Centralized Customs Clearance in the EU for your global supply chain

Centralized Customs Clearance is a valuable trade facilitation measure under a customs procedure of the Union Customs Code (UCC) within the EU.

It allows an approved trader to lodge at the customs office where they are established, a customs declaration for goods which are presented at another customs office within the customs territory of the Union.

Centralized Clearance allows the economic operators to centralize and integrate accounting, logistics and distribution functions with financial savings in administrative and transaction costs, thus providing a genuine simplification. Centralizing payment of customs duties and related declaration costs provides real savings and efficiencies.

Multinational organisations with manufacturing or distribution centres in different EU countries can centralize their EU customs clearance administration in one location within the EU. These organisations may have to implement or purchase costly IT solutions in each member state they are importing/exporting to/from or outsource this facility to many different external stakeholders. Centralized Clearance can eliminate this costly administration burden, centralize these operations in one location, and reduce risk within your global supply chain.

As your global supply chain expands and non-EU imports increase into multiple cross county locations throughout the EU, you now should consider this very useful trade facilitation measure. Global sourcing within your industry can be complex. Making the inbound process of this function more efficient by ensuring security of supply and reducing risk should be considered.

For more information on Centralized Clearance contact Brian Murphy, Head of Trade Services at the Irish Exporters Association.

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Tariff Suspension / Quota Applications

If the product (raw material or semi-finished product) your company imports cannot be supplied in sufficient quantity in the European Union, the company can apply for Duty Suspensions or Tariff Quotas.

The duty suspensions will allow unlimited quantities to be imported into the EU for five years and tariff quotas will allow the importation of limited quantities for a period from 6 to 12 months.

There are 2 annual deadlines for applications under the Tariff suspension Scheme, one in early January and the other in July. Note that the quota/suspension does not come into effect until a year after the deadline date. For example, applications submitted by the deadline in January 2018 will not come into effect until January 2019.

To be eligible, the application must meet the following criteria:

  • The applicant must be established in the EU
  • The applicant must have had recent contacts with potential suppliers and EU manufacturers at the time of application. Note that these contacts must be documented (letters, faxes, emails) and included in the application.
  • Applicants must be using the product, or involved in significant manufacturing/processing of the product, and ensure the imported products are not covered by an exclusive trading agreement.
  • Precise product description. Note that the goods must be raw material or semi-finished products. Finished products won’t be granted suspensions/quotas. Include the CAS number if the product is a listed chemical.
  • Product(s) must be correctly classified for customs purposes. If the correct classification is in doubt, a Binding Tariff Information (BTI) application may be required.
  • Anticipated and current imports as well as the applicable duty rate at the time of request, together with estimated uncollected customs duties (duties expected to be paid in the year indicated). Note that the estimated amount must be over €15,000 per year.

Applications must also state

  • The origin of the goods.
  • If the goods are subject to a patent.
  • If the goods are subject to any anti-dumping or anti-subsidy measure.

Note that the duty suspension will apply to the tariff code rather than the applicant, therefore it is important to make the application as specific as possible to avoid competitors using the duty suspension. The other side to this is that a competitor may have applied for the suspension of a product that you are using so it is worth reviewing 1) that you are correctly classifying your product, and 2) if an autonomous duty suspension is applied to this tariff code. Having a product misclassified in this instance could lead to missing out on a valuable duty break in place.

If you wish to obtain further information on the application process for autonomous duty suspension or wish to review if your imported raw materials already have a suspension in place, please contact BDO.

For more information about our partnership with BDO Ireland click here.

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Japan – EU Trade Deal, a new market for Irish food exporters

On 8 December 2017, the EU finalised negotiations for a trade agreement with Japan. After the legal verification and translation processes which will take place in early 2018, the European Commission can then submit the agreement for the approval of the European Parliament and EU Member States.

The trade agreement with Japan will:

  • remove these barriers
  • reduce or eliminate tariffs
  • help shape global trade rules in line with high standards and shared values

The Japanese market has a population of 127m people and currently EU agri-food exports to Japan amount to around €5.7bn despite the challenges and tariffs faced.

What will it mean for Irish food exporters looking to expand to the Japanese market?

