CUSTOMS INFORMATION PAPER (13) 49
Tariff Preference: Implementation of Reciprocal Preferential Trade Agreement between EU - Central America
Who should read: / Everyone involved with importing from or exporting to Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama)What is it about: / The entry into force on 1 August 2013 of a reciprocal preferential trade agreement between the EU and Central America.
When effective: / 1 August 2013
Extant until/ Expires / Until further notice
1. Introduction
The European Union has concluded a reciprocal preferential trade agreement with three of the six Central American countries (Honduras, Nicaragua and Panama see Official Journal (OJ) L204 31 July 2013). The provisions of the agreement apply to eligible products released to free circulation in the EU and these Central American signatory countries, on or after 1 August 2013 (the date of provisional entry into force of the trade aspects of the Agreement), and are covered by a proof of preferential origin (EUR1 Movement Certificate or invoice declaration) issued in the EU or Central America on or after that date.
However the trade provisions will not initially apply to Costa Rica, El Salvador and Guatemala which have yet to finalise formal signatures.
The agreement has been published in the European Union Official Journal (OJ) L346 dated 15th December 2012, which is published on the European Commission website.
Reference numbers quoted are for the agreement unless specifically stated.
2. Tariff elimination schedules
Some import tariffs will be removed immediately whilst others will be reduced on a staged basis eventually to nil. Details of how to find the correct tables of tariff elimination schedules and corresponding tariff elimination staging categories are below. You should also check the additional notes on staging categories.
The following link to the EU TARIC website allows you to check the duty rates by inserting your tariff headings.
How to identify the tariff elimination schedule appropriate to your product.
Products originating in the EU for export to Central America
The tariff elimination table for products originating in the EU begins on page 118. Find your product heading and note the tariff elimination staging category. Details of the Tariff Elimination staging categories begin on page 109.
For example asparagus in Tariff Heading 0709 20 00 originating in the EU is in staging category A which states:
“3(a) duties on goods provided for in the items in staging category A in a Party's Schedule shall be eliminated entirely and such goods shall be duty-free on the date of entry into force of this Agreement;”
Hence the duty rate for all headings in staging category A will be nil from 1 August.
However, sweetcorn in Tariff Heading 0709 90 60 originating in the EU is in tariff elimination staging category B which states:
“3(b) duties on goods provided for in the items in staging category B in a Party's Schedule shall be removed in three equal annual stages beginning on the date of entry into force of this Agreement, and such goods shall be duty free, effective January 1 of year three;”
Hence for this heading start with the base rate of 9.4 EUR/100 kg/net, reducing to 6.27 EUR/100 kg/net from 1 August 2013 (year one), 3.13 EUR/100 kg/net from 1 January 2014 (year two) then nil from 1 January 2015 (year three).
Products originating in Central America (not including Panama) for export to EU
The tariff elimination schedule for products originating in Central America is on page 719 of the agreement, find your product heading and note the tariff elimination staging category. Details of the corresponding tariff elimination staging categories begin on page 109 of the agreement.
For example cabbage lettuce (head lettuce) in Tariff Heading 0705.11.00 originating in Central America is in tariff elimination staging category A which states:
“(a) duties on goods provided for in the items in staging category A in a Party's Schedule shall be eliminated entirely and such goods shall be duty-free on the date of entry into force of this Agreement;”
Hence the duty rate for all headings in staging category A will be nil from 1 August 2013.
