Customs Academy website.

What is currently required by law?

Businesses currently trading timber or timber products already placed on the EU, EEA or UK market, are required to have basic traceability information on supplier and seller and keep these records for at least five years. These businesses are known as Traders.

Businesses placing timber from non-EU/EEA countries and domestic (UK) forests on the UK market are obliged to exercise Due Diligence (DD) to ensure the risks of illegally harvested timber enter the product supply chain is negligible. These businesses are known as Operators.

The reason many merchants have been able to operate as traders is because the UK is party to EU Timber Regulations (EUTR) and a part of the single economic market. However, this may soon change.

European Union Timber Regulations

Understand your responsibilities when trading timber.

What will change from 1 January 2021

Businesses importing into the UK from the European Economic Area will need to carry out due diligence confirming that the timber product placed on the UK market has been legally harvested to meet the UK Timber Regulations.

This will effectively mean all timber importers in the UK will be classed as Operators, unless special arrangements are made within the context of a Free Trade Agreement between the EU and UK by 1 January 2021.

Currently only around 12% (around 1.23 million cubic metres) of annual imports made by TTF members are from outside of the European Economic Area and subject to due diligence under the EUTR.

Read our UKTR guide on the right hand side to find out what you need to do to be ready for the new regulations, and make sure to download our free Due Diligence Toolkit which will help you undertake and report on Due Diligence.

Getting your due diligence right

The Timber Trade Federation has long been a world leader in responsible sourcing and supply chain management. We were the first timber trade association in the world to introduce a compulsory risk management and verification system – the Responsible Purchasing Policy (RPP) – to keep members and their products in line with the requirements of the EU Timber Regulations and the Construction Products Regulation (CPR).

We strongly advise all timber merchants to get in touch with use to ensure they are prepared to meet all their obligations as operators under the upcoming UK Timber Regulations. Some of the first you should take in preparing for Brexit is to establish your product supply chain risk profile. This should include finding out about your products Country of Harvest, Country of Production/Supply, Species, and Certification Status

It is also important you can identify products and supply chains that carry higher risks, such as products from non-EU forests, or products from countries with high prevalence of illegal logging, or uncertified products. It will be important from 1 January 2021 that you are requesting all the relevant information under the UKTR from your product’s supplier. If you have any questions, contact the Timber Trade Federation for guidance and tools on how to carry out due diligence for your timber products.

Timber you can trust

Timber Trade Federation members are the trusted suppliers of timber in the UK.

Getting a better Brexit deal

As we lead up to formally leaving the EU and the European Economic Area, the TTF is working to ensure that our members and the timber supply chain are able to continue business with as little interruption as possible.

While the Government has made clear that there will be no more fricitionless trading with the EU, with the introduction of customs procedures between the UK and EU, the key matter remains of whether there will be a trade agreement.

A trade agreement will decide what kind of duty the UK will pay on timber. Either we trade with the EU with a trade agreement in place, which we continue to advocate for, or within the scope of the UK Global Tariff arrangements.

SCENARIO ONE: A comprehensive free trade agreement is put in place between the EU and UK which allows us to continue to trade with minimal or Zero duty in place on timber products from the EU.

SCENARIO TWO: The UK does not secure a comprehensive free trade agreement and the UK begins to trade with the EU under the UK Global Tariff regime, with duty in place on some timber products.

We have detailed information on the UK Global Tariff under the ‘Imports’ tab.

Help us advocate for a better Brexit

The primary position of the TTF is the UK should agree a comprehensive free trade agreement with the EU. If this is not achieved, the the Government should alter the UK Global Tariff regime.

While on the face of it, the UK Global Tariff regime is a positive document for trading with the rest of the world, with the stated intention to lower the tariffs currently in existence and simplify the framework.

However, in the event of a no deal exit it will have exactly the opposite effect on imports from Europe, our main trading partner, imposing duty on many products that have been duty free within the single market. A closer look reveals some obvious problems for the wood sector.

First, the UK Global Tariff introduces tariffs on imports of European plywood and laminated timber products of between 6 and 10%. This will reduce the competitiveness of these products in the market – possibly pushing buyers towards competing non-timber alternatives or products from outside Europe with lower transparency and worse track record on performance.

