15th October 2013

Did You Know? Issue 168

1.  EU Generalised System of Preferences 2014:  2. Union Customs Code (UCC) published: 3. Update EU FTA Negotiations:   4. US publishes long-awaited interim final rule on ITAR brokering provisions:

1.  EU Generalised System of Preferences 2014:  On 1stJanuary 2014 EU’s new GSP scheme comes into force.  It will be a major rewrite of a scheme used in EU countries since the 1970’s permitting developing markets duty reduced access on imports.  GSP2014 will see the number of countries covered by the scheme come down from 170 to around 90.  The ones being removed from the scheme include 33 Overseas Countries & Territories already covered by the EU-OCT agreements, 34 countries already with bilateral EU FTAs leaving about 20 countries leaving GSP status because they are now within the high income/ upper middle income countries category according to the World Bank. 
The key markets losing GSP Status from the 1st January 2014 are high income countries: Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates, Oman, Brunei Darussalam, Macao. Upper Middle Income countries: Latin America (5): Argentina, Brazil, Cuba, Uruguay, Venezuela; ex-USSR (3): Belarus, Russia, Kazakhstan; other (4): Gabon, Libya, Malaysia, Palau.  In addition, between 2014 and 2016 countries are being graduated out of the GSP Scheme for some or all products.  These include India, Thailand, Indonesia, Vietnam and China (for the few food products still covered by GSP).  From 1st January 2014 India will lose GSP status for textiles and clothing. 
GSP+ countries have not been agreed yet but a number of countries, including Pakistan, have been notified that they may apply for GSP+ status from 2014.  In a recent HMRC presentation it was stated that no countries have currently applied.
The new GSP2014 scheme will remain dynamic and subject to change depending on the financial standing of the countries involved or if they sign a FTA with the EU.  Read More below

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2. Union Customs Code (UCC) published: On the 9thOctober 2013 the Union Customs Code UCC was published, It will come into force from the 30th October 2013.  The regulations covered in the 288 Articles long document will take effect between 1st May 2016 and 2020 after the Implementing Provisions have been agreed.  The UCC covers:

  • Provisions for Centralised Clearance (though the company must be AEO-C approved)
  • Self Assessment of customs revenue (though the company must be AEO-C approved)
  • Single Transport Document movements
  • Earlier Sales Value to be used at import
  • The requirement for guarantees to cover both the actual debt to Customs and potential debt, eg warehousing, temporary storage, Inward Processing, transit movements, ERTS
  • Moving goods under a Single Authorisation within the EU acceptable if the company is AEO-C approved
  • The right to grant guarantee waivers/ reductions
    -  Actual debt, eg deferment accounts, potential reduction in guarantee available if company AEO-C approved
    - Potential debt – companies may apply for guarantee waivers/reductions if they meet AEO conditions under Customs Simplication requirements

Next steps: 25th October 2013 - work programme starts on drafting the Implementing Provisions.  Text of Implementing Provisions due January 2014, completed May 2015.
3. Update EU FTA Negotiations:  The EU is negotiating a number of Free Trade agreements, here is a quick update

  • USA (TTIP): 2nd round of talks delayed due to industrial action in the USA.  The deal is worth around £10 billion to the EU.  It will cover not only duty and tariff issues but also other trade regulations, services and Intellectual Property Rights.  Timescale – the aim currently is 18-24 months for completion.
  • Japan: Worth around £6 billion to the UK alone/ £42 billion to the EU.  Two rounds of talks so far, 3rd due 24th October 2013.  Focus is on Non-Tariff Barriers (NTB), food and drink standards, Intellectual Property Rights.  Key date for this FTA is April 2014 when progress will be reviewed.
  • India: Indian General Election of 2014 is slowing down negotiations.  Progress has been made in some areas, eg alcohol tariffs but concession on agriculture are causing issues.
  • Canada: Many issues have been resolved … except agriculture … and it is progressing well.  EU wants to include financial services in the agreement.  18-24 months may see a conclusion.
  • ASEAN: Singapore agreed.  Vietnam on the 5th Round of talks in October 2013 and ready to make concessions could be resolved within 18 months.  Thailand, negotiations continue. Malaysia, the negotiations were paused in 2012 due to a general election hopefully they will restart in 2014, especially as Malaysia will lose GSP status 2014.
  • Mercosur: unlikely for Brazil negotiating unilaterally from its other partner countries.
  • ANDEAN: Peru and Colombia agreements in place.  Ecuador interested in joining the FTA.
  • Central America:  Negotiations with Honduras, Nicaragua and Paraguay are underway with Guatemala joining soon.  There have been successes in the areas of vehicle and pharmaceutical products.
  • European Neighbourhood: Ukraine the Deep & Comprehensive Trade Agreement (DCTA) was completed in 2012 but no FTA to date.  Moldova and Georgia also under a DCTA.  Negotiations with Armenia have been terminated as Armenia has decided to join the Russian Customs Union.
  • China: EU will start discussion with China on the 21stNovember 2013 to negotiate a Bilateral Investment Agreement.

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4. US publishes long-awaited interim final rule on ITAR brokering provisions: On August 26, 2013, the US State Department’s Directorate of Defense Trade Controls (DDTC) published an Interim Final Rule that makes significant changes to the current definitions of “broker” and “brokering activities” in Part 129 of the International Traffic in Arms Regulations (ITAR). The much-anticipated Interim Rule will go into effect on October 25, 2013. The ITAR’s brokering provisions implement the Arms Export Control Act’s requirement that persons engaged in the business of brokering arms be registered with the State Department. As currently written, the brokering provisions are generally considered ambiguous because they fail to precisely define those activities that constitute “brokering activities.” As such, questions as to what triggered the requirements of the ITAR brokering provisions, including requirements for registration, reporting, and obtaining “prior approval,” were pervasive under the old rules. The revisions contained in the Interim Final Rule have been long-awaited by the trade community. Since 2003, the State Department has indicated that DDTC would consider modifications to Part 129. Draft revisions were released in 2009 and again in 2011. Finally, in late 2012, DDTC released yet another set of draft revisions to the Defense Trade Advisory Group (DTAG), which are reflected in the key changes contained in the current Interim Final Rule.
>> View the original DDTC public notice 8437 from August 26, 2013, for full details

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