Preferential trade deal between the EU and Japan (CIP2/2019)

Details of Economic Partnership Agreement between Japan and EU.

This Customs Information Paper (CIP) introduces the EU and Japan Economic Partnership Agreement, specifically the preferential arrangements.

An outline of the preferential arrangements is included in this CIP together with details on how to declare preferential imports on the Customs Handling of Import and Export Freight (CHIEF) system.

Background

Full details on the preferential arrangements can be found within the Official Journal L 330 27 December 2018. The rules of origin and origin procedures are set down in Chapter 3 page 21. All page numbers shown in this CIP refer to this document. For the version showing page numbers select language and formats available then click on English PDF.

As part of this agreement certain goods, either originating in Japan for import into the EU or originating in the EU for export to Japan, may be eligible for preferential duty rates in the importing party if the required conditions are met, the details are explained in this CIP.

The agreement has now been ratified by the Japanese government and the EU. The preferential rates provided for within the agreement will be available on the CHIEF system when it enters into force on 1 February 2019.

Preferential duties on goods imported into the EU or exported to Japan

Elimination and reduction schedule for imports to the EU

The elimination and reduction schedule for duties on goods imported to the EU is contained in Annex 2-A beginning on page 173. The notes for the schedule for imports to the EU are shown in Part 2, Section A (pages 173 to 174) and are replicated below.

These duties will apply from the date this agreement comes into force to consignments that satisfy all of the conditions to qualify for preference, details of which are shown further on.

Section A

Notes for the schedule of the EU.

For the purposes of Article 2.8, the following categories indicated in Column ‘Category’ in the Schedule of the EU in Section B apply:

(a) Customs duties on originating goods classified under the tariff lines indicated with ‘B3’ shall be eliminated in four equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(b) Customs duties on originating goods classified under the tariff lines indicated with ‘B5’ shall be eliminated in six equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(c) Customs duties on originating goods classified under the tariff lines indicated with ‘B7’ shall be eliminated in eight equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(d) Customs duties on originating goods classified under the tariff lines indicated with ‘B10’ shall be eliminated in 11 equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(e) Customs duties on originating goods classified under the tariff lines indicated with ‘B12’ shall be eliminated in 13 equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(f) Customs duties on originating goods classified under the tariff lines indicated with ‘B15’ shall be eliminated in 16 equal annual instalments beginning on the date of entry into force of this Agreement, and such goods shall thereafter be free of any customs duty.
(g) Customs duties on originating goods classified under the tariff lines indicated with ‘EU10’ shall remain at the base rate from the first year to the seventh year and be eliminated in four equal annual instalments beginning on the first day of the eighth year, and such goods shall thereafter be free of any customs duty.
(h) Customs duties on originating goods classified under the tariff lines indicated with ‘X’ are excluded from reduction or elimination in this Agreement.
(j) Customs duties (including the agricultural element of duty (marked as ‘EA’) where this element is mentioned as part of the base rate) on originating goods classified under the tariff lines indicated with ‘R7’ shall be reduced by the percentage indicated in the Schedule in eight equal annual instalments beginning on the date of entry into force of this Agreement.
(k) Customs duties (including the agricultural element of duty (marked as ‘EA’) where this element is mentioned as part of the base rate) on originating goods classified under the tariff lines indicated with ‘R10’ shall be reduced by the percentage indicated in the Schedule in 11 equal annual instalments beginning on the date of entry into force of this Agreement.
(I) The ad valorem component of the customs duties on the originating goods classified under the tariff lines indicated with ‘entry price’ shall be eliminated upon the date of entry into force of this Agreement; the tariff elimination shall only apply to the ad valorem component of the customs duties; the specific duty component of the customs duties resulting from the entry price system on these originating goods shall be maintained.
2 The treatment of originating goods classified under the tariff lines indicated with ‘S’ in Column ‘Note’ in the Schedule of the EU in Section B shall be subject to review pursuant to paragraphs 3 and 4 of Article 2.8.

 

For example, heading 4011 3000 Rubber and articles thereof of a kind used on aircraft (staging category B3 originating in Japan), section A states customs duties on originating goods classified under the tariff lines indicated with ‘B3’ shall be eliminated in four equal annual instalments beginning on the date of entry into force of this Agreement. For the purposes of Annex 2A part 2 a year is defined as:

‘with respect to the first year, the 12-month period from the date of entry into force of this Agreement and, with respect to each subsequent year, the 12-month period after the end of the previous year’ Annex 2A Part 1 (3) (a).

For this heading from 1 February 2019 (year one) the duty rate will be 3.4%, from 1 February 2022 (year four) 0%.

You can check the applicable duty rates on the EU TARIC or the UK OnlineTrade Tariff.