Last month the Irish Minister for Agriculture Michael Creed led a trade mission to Japan and South Korea. At the moment, Irish beef tongue is the main beef product being exported to Japan, but according to the Minister the 30t of beef tongue being exported to Japan could increase under the EU-Japan trade deal. Note that the EU have also a free trade agreement in place with South Korea which has been applied since 2011 and was formally ratified in 2015.

Some examples of the potential benefits to Irish agri-food exporters which would make their products more competitive on the Japanese market:

If you are looking to expand into new markets and wish to discuss further please contact BDO.

For more information about our partnership with BDO Ireland click here.

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Brexit: Preparing for 2018

As the Brexit negotiations continue there is increasing concern on the time period which will be available to allow companies prepare.

Time pressure is increasing as:

  • Businesses will need a year to make preparations and introduce new Customs Procedures
  • There will be a requirement for a significant increase in the number of customs officials both in the UK, Ireland and the EU
  • IT systems will need significant investment to cope with the potential ten-fold increase in the number of declarations required

This leaves companies unclear as to whether to prepare for a worst case scenario of a Hard Brexit, a best case transition period or whether to adapt a wait and see approach. The downside to the latter however is that as the months go by it leaves less and less time for the necessary work to be completed.

Also, the facts are, that when we deconstruct the meaning of a Hard versus a Soft Brexit what this really boils down to is whether there will be customs duties applied. On the basis that the UK leave the EU Customs Union and Single Market then the customs compliance requirements remain mostly the same.

The question we get asked the most at this point is whether there is anything a company can do when so little is known. While this is true to some extent, there is in fact a lot more known than unknown.

  • It is certainly still unclear whether a Trade Agreement leading to reduced /zero tariffs will be agreed. It is to be hoped an agreement will be reached, but a start on this will only be made in March 2018.
  • Less unclear however is that there will be requirements for Import and Export Declarations to be lodged with the Customs Authorities once the UK is a Third Country for Customs Purposes. This is the case with all imports and exports from non-EU countries and there is very little reason to believe that any different situation will apply to the UK. Indeed Pascal Lamy, the former EU Trade Commissioner and former head of the WTO re-iterated this when he said that “There is no ‘no border’ solution”.

If we look at what is being suggested by the UK, their most recent thinking is outlined in their Government’s White paper on Customs published in October 2017.

In summary the White Paper confirms that:

  1. Traders who trade only with the EU will now be subject to customs declarations and checks for the first time.
  2. It is necessary, in the interests of being prudent, to provide for the implementation  of an Customs, VAT and Excise regime for goods moving between the UK and EU
  3. EU Movements by sea and air will be dealt with broadly in the same way as they are dealt with currently for non-EU movements.
  4. For roll on- roll off traffic pre notifications to customs may be introduced with customs posts set back from the ports.
  5. Trusted Trader status will be critical to enable simplifications in managing customs, cost-savings in lodging declarations and avoiding delays - in particular at the N.I. Border.

-Trusted Traders may obtain simplified options in terms of lodging customs declarations i.e the monthly reporting as we have discussed.

-In addition for cross border trade the Trusted Trader arrangement would allow for aggregated returns and periodic duty payments.

 

This outline is therefore quite clear in stating that trade with the EU will be subject to customs requirements.

What should a company do therefore at this point to prepare for a Hard Brexit while still hoping for a soft Brexit?

We are strongly advising the following steps are undertaken:

  1. Review your supply chain and map out imports and exports to and from the UK
  2. Assess the impact of tariffs on a worst case and best case scenario
  3. Identify the level of customs awareness within the Company
  4. Assess the potential increase in the costs of customs compliance
  5. Look at applying for Trusted Trader Status

Indeed both the UK and Irish Authorities have identified the Trusted Trader Status as a means for reducing burdens for companies and a prudent company would be well advised to start preparations for this authorisation as soon as possible.

The time line between starting an application process and receiving an authorisation is on average one year which means that even allowing for a start date of January 2018 it would be unlikely that authorisation would be achieved before January 2019. If Brexit occurred in March 2019 this would leave limited time for slippage.

