8 April 2014

Did You Know? Issue 180

8th April 2014

1. Update Armenia: 2. EU Sanctions on Burma/Myanmar: 3. New EU regulation on Central African Republic:  4. Esterline Fined by US State Department: 5. Export Health Certificates: 6. Inward Processing:  7. Trade Controls: 8. Excise Duty Bioethanol: 9. EU backs China joining talks on Trade in Services Agreement (TiSA):  10. Updated Customs Notices:

1. Update Armenia: Early March 2014 Armenia declared it will be ready to join a Russia-led customs union within weeks.   Armenian Deputy Foreign Minister Shavarsh Kocharian said in Yerevan on March 1 that his country will accomplish all necessary tasks by mid-April in order to join the CIS Customs Union, which also includes Belarus and Kazakhstan.  Kocharian said the Armenian parliament will debate the customs-union agreement after the document is approved by Russia, Belarus, and Kazakhstan.
In July 2013 the EU and Armenia concluded negotiations on a new Association Agreement (AA) and a Deep and Comprehensive Free Trade Area (DCFTA), which is an integral part of the AA. The AA and the DCFTA aimed at allowing Armenia, with the EU´s support, to drive forward a programme of comprehensive modernisation and reform based upon shared values, political association and economic integration.   The process of implementation of the AA and the DCFTA has been withheld in September 2013 following Armenia's start of negotiations of its membership in the Customs Union of Russia, Belarus and Kazakhstan. The obligations resulting from the membership in the Customs Union of Russia, Belarus and Kazakhstan are incompatible with the commitments undertaken by Armenia in the framework of the DCFTA.
2. EU Sanctions on Burma/Myanmar: The European Union has agreed to lift all sanctions on Myanmar, except for an arms embargo, despite a Human Rights Watch report which accused authorities of complicity in the mass killing of Muslims in the west of the country last year.  Lifting the sanctions gives more certainty to European firms contemplating investments in one of the least developed markets in Asia. Myanmar, formerly known as Burma, has significant natural resources and borders economic giants China and India.  The EU's move could put pressure on the United States, which suspended sanctions in May last year and allowed U.S. companies to invest through a general licence. Some American executives have urged Washington to go further and lift sanctions entirely.
           The EU lifted its sanctions on Monday 22nd April 2014, a year after suspending them in response to a dramatic series of reforms put in place since Myanmar's military stepped aside and a quasi-civilian government was installed in 2011.
3. New EU regulation on Central African Republic:  The European Union has published a regulation imposing restrictive measures in the light of the situation in the Central African Republic (‘CAR’) – although lawyers say that as the regulation lacks an annex listing entities and individuals subject to the measure, its impact is moot for the moment (see Comment below).
Regulation No 224/2014 prohibits the direct and indirect provision of:

  1. technical assistance or brokering services related to the goods and technology listed in the Common Military List of the European Union or related to the provision, manufacture, maintenance and use of goods included in that list, to any person, entity or body in the Central African Republic or for use in the Central African Republic;
  2. financing or financial assistance related to the sale, supply, transfer or export of goods and technology listed in the Common Military List, including in particular grants, loans and export credit insurance, as well as insurance and reinsurance, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance or brokering services to any person, entity or body in the Central African Republic or for use in the Central African Republic;
  3. technical assistance, financing or financial assistance, brokering services or transport services related to the provision of armed mercenary personnel in the Central African Republic or for use in the Central African Republic.

