In our legal advisory work, we are seeing that questions concerning the non-preferential origin of goods are currently arising in many companies, which is why we would like to address this topic here.<\/p>\n\n\n\n
Non-preferential origin is becoming increasingly important in customs and foreign trade law. It is relevant to the question of whether anti-dumping duties are levied, or whether other trade defence measures, tariff quotas, and trade embargoes apply. Because of its relevance to the applicability of such trade policy measures, it is also referred to as trade policy origin. It also plays a role in the area of so-called sustainability regulations, for instance with regard to the applicability of a particular regime (Article 2(4) and (5) of Regulation (EU) 2023\/956, CBAM) or with regard to due diligence requirements (Article 2 Nr. 23 and Article 13 of Regulation (EU) 2023\/1115, EUDR).<\/p>\n\n\n\n
Non-preferential origin is a mandatory element of the declaration for release for free circulation. It can have enormous financial consequences where the question of a product’s non-preferential origin determines whether anti-dumping measures apply or whether tariff quotas can be made use of. We therefore consider it important to highlight a number of key facts:<\/p>\n\n\n\n
1.<\/strong> The legal basis for determining trade policy origin is found in the Union Customs Code (UCC, Unionszollkodex<\/em>) (Articles 59 to 63 UCC) and the supplementing legal acts (Articles 31 to 36 of the UCC Delegated Regulation, UCC DA, and Articles 57 to 59 of the UCC Implementing Regulation, UCC IA). The rules on non-preferential origin apply, on the import side<\/strong>, to the application of the Union measures<\/strong> referred to in Article 59 UCC. They apply to the export of goods only in very specific and limited cases<\/strong>, namely where Union measures exist that are linked to the origin of goods, as is the case with export <\/strong>refunds. Every third country may apply its own non-preferential rules of origin. However, Article 61(3) UCC opens up the possibility that a proof of origin may be issued within the Union in accordance with the rules of origin applicable in the country or territory of destination, where this is necessary for trade purposes.<\/p>\n\n\n\n 2. As regards the “standard case” of determining origin under Union law, the basic rule in Article 60 UCC first distinguishes, for the purpose of acquiring origin, according to whether one country (paragraph 1) or more than one country (paragraph 2) was involved in the manufacture of a product. In our modern, globally divided world, paragraph 2, the involvement of more than one country in the manufacturing process, is the standard case, and one that frequently turns into a problem case. This newsletter will not go into the individual rules on the acquisition of origin in detail. Readers wishing to explore this further are referred to the relevant specialist literature, as well as to the EU Commission’s very informative guidance <\/a><\/strong>document on non-preferential rules of origin, which is also available in different languages. There is, however, one aspect we would like to highlight here: where more than one country is involved in the manufacture of a product, Article 32 of the UCC DA defines the concept of “last substantial processing or working” from the basic rule in Article 62(2) UCC, referring in this context to Annex 22-01 of the UCC DA. For certain products, this Annex contains so-called primary rules, which are reminiscent of the processing rules found in preferential trade agreements. Where a primary rule is not met, a residual rule applies for the purpose of determining the origin of the product concerned. It cannot be emphasised often enough that Annex 22-01 UCC DA applies ONLY <\/strong>to the goods expressly listed there. For goods not listed in Annex 22-01<\/strong>, origin must be determined on a case-by-case basis, by examining, under the basic rule in Article 60(2) UCC, whether the manufacturing process carried out in the third country constitutes the last substantial, economically justified processing or working, carried out in an undertaking equipped for that purpose, and resulting in the manufacture of a new product, or representing an important stage of manufacture. We stress this because, in cases of doubt, the customs administration frequently falls back on the non-legally-binding list rules<\/strong> published on the EU Commission’s website<\/a><\/strong>, which set out non-binding list rules for goods NOT covered by Annex 22-01 UCC DA. The Court of Justice of the European Union has pointed out, in various decisions, that these rules are not legally binding<\/strong> and must under no circumstances conflict with the principle enshrined in Article 60(2) UCC. This is worth bearing in mind should discussions arise with the customs authorities concerning the question of non-preferential origin.<\/p>\n\n\n\n 3.<\/strong> Since trade policy origin is stated in the customs declaration, the importing company, as the declarant, is responsible for the accuracy of this information. Where there are reasonable doubts as to the origin, the company must be able to prove the origin. The proof of origin is not subject to any special conditions; any evidence suitable for demonstrating the declared origin may be submitted. It should be noted that importers should not rely solely on a certificate of origin issued in the third country.<\/strong> Such a certificate is, as a general rule, not recognised as sufficient proof of origin. The Commission’s guidance document explains this on the ground that such a certificate of origin contains no information as to the accuracy of the declared non-preferential origin and merely provides an indication of the place of production or the provenance of the goods (see the guidance document<\/a><\/strong>, page 19). Only in specific cases, where special non-preferential import arrangements apply to products from third countries (Articles 57 to 59 UCC IA), is a certificate of origin issued by the competent authority recognised, on the basis of administrative cooperation between the countries involved. It is entirely legitimate for the customs authorities to be able to verify the trade policy origin stated in a customs declaration. It is problematic, however, and questionable from a rule-of-law perspective, where customs authorities alter the declared origin in the course of clearance without providing sufficient and comprehensible reasons for doing so, and then levy duties, such as anti-dumping duties, on that basis. In our advisory practice, we repeatedly encounter cases of this kind. It is often advisable to challenge the resulting import duty assessment notice by way of an objection.<\/p>\n\n\n\n If you have any questions on this topic, please feel free to get in touch.<\/p>\n\n\n\n