Britain is a big consumer of COD. Its”fish and chips” series of dishes can be called Britain’s”national cuisine”, and about half of the COD raw materials used are originated from Russia. Aoife Martin, director of operation of seafish, a British seafood public institution, said:”British cod is not self-sufficient. In 2020, the local production was only 47000 tons, and the import volume was as high as 430000 tons. Russia accounts for 45%of the global cod supply. If Russia is removed from the supply chain, it is bound to have a severe impact on the industry.”
According to seafish, the additional 35%tariff applies to fish”caught in Russia or its territorial waters” and fish”caught by vessels flying the Russian flag and registered in Russia from the territorial waters or outer seas of any country”.
If Russian raw materials are processed into value-added products in the EU (such as birds eye brand fish sticks, which are processed by nomad foods in Germany) and then sold to the UK, they will continue to enjoy zero tariffs. Each value-added product has its own unique commodity code. The code of coated fish product is 160419. According to the trade cooperation agreement between the UK and the EU, the origin of the commodity must be changed to the processing location of value-added products. Therefore, after Russian raw materials (COD, haddock and Pollock) are processed into fish sticks or powdered fish fillets in the EU, tariffs will no longer be levied on the British market.
Nomad foods is one of the important buyers of Russian Pollock. Its brands include birds eye, findus and iglo, and its products are sold to the UK and EU countries. Young’s seafood, the largest seafood company in Britain, is also a purchaser of COD products. The frozen fish fillets it buys are produced in China, and the raw materials are provided by Russia. At present, it is not subject to 35%tariff.
Seafish believes that as long as Chinese processing plants are”sufficient” to convert Russian raw materials (head and dirt removal, h& g) into high value-added products, the product shape and texture have undergone a”substantial” change, and the country of origin will be changed to China, so it will not be subject to tariff restrictions. Similarly, if Russian raw materials are processed in other third-party countries in the EU, as long as they meet the requirements of product specific rules, the origin can also be changed accordingly.
The following table shows that Russian raw materials are processed in China. If they are simply processed (such as cutting, freezing, and repacking), they will also be considered as Russian origin, and a 35%tariff will be levied on the basis of the MFN tax rate. If deep processing is carried out, such as h& G fish fillets are considered to be of Chinese origin and are only taxed at the most favored nation tax rate.
Under the current MFN tax rate, the British government imposes a 6%tariff on imported frozen cod and pollock fillets and fillets, a 6%tariff on pollock fillets and a 12%tariff on pollock fillets.
Seafish said that the refined slicing and boning of COD raw materials, whether manual or mechanical, are beyond the scope of simple processing and will be classified as”substantial” manufacturing; Similarly, vacuum packaging is also a process beyond simple packaging, because special equipment is required.
Seafish reminded that the import and export process of fish processing must meet the economic rationality, and it is not allowed to deliberately avoid tariffs just to change the origin. Businesses should make decisions according to specific circumstances. HMRC (British General Administration of Taxation and customs) and British courts have the right to interpret all relevant laws.