Further reading at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2014:070:0001:0009:EN:PDF
4. Esterline Fined by US State Department: Aerospace and defence technology company, Esterline Technologies Corporation has been fined $20 million in civil penalties by the U.S. State Department for inadequate oversight resulting in the provision of defence articles and technical information to foreign companies without the government’s authorisation. The company had been charged with alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations (‘ITAR’).  The consent agreement also targeted Esterline subsidiaries Korry HMI Solutions and Kirhill-TA. The actions follow an investigation by the U.S. Immigration and Customs Enforcement agency, Homeland Security and the Office of Defence Trade Controls Compliance.
           According to the results of the investigation, Korry transferred sensitive technical data to a foreign company in Liechtenstein between 1997 and 2010 – it had contracted with the company to manufacture night vision components for the U.S. government – without getting the appropriate authorisation. It voluntarily chose to disclose the unauthorised information after conducting its own internal compliance review. The Office of Defense Trade Controls Compliance’s findings concluded that Esterline used poor record-keeping and jurisdictional control practices, and failed to properly administer licences and agreements.
5. Export Health Certificates: Changes have been made to application process for certain export certificates - Export Health Certificates (EHC).  They must be
applied for to the Centre for International Trade – Carlisle. These changes will
be introduced during 2014. More...
6. Inward Processing: In an Information Paper issued by Customs it was made clear that IP is a processing regime and should not be used for long-term storage. Once processing is finalised the IP compensating products should be re-exported or discharged to another eligible method of disposal as soon as possible. If there is a requirement to store compensating products before and/or after processing the customs warehousing arrangements should be used. A reasonable period of storage will be permitted in the IP authorisation if it can be demonstrated that this is part of the 'process' but any period of storage granted cannot be longer than the time taken to process the goods.  Notice 221 has been amended and Notice 221a cancelled. 
Processing under Customs Control:  The same rules apply as for IP, however storage is not normally permitted under PCC as the purpose of PCC is to process goods for free circulation.
Usual Form of Handling (UFH): If you are only undertaking Usual Forms of Handling (UFH), it is UK policy to allow a maximum of three months throughput period. This is because these are simple operations with relatively minimal processing such as packing. UFH goods should be re-exported or put to another eligible method of disposal before the end of the three-month throughput period. It should be noted that the three-month throughput period also applies to traders using IP with a Simplified Authorisation.
7. Trade Controls: New items added to Trade Controls under Category BRead More They include:

  • Battle tanks and armoured combat vehicles within ML6
  • Large-calibre artillery systems within ML2 and ML4
  • Combat aircraft and attack helicopters within ML10
  • Warships within ML9
  • Other missiles and missile launchers

8. Excise Duty Bioethanol: Legislative changes on fuel additives and the warehousing of bioethanol for the production of biodiesel. Under the Energy Products Directive (EPD), the rate of duty on additives and extenders is that of the host oil - whatever oil they are added to. Therefore, where additives or extenders are added to rebated fuel or liquefied petroleum gas (LPG), the rate of duty on the additives or extenders should be that of the rebated fuel, or the LPG. We have amended UK legislation to meet our obligation under the EPD.   In addition, HMRC has also legislated for an Extra Statutory Concession relating to the warehousing of bioethanol for the production of biodiesel. This gives legal cover on the policy of allowing bioethanol to be moved into an excise warehouse where it is going to be used in the production of biodiesel.Read More Revenue & Customs Brief 10/14
9. EU backs China joining talks on Trade in Services Agreement (TiSA): On the occasion of the visit of the President of the People's Republic of China, Xi Jinping, to Brussels, the EU announced its strong support for China joining ongoing negotiations to liberalise trade in services. The EU's position is reflected in the EU-China joint statement issued at the Summit. 'I am very pleased with the successful outcome of the visit of President Xi Jinping,' said EU Trade Commissioner Karel De Gucht after meeting the Chinese President. 'China has reassured the EU that it shares the objectives of the TiSA negotiations and that it would respect the results of the negotiation achieved by other participants if it joins. As a result, the EU will now strongly support China's swift participation in the Trade in Services Agreement (TiSA) negotiation.'  Read more
10. Updated Customs Notices:
Notice 179E: Biofuels and other fuel substitutes
Revised Notice 235:  Outward Processing Relief
Revised Notice 237: Processing Under Customs Control
Notice 550: Air Passenger Duty
Notice 551: Special Accounting Schemes for Air Passenger Duty (APD)
Revised Notice 700/63 - Electronic invoicing
Notice 703: VAT: Export of goods from the United Kingdom

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