Secondly, it seems to provide a disincentive to manufacturing certain products and adding value within UK borders. For example, manufacturing of certain joinery items such as door sets, windows or I-beams, can use laminated sections as components or feedstock. These components could now face tariffs of up to 10% adding costs to the manufacturing process.

However, paradoxically, importing fully manufactured items of joinery or I-beams will attract considerably lower tariffs of zero to two per cent. Under this scenario, this would undermine manufacturing in the UK – as with the associated costs of machinery, trained skilled staff the UK would become less competitive with overseas manufacturers.

This is why we are asking for our members to write to their local MPs and ask them to put pressure on the Government to secure a deal and protect those areas of the timber supply chain that are threatened by this tariff regime.

Below find a template letter and link to find the address of your local MP. It is always more powerful for local business to highlight the issues to their local MP and to amplify this through multiple timber businesses across the country.

Download our template Brexit letter

Construction Products Regulations

EU Construction Product Regulations (CPR) are designed to harmonize construction product technical standards across EU member states to ensure that construction products sold within the EU meet certain safety and technical standards.

Harmonising these standards has allowed trade barriers between the manufacture and sale of construction products between member states to be reduced, enabling greater inter-country trade.

CE Marking indicates that the manufacturer takes responsibility for the conformity of that product to its declared performance in the standards, as required under the harmonised standards created under CPR.

You can find out more about these regulations in our Trade Hub.

One of the key changes for merchants as a result of Brexit will be that the UK will no longer be a part of these harmonised standards in future, with the UK setting up a parallel system which will mean new Marks and approved bodies.

Construction Product Regulations

Learn about this important set of standardised regulations.

What will happen to these regulations after Brexit?

All existing European harmonised standards will become UK ‘designated standards’ and immediately following the UK’s exit from the EU, the European harmonised standards and UK designated standards will be identical.

This means that as a UK manufacturer or importer placing CE marked goods for construction on the UK market your business can, in the event of a deal or a no deal scenario, continue to operate legally without significant change.

Members are advised to check with their notified body to confirm they have the necessary arrangements in place.

As a consequence of leaving the EU, there will be longer term changes because the UK will no longer be able to participate in the EU structures developed for implementation of the Construction Products Regulation.

While immediately after leaving the EU, the Construction Products Regulation will become UK law. If “frictionless trade” is to be maintained via Construction Products Regulations, the UK will need to maintain a parallel system.

This will mean that:

Existing harmonised standards such as – EN.14250 for Trussed Rafters (used to demonstrate conformity with EU essential requirements) will become UK ‘designated standards’, used to demonstrate conformity with UK essential requirements. Immediately following exit these will be identical to EU essential requirements.
Notified bodies based in the UK will be granted new UK ‘approved body’ status and listed on a new UK database.
Approved bodies will be able to assess products for the UK market against UK essential requirements. Immediately after exit day in a No Deal scenario, UK requirements will be identical to EU essential requirements.
A new UK conformity mark is being developed by the UK for manufacturers to affix before placing a product on the UK market.

For UK manufacturers wishing to export and place CE marked goods for construction on the EU market, your business can, in the event of a deal or a no deal scenario, continue to operate legally provided the notified body you are using is registered in an EU member state or has a partnership arrangement with such a body.

How might these regulations change in the longer term?

While in the majority of cases you will still be able to use CE marking if you are selling goods on the UK market after the UK leaves the EU, the Government has indicated CE marking will only be accepted in the UK for a limited time after Brexit.

Notified bodies operating under the CPR and based in the UK will be granted new UK ‘approved body’ status and be listed on a new UK database. Approved bodies will be able to undertake conformity assessment activity for UK designated standards.

Where an approved body has undertaken the assessment, the manufacturer (or their authorised representative) must affix UK marking.

Manufacturers will only be able to continue relying on assessment by a UK-based approved body after the UK leaves the EU if the UK marking has been used. Where certificates have been transferred to an EU-recognised notified body, the CE marking can continue to be used for the UK market.

Importers