 

For further information on Brexit and all customs queries please contact BDO.

For more information about our partnership with BDO Ireland click here.

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Completion of Study on Freight Traffic on British Landbridge

This study, which is an important part of the Department of Transport’s work in preparing to meet the challenges of Brexit, is now underway. The work is being carried out by consultants under the management of the Irish Maritime Development Office (IMDO) and involves a significant number of interviews with Exporters, Traders, Freight Forwarders, Hauliers, Ports and Shipping Lines.

Many IEA Member Companies are being asked to respond to the survey work. The results of the research carried out by the IEA earlier in 2017 on the subject will also be fed into the study.

All of the work, when collated, will enable the Department to make not just their own plans but will enable them to inform the EU Transport Commissioner and her team of the real Irish requirements within the Brexit discussions to minimise the disruption to the Landbridge routing.

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EU-EIP Project Moves to Second Phase

Following the successful completion of the initial project focussed on the development of a European ITS Platform for freight traffic operating within the East-West Corridor, a second phase was launched on 14th November. Within the first phase the IEA, working on behalf of Transport Infrastructure Ireland (TII), took responsibility for guiding the development of an on-line multimodal freight route planner. This planner, which can be accessed at: https://eastwestcorridor.eu/Planner/ currently is very much focussed on routes including Road, Rail, Lo-Lo Shipping and barge transport for the door to door transport of freight in containers, will be expanded to take into account routes involving shipment in trailers shipped on board R-Ro services.

The definition of the Corridor has been expanded to more actively include freight moving to and from the Baltic States. This aspect of the work, which involves study of routes and customs controls involved in traffic moving into and out of third countries promises to be a very useful contribution to our sum of knowledge in our Brexit discussions on controls that might affect traffic to and through the UK.

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Mid West Sustainable Freight Partnership Launched

This partnership, which grew out of the EU InterReg “Weastflows” project in which Limerick City and County council and the IEA were partners, was launched in Limerick on November 21st. The new partnership is driven by Limerick Chamber along with the Shannon and Ennis Chambers and supported by Limerick City and County Council. Speakers at the launch event included Faye Carroll, Assistant Principal at the Climate Change Unit at the department of Transport, Tourism and Sport (DTTAS) who spoke about the challenges that Irish Freight Transport in particular, faces in meeting its carbon reduction targets, while Howard Knott of IEA spoke about the Brexit challenges specific to the Mid-West Region.

In introducing the event Limerick Chamber CEO, James Ring outlined a number of the objectives of the Partnership. These include:

To strengthen and improve the representation of the infrastructure, export generator, logistics, freight forwarding, customs services, and retail industry in the region.

In this respect the Partnership's core goals will be:

  • to represent its members;
  • to influence, on behalf of the freight & logistics sector current and future policy and legislation;
  • to promote the sharing and learning of best practices from across the industry;
  • to lobby for infrastructural and regulatory investment;
  • to contribute to research and innovation through collaboration and co-opetition amongst competitors;
  • to improving the attractiveness of the sector for new recruits;
  • to improving the education and training opportunities of employees

It is hoped that the Partnership will work closely with the IEA’s Regional and Supply Chain groups in pursuit of the common aim of Supply Chain excellence for exporters in the Region and become a template for similar bodies elsewhere.

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Irish Ferrries Make Radical Changes to their 2018 schedules

The newly released Irish Ferries schedules for 2018 mark a significant shift both in schedules but also in the way in which the Company deploys its ferry fleet.

On its arrival from the builders in July 2018 the 55,000-tonne cruise ferry W.B. Yeats will take up service on the Dublin/Cherbourg route operating a once every other day service in each direction while the Oscar Wilde will also take up a new schedule leaving Rosslare on the alternate days and destined for either Cherbourg or Roscoff.

Irish Ferries have planned a revised schedule from mid-September that will see the W.B. Yeats switching to the Holyhead route replacing the Dublin Swift over the winter months, while the Epsilon will maintain a three times weekly Dublin/ Cherbourg service. The Rosslare/ France service will not run over the winter period, thought the Isle of Inishmore will continue to operate her twice daily service to Pembroke out of the Co. Wexford Port.

