There are different sets of origin rules depending upon the trade policy that is being implemented. The legislation covering rules of origin also varies from product to product and country to country and may be dependent on the type of processing involved. An imported product may have different origins for preferential tariff and non-preferential tariff purposes. It is important to get it right to determine whether a license is required, whether a preferential rate of duty can be claimed, whether anti-dumping duties apply or whether certain documentation is needed / may be issued.
Erroneous declarations of origin probably account for the largest back duty demands issued by HMRC.
The EU allows goods from certain countries to be imported duty free or at reduced rates of duty, so as to encourage exports from those countries and to promote international trade. One system is known as the Generalised System of Preferences, or GSP, allowing duty free access for the least developed countries in the world. The GSP arrangements are enshrined in the Union Customs Code.
Preferential duty arrangements also apply to many other countries, or groups of countries, which the EU seeks to favour for political or economic reasons. These arrangements will have been negotiated as part of a bi-lateral free trade agreement and, in some cases, reduced duty or duty free importation may be limited to certain tariff headings but only if the goods are deemed to originate in the country concerned. Detailed rules of origin for goods based on their tariff coding will have been negotiated in the trade deal.
Anyone importing goods at a reduced rate with a preferential certificate of origin such as a GSP Form A or EUR 1, must ensure that it is a valid document, ie, that the goods comply with the relevant rules of origin in the trade agreement between the EU and the exporting country.
Since 1st January 2017, the EU has been phasing in the Registered Exporter System (REX) which is a self-certification system that will replace the requirement for GSP Forms A certified by the exporting authorities.
It can be difficult to determine the origin of goods that have been manufactured in more than one country or made from components from various countries. Whereas the general rule of ‘country of last substantial process’ is adopted by the EU, the Union Customs Code contains a set of rules similar to those used for tariff preferences.
It is important to ensure compliance with the non-preferential origin rules when completing documentation, especially if the goods could, for example, potentially be liable to anti-dumping duty.