However, Ostrich eggs in Tariff Heading 0407.00.20 originating in Central America are in tariff elimination staging category C which states:
“3(c) duties on goods provided for in the items in staging category C in a Party's Schedule shall be removed in five equal annual stages beginning on the date of entry into force of this Agreement, and such goods shall be duty free, effective January 1 of year five;”
For this heading start with the base rate CA of 10 percent reducing to 8 percent from 1 August 2013 (year one), 6 percent from 1 January 2014 (year two), 4 percent from 1 January 2015 (year three), 2 percent from January 2016 (year four) and nil from 1 January 2017 (year five). However the additional notes 2 a, and 2b below also needs to be considered because there is also a base rate for each country:
“2(a) if by applying the staging categories to the CA base rate, a tariff higher than the base rate of one of the Republics of the CA Party [Central American signatory country] is obtained, the applicable tariff for that Republic shall be its base rate;
2(b) if by applying the staging categories to the CA base rate, a tariff lower or equal to the base rate of one of the Republics of the CA Party is obtained, the applicable tariff for that Republic shall be the result of applying the staging category to the CA base rate.”
Products originating in Panama for export to EU
There is a separate tariff elimination table for products originating in Panama which begins on page 1302 of the agreement. The corresponding tariff elimination staging categories are on page 109. (The above note 2a and 2b also applies).
3. Special treatment on bananas
For HS heading 0803.00.19 (fresh Bananas, excluding plantains) there is a separate table Appendix 3 on page 117, listing the preferential customs duty rates and (starting from the 1 August 2013) the dates from which they are applied. Please note duty rates for periods prior to 1 August 2013 cannot be retrospectively applied.
4. Annex II - Concerning Definition of ‘originating products and methods of Administrative Co-operation begins on page 1803 and includes:
Cumulation of origin Article 3 (page 1805)
Wholly obtained products Article 4 (page 1806)
Sufficiently worked or processed products Article 5 (page 1807)
Insufficient working or processing Article 6 (page 1807)
Unit of qualification Article 7 (page 1808)
Accessories spare parts and tools Article 8 (page 1808)
Sets Article 9 (page 1808)
Neutral elements Article 10 (page 1808)
Proof of origin Articles 14 - 26 (page 1809)
Arrangements for administrative co-operation Article 29 (page 1813)
Ceuta and Melilla Article 34 page 1814
Appendix I – Introductory Notes to Annex II (page 1815)
Appendix 2 – List of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status (Rules of Origin) (page 1820)
Appendix 2A = Addendum to the list of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status (Rules of Origin) (page 1885)
5. Payment/Repayment of duty
The HMRC printed Tariff, online UK Trade tariff at www.gov.uk and CHIEF (Customs Handling of Import and Export Freight) Entry processing system will be updated in due course. In the meantime, there is a risk you could overpay duty on products eligible for preference under the new arrangements.
If you have imported (released to free circulation) any of the qualifying products on or after 1 August 2013, and have paid the full duty rate shown in the tariff, then you may:
make a claim for repayment by either contacting the National Duty Repayment Centre (NDRC) Tel: 01304 664523 (open Mon-Fri between 9am and 3pm), or by downloading Form C285 (application for repayment/remission) from our website hmrc.gov.uk or
until CHIEF is updated, you may manually override the system and input the correct preferential rate of duty payable
Entitlement to preference, both inside and outside of any Tariff Quotas, is subject to normal requirements including the need to hold a valid proof of preferential origin (EUR1 Movement Certificate or invoice declaration) and compliance with the appropriate preferential rules of origin.
6.GSP
Honduras and Nicaragua are currently eligible for the special incentive arrangement for sustainable development and good governance (also known as GSP+) under article 8 of EC regulation 732/2008, Panama is a standard GSP beneficiary country. Each of these countries will keep their current GSP status at least until 31 December 2013 or when the current GSP arrangements expire.
7. Contacts
Ken Sherlock
HMRC
Customs Directorate, Customs Duty Liability
10th floor south east Alexander House
21 Victoria Avenue
Southend on Sea
SS99 1AA
Fax 01702 367342
e-mail:
Issued on the 9 August 2013 by the JCCC Secretary HMRC, Customs Directorate.
If you have a question about the content of this paper please use the details provided in the Contacts section. For general HMRC queries speak to the VAT, Customs helpline on Tel 0300 200 3700.
To find out what you can expect from us and what we expect from you go to www.hmrc.gov.uk/charter and have a look at Your Charter