Well as the UK - EU Free Trade Agreement is now in play, and businesses have the option for free tariff trade. Today I want to answer some questions posed, about if a company qualifies how do they confirm prefrential duty status under the Trade Cooperation Agreement.
The Importer is required to declare they hold proof that Goods comply with rules of origin.
So, rules of origin must apply within this trade deal to benefit from preferential tariffs whether that's 40 50 60 percent and we're going to look at.
Proof of Origin – Statement of Origin
Importer is required to declare they hold proof that goods comply with Rules of Origin to benefit from preferential tariffs when:
importing into the UK from the EU
importing into the EU from the UK
A Statement on origin is not a document, but a prescribed text which the exporter should add to the invoice, or any other commercial document, describing the originating goods in sufficient detail to enable its identification. An exporter making a Statement on origin must hold information demonstrating that the goods are originating, including information on the originating status of materials used in production. This may include declarations obtained from suppliers.
A Statement on origin may apply to a single consignment, or to multiple shipments of identical goods, for a period specified in the statement, but not exceeding 12 months from date of first import. For UK imports, the statement will be valid for two years from the date it was made out and for exports to the EU, it will be valid for 12 months.
A statement of origin (issued by the exporter) or "importer's knowledge" that the product satisfies the relevant origin rules can be used to claim tariff preferences. The precise language to be used in the statement of origin is set out in an Annex in the TCA.
This needs to include the following.
§ provided on invoice or any other commercial document (excluding bill of lading)
§ describes originating product in sufficient detail for it to be identified.
§ exporter is responsible for it being correct.
The process is more flexible than under many EU FTAs in that there is no necessity for an exporter to have "approved exporter" status.
There are however new rules which require traders to self-certify the origin of their exports. To self-certify:
§ Exporters will need to make a statement of origin which declares the origin of the goods being exported. This statement should be contained in the commercial invoice or another document that describes the originating product in detail. The statement of origin can be valid for up to 24 months from the date it was made. It may apply to a single shipment of one or more products; or multiple shipments of identical products imported into the UK/EU within the period specified in the statement of origin, which should not exceed 12 months.
§ Claims of preferential tariff treatment will then be based on the importer’s knowledge and their verification that the goods in question originate in the UK or EU. The importer shall be responsible for the correctness of the claim for preferential tariff treatment and for compliance with these requirements.
§ Exporters and importers must retain copies of the statement of origin and any other documents that demonstrate that the product satisfy the requirements for obtaining their originating status for a minimum of four years and three years, respectively.
The importer must keep for at least three years the statement of origin or the records used to make an importer's knowledge claim.
The exporter must keep a copy of his statement of origin and supporting documents demonstrating compliance with the origin rules for at least 4 years.
The TCA commits the UK and EU to cooperate to ensure that businesses comply with the rules of origin, and UK and EU customs authorities will have the power to verify traders’ originating statements.
In conclusion businesses should ensure they understand the originating status of all the goods they trade between the UK and EU to ensure they are eligible for the preferential trade terms i.e., zero tariffs and quotas under the TCA; and that their supply chains understand the new self-certification procedures for proof of origin.
Trade practice is underpinned by ‘importer’s knowledge’.
‘Importer’s knowledge’ is an option allowing the importer to claim preferential treatment, based on own knowledge about the originating status of imported goods. It can be used as an alternative to a Statement on origin. As this requires the importer to have knowledge that the goods meet relevant rules of origin, the exporter or producer may have to provide information about production, to the importer. This may be in addition to other information already in possession of the importer, such as the HS code of the goods and origin criteria used and a description of the production process.
The fact that importers can self-certify that a product qualifies for this "preferential tariff" treatment under the rules of origin will help to reduce the administrative burden in one sense.
However, to self-certify, the importer needs to be in a position either to rely on a statement of origin made by the exporter, or to have sufficient knowledge of the supply chain to be confident of where it is considered to originate under the rules.
Some manufacturers will be certain that their products will qualify as originating. That may be because they themselves have carried out processes that sufficiently transform the product to qualify under the rules of origin, because third-party components are less than the tolerances, or because they have only used materials that are wholly obtained.
Otherwise, a manufacturer may need to rely on a supplier’s declaration that the components used are originating.
Because a challenge of origin by customs can have significant financial implications, traders may wish to gain certainty by seeking a ‘Binding Origin Information’ (BOI) decision from customs authorities. A BOI is a written statement confirming the origin of a particular product.
EU Binding Origin Rulings (BOIs) are recognised across the EU and UK has its own origin ruling process.
If you need to get proof of origin because your goods meet the rules of origin, a Binding Origin Information (BOI) decision in the UK can offer some advantages:
it is legally binding on the UK, so you will have legal protection against any UK customs authority challenging the country of origin of the product, provided the production arrangements remain unchanged in so far as they relate to the origin rules.
it can be helpful where an origin rule is difficult to interpret or where the circumstances of manufacture of a product make application of a rule difficult
if a change in UK law makes a BOI invalid, you may be able to continue using it for up to 6 months provided you can show that the goods are subject to a binding commercial contract.
You must be able to prove, if asked, that the goods declared are identical in all respects to the goods detailed in the BOI, including the circumstances of their production as they affect origin. If you cannot prove this the BOI will have no legal effect.
Supplier’s declarations (until 31 December 2021)
If claiming preference on basis of importer’s knowledge or making out a statement on origin:
Ø You do not need to hold a supplier’s declaration at the time they are claiming preference.
Applies for goods imported from or exported to the EU.
UK exporters will not need to be REX (Registered Exporter) or be Approved Exporters although they must hold a GB EORI number.
This will usually be identified on the Statement on origin by their Exporter Reference Number (ERN). Where an Exporter’s Reference Number has not been assigned the exporter may indicate its full address under the part "Place and date".
Importer & exporter must maintain records for at least four years.
Ø Records can be stored in an electronic format.
Record keeping proof of export proof of import is essential. So, all the documentation audit records are in one export file and in import file as well.
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