Elimination and reduction schedule for exports to Japan

The elimination and reduction schedule for exports to Japan is in Annex 2A part 3 beginning on page 234. For this a year is defined as:

‘in the case of part 3, with respect to the first year, the period from the date of entry into force of this Agreement until the following 31 March and, with respect to each subsequent year the 12 month period starting on 1 April of that year.’ Annex 2A part 1 (3)(b).

The notes on these staging categories are in section A beginning on page 234.

Rules of Origin

To claim preferential duty under this agreement a product must be deemed as originating in the territory of the exporting party, in accordance with the rules of origin and origin procedures which are defined in Chapter 3 Section A (pages 21 – 32). The introductory notes to product specific rules of origin can be found in Annex 3-A (page 634) and the rules in Annex 3-B (page 639).

Proof of origin

Entitlement to preference duty shall be based on either:

a) a statement on origin that the product is originating made out by the exporter

b) the importer’s knowledge that the product is originating

The text for a statement on origin is in Annex 3-D of the agreement on page 680.

The footnote reference numbers have been printed incorrectly in the text of the English version of the statement on origin (page 681-682). In particular:

  • period from to should refer to footnote 1 not 3

  • exporter reference number should refer to footnote 2 not 4

  • origin of the product should refer to footnote 3 not 5

  • origin criteria used should refer to footnote 4 not 1

  • place and date should refer to footnote 5 not 1

Footnote 2 states:

‘Indicate the reference number through which the exporter is identified. For the European Union exporter, this will be the number assigned in accordance with the laws and regulations of the European Union (the Registered Exporters number or REX number). For the Japanese exporter, this will be the Japan Corporate Number. Where the exporter has not been assigned a number, this field may be left blank.’

The statement on origin must be provided on an invoice, or any other commercial document (excluding a Bill of Lading), describing the originating product in sufficient detail to enable its identification. It is valid for twelve months from the date it was made out.

Importer knowledge

‘Importer’s knowledge’ allows the importer to claim preferential tariff treatment based on their own knowledge about the originating status of imported products. This knowledge is based on information in the form of supporting documents or records provided by the exporter or manufacturer of the product, which must be in the importer’s possession.

This information provides valid evidence that the product qualifies as originating. As the importer is making a claim using their own knowledge, no statement on origin is used and no exporter or producer needs to be identified, or take any action relating to the preferential origin of goods in the exporting Party.

Box 36 must include a preference code in the 300 series and box 47c must be coded ‘A’.To claim preference the proof of origin must be declared in box 44 of your CHIEF declaration using the codes listed below:

  1. Where the claim to preferential tariff treatment is based on a ‘statement of origin’ for a single shipment, enter the code ‘U110’
  2. Where the claim to preferential tariff treatment is based on a ‘statement of origin’ for multiple shipments of identical products, enter the code ‘U111’

These codes must be declared with one of these status codes AE, AF, AG, AP, AS, AT, GE, GP, HP, JE, JP, LE, LP, UA, UE, UP, US, XA, XB and the commercial document reference number.

Where the claim to preferential tariff treatment is based on ‘importer’s knowledge’, enter the code ‘U112’. Enter status code JP

Status codes are defined in the UK Tariff Appendix C10.

Statement on origin for exports to Japan with consignment value exceeding €6,000

Only Registered EU exporters may issue statements on origin for consignments with a value exceeding €6,000 and they must include their registered exporter (REX) number as the exporter reference number in the statement on origin. As required by EU Regulation 2015/2447 Article 68(4).

Registration of UK exporters to Japan

In preparation HMRC has taken the step of identifying and pre-registering all UK exporters holding a valid Economic Operator Registration and Identification (EORI) number who exported goods to Japan during 2018.

If you intend to export to Japan you should check whether you have been pre-registered by checking the Registered Exporters database.

Your REX number will be formatted ‘GBREX’ followed by your EORI number followed by ‘X’. For example, GBREX123456789000X. If you’ve been registered then, on entering your number, the system will confirm that it’s valid. You only need to register once for REX.

If you export to Japan and find you have not been preregistered you can register by completing the online application you’ll need:

  • your EORI number
  • your approved exporter number (if you have one)
  • the first 2 or 4 digits of the commodity codes of the goods that you trade in

As part of your application you’ll also need to provide an appropriate contact point within your business who is empowered to answer any queries HMRC may have relating to your application or registration.

Contact

Any questions regarding the implementation of these preferential arrangements in the UK should be emailed to: dutyliability.policy@hmrc.gsi.gov.uk.

More information

For general HMRC queries speak to the VAT, Excise and Customs Helpline on Telephone: 0300 200 3700.

Your Charter explains what you can expect from us and what we expect from you.

Published 29 January 2019

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