BIFAlink
Policy & Compliance
www.bifa.org
A hidden EU-Exit issue
criteria or not. Also there have been reports of preference being claimed where there has been insufficient processing of the product. For instance, simply placing a ‘Made in UK’ sticker on goods manufactured in China would not qualify the goods as being of UK origin. Up to a point, EU officials have been relatively relaxed about enforcing such regulations. However, BIFA is aware that stricter enforcement is imminent. Since 2016, Dutch Customs have employed 900 additional officers and have now advised that they will be conducting random checks and enforcing origin rules more strictly. Duty charges The impact of this approach will be that duty will be charged at the time of import on goods that do not comply with the origin rules, thus increasing the cost of such goods being imported into the EU; in a way, it is a method of imposing controls to ensure that correct tariffs are collected. Forwarders, particularly those clearing goods under Delivery Duty Paid (DDP) terms, should consider how to handle the scenario where they have acted on an ‘indirect’ basis for a non- established importer and the goods fail the origin criteria. Almost inevitably previous shipments will be investigated with the potential for a significant post-entry clearance demand being issued. On a more day-to-day basis, it is important to ensure that all parties are aware of who will be responsible for any additional costs if a vehicle is delayed whilst checks are carried out, or where the entry has to be amended to reflect the true origin. It is important that traders are made aware of these facts and Members should consider reminding their customers of this important and often overlooked issue.
It is understood that some EU countries will soon be more strictly enforcing Rules of Origin regulations and applying duty on the spot. Forwarders should consider how to handle such potential scenarios
When forwarders and Customs agents act as intermediaries, they are reliant on the information provided to them by their customer. It is taken on trust that the customer has performed their role correctly and this premise is enshrined in Clause 17 of the BIFA STC. Full and accurate information is required for a variety of purposes – for instance ensuring the correct transportation/stowage of cargoes and all aspects of regulatory compliance such as preparing and submitting Customs declarations. A major element of this is ensuring that the correct duty is paid. Since 1 January 2021, for trade with the EU, this has meant that preference can be claimed where shipments meet the applicable rules of origin... but do they? The Trade Agreement Annexes 2 and 3 cover many of the Rules of Origin, while Annex 7 provides the specific wording for the invoice declaration confirming the product’s origin. These rules are product- specific and complex. The certification requirements, which allow for goods to be imported duty free into the destination country, apply equally to UK exporters shipping to the EU and to EU producers shipping to the UK. However, to
qualify the goods have to meet the relevant origin criteria, which can be complex with rules varying from one product to another. One criterion is that sufficient processing takes place that changes the first four digits of the tariff heading, so for instance raw rubber becomes a tyre. From the UK’s perspective, another method of meeting the origin rules is to ensure that during the process sufficient UK-manufactured components are used, or enough value is added, to qualify the resulting product as being “made in the UK”. The rules apply in reverse for goods produced in the EU destined for the UK. One-year grace period Due to the complexity of the rules, exporters on both sides were given a one-year grace period that reduced the required documentation. During the one-year grace period, UK and EU companies were allowed to certify that their goods did qualify for zero-tariff access under the origin rules, even where they were unable to obtain the supporting evidence from their suppliers. There is evidence emerging, and being reported in the press, that UK companies are claiming the preferences when in fact they have no idea whether the product meets the origin
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December 2021
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