In terms of trailer capacity both the Epsilon and the W.B. Yeats have a freight capacity on board in the order of three times of that on the Oscar Wilde.

It is understood that Irish Ferries intend to take up their option at the yard to build a sister ship to the W.B. Yeats. These vessels have been designed to operate out of both Dublin and Rosslare.

Irish Ferries, sister company within the Irish Continental Group, ICG Container and Terminal Division was winner of the 2017 Maritime Services Award, sponsored by the IMDO, at the recent Exporters of Year awards ceremony.

Stena Line do not intend to change their current schedules for 2018 and will retain the revised Rosslare-Fishguard schedule introduced earlier in 2017. No significant schedule changes are anticipated from either Seatruck or P & O Ferries.

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What is Trusted Trader Status?

By obtaining an AEO certificate an operator has effectively demonstrated that their customs controls and procedures are efficient and compliant and their role within the international supply chain is secure.

Whilst not mandatory, the EU is actively encouraging organisations to sign up to this worldwide initiative, which has been designed to ensure that international supply chains are secure and controlled from the point of origin through to the final delivery destination.

Registration is open to all businesses in the EU that are involved in trade with non-EU countries, including logistics operators, carriers, freight forwarders, customs agents, importers, exporters and manufacturers.

What are the benefits?

Trusted traders could benefit from:

  • Waiver of comprehensive guarantees for suspension procedures (e.g. Customs warehousing or Inward Processing).
  • Reduction in guarantee requirement for deferral account holders.
  • Completing self-assessment for customs declarations, when implemented.
  • Lower risk scores in risk analysis systems with Revenue profiling for customs interventions.
  • Priority treatment if physical controls are conducted.
  • Mutual recognition under Joint Customs Cooperation Agreements which could result in faster movement of goods through third country borders.
  • Recognition worldwide as safe, secure and compliant business partners in international trade.
  • Reduced data sets for entry and exit summary declarations (AEOS)
  • Easier access to simplified procedures.

Timeline to authorisation

Please see below an indicative timeline including all stages to authorisation.

 

 

 

For further information on AEO and all customs queries please contact BDO.

For more information about our partnership with BDO Ireland click here.

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New export regulations planned for China

Consistent with U.S., EU, and other global export control regimes, the Export Control Law (ECL)  will establish export license requirements pertaining to items that are “dual use” (civil by design but, depending on specific capabilities, could be used for defense-related or nuclear purposes) as well as “military” (specifically designed for defense purposes).

Across a broad spectrum of industries, outbound exports from China, as well as the sharing of export-sensitive technology in China with non-Chinese nationals (including those from Taiwan, Hong Kong and Macao) i.e. “deemed exports”, will be covered under these regulations, as well as international end-user requirements for permitted exports.   Preliminarily, the draft ECL sets forth stringent fiscal penalties for export violations, potential criminal penalties, as well as related export and credit sanctions.

For EU and other European companies who are manufacturing products in China, or developing software or R&D and exporting these commodities or services from China, these regulations will significantly impact local supply chain operations to the extent that export license determinations are required and, if such items are controlled, license approvals are required. Likewise, E.U. and other non-Chinese citizen personnel receiving export-sensitive technology will likewise be effected and potentially subject to the ECL’s deemed export requirements in order to perform their corporate responsibilities.

For companies directly exporting from China or part of a China-based supply chain, proactive compliance attention will be essential in order to avoid export supply chain disruption. These compliance measures include:

  • Determining whether or not your products and technology will be covered under the ECL and subject to export license approval
  • Determining whether technology sharing with international personnel working in China is subject to export license approval
  • Establishing the necessary documented procedures to address export control products, including licensing and international shipping procedures, as well as local Technology Control Plans for safeguarding export-sensitive technology
  • Proactively training corporate personnel and logistics facilitators on compliance and documentary requirements.

Through BDO’s affiliated professionals based in the PRC, we can assist your company in proactively addressing these new ECL requirements through supply chain assessments, procedural development and resource training, so as to minimize supply chain impact.   For further information please contact BDO.

For more information about our partnership with BDO Ireland click here.

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