Customs Information Paper 10 (2017): trading between the EU and Canada
Trading between the EU and Canada. Guidance on the preferential arrangements part of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.
This Customs Information Paper (CIP) brings to your attention the introduction of the EU and Canada Comprehensive Economic and Trade Agreement (CETA), specifically the preferential arrangements contained therein.
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.
Full details on the preferential arrangements can be found within the Official Journal L11/2017 at ‘Protocol on rules of origin and origin procedures’, which runs from page 465 to 566 of the agreement. All page numbers shown in this CIP refer to this document.
In Official Journal L11/2017, dated 14 January 2017, the EU published full details on the EU and Canada CETA.
As part of this agreement certain goods, either originating in Canada for import into the EU or originating in the EU for export to Canada, may be eligible for preferential duty rates in the importing party if the required conditions are met, the basic details of which are explained in this CIP.
The agreement has now been ratified by the Canadian government and HM Revenue and Customs (HMRC) is taking steps to ensure the preferential rates provided for within the ‘Protocol on rules of origin and origin procedures’ section of the agreement are available on the CHIEF system when it enters into force.
Entry into force of this agreement is expected to be 1 July 2017 although this has yet to be confirmed and it’s recommended that you check the EU TARIC, the UK Online Trade Tariff and the Official Journals for updates.
3. Preferential duties on goods imported into the EU
Details on the new preferential duties and the goods to which they apply can be found in the tariff elimination schedules. These duties will apply to consignments accompanied by an appropriate proof of origin, details of which are shown below.
The elimination schedule for duties on goods originating in Canada and being imported into the EU begins on page 223.
Import duty will be eliminated on goods according to these staging categories, which are detailed on page 202:
- A - duty immediately reduced to zero
- B - duty to be reduced to zero in equal cuts over 4 years
- C - duty to be reduced to zero in equal cuts over 6 years
- D - duty to be reduced to zero in equal cuts over 8 years
- E - duty is exempt from tariff elimination
- S - duty to remain the same for 5 years after which they will be reduced to zero in equal cuts over 3 years
- AV0 + EP - ad valorem duty to be reduced to zero, specific duty determined by the entry price system
For example, Brie and Brie types in Tariff Heading 0406 90 31 originating in Canada is in staging category A which states:
‘3(a) duties on originating goods provided for in the items in staging category A in a Party’s Schedule shall be eliminated on the date this agreement enters into force.’
Hence the duty rate for all headings in staging category A will be nil from 15 June 2017.
However, Drilling Platforms, ‘Other’ in Tariff Heading 8905 20 19 originating in Canada is in staging category B which states:
‘3(b) duties on originating goods provided for in the items in staging category B in a Party’s Schedule shall be removed in four equal stages beginning on the date this agreement enters into force, and such goods shall be duty-free, effective January 1 of year 4’.
Hence for this heading the duty base rate will start at 20%, reducing to 15% on implementation of the agreement (year 1), 10% with effect from 1 January 2018 (year 2), 5% with effect from 1 January 2019 (year 3), then nil from 1 January 2020 (year 4).
You can also check the applicable duty rates on the EU TARIC or the UK Online Trade Tariff.
4. Preferential duties on goods exported to Canada
Goods originating from the EU and being exported to customers in Canada may also benefit from similar reductions. As with imports into the EU, for your customers to benefit from these reductions, consignments must be accompanied by an appropriate proof of origin.
The elimination schedule for these movements begins on page 213. The same staging categories apply.
5. Rules of origin
In order 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 which begin on page 466.
In effect this means that goods can only qualify for preferential duties if they have:
(a) been wholly obtained within the meaning of Article 4 of the Protocol (page 467)
(b) been produced exclusively from originating materials, or
(c) have undergone sufficient production within the meaning of Article 5 and Annex 5 of the Protocol (pages 468 and 491 respectively).
A product that does meet the rules shall be considered originating only if, subsequent to that production, the product:
(a) doesn’t undergo further production or any other operation outside the territories of the parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the product to the territory of a party
(b) remains under customs control while outside the territories of the parties.
The storage of products and shipments or the splitting of shipments may take place where carried out under the responsibility of the exporter or of a subsequent holder of the products and the products remain under customs control in the country or countries of transit.
Please refer to the Protocol on rules of origin and origin procedures, section B for full details (page 466).
6. Proof of origin for imports into the EU
Entitlement to preference duty is subject to the presentation of proof that the goods meet the rules of origin.
For imports into the EU under this agreement the proof of origin must be in the form of an ‘origin declaration’. This declaration 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 and should contain the Canadian exporter’s business number.
The text of the origin declaration can be found in Annex 2 of the Protocol on page 485.
To claim preference the proof of origin must be declared in box 44 of your CHIEF declaration using one of the document codes listed below:
- N864 - invoice declaration or origin declaration made out by any exporter on the invoice or any other commercial document (excluding the Bill of Lading) for originating goods where the total value exceeds €6,000
- U162 - Invoice declaration or origin declaration made out by an exporter on the invoice or any other commercial document (excluding the Bill of Lading) for originating goods where the total value is less than €6,000
These codes must be declared with a status code in the range used for N954 and the invoice and document reference number. See the UK Trade Tariff: document, certificate and authorisation codes for harmonised declarations.
Box 36 must include a preference code in the 300 series and box 47c must be coded ‘A’.
7. Proof of origin for exports to Canada
In order for a Canadian importer to claim preference under this agreement goods originating in and exported from the EU into Canada must also be accompanied by an origin declaration on an invoice, or any other commercial document (excluding a Bill of Lading), describing the originating product in sufficient detail to enable its identification.
The text of the origin declaration can be found in Annex 2 of the Protocol on page 485.
For consignments where the total value exceeds €6,000 you’ll have to be a registered exporter in order to make an origin declaration and you must include your registered exporter number (as the customs authorisation number) in your origin declaration. Please see the following section for further information.
For consignments where the total value falls below €6,000, if you hold a registered exporter or approved exporter number you must still include this in your origin declaration. If you don’t hold one of these numbers then the reference to the customs authorisation number on the origin declaration must be deleted or left blank.
Exporters who are registered, or approved exporters holding a signature waiver, aren’t required to sign their origin declarations.
8. Registration of UK exporters to Canada
Under this agreement, for consignments being exported to Canada valued above €6,000, to complete a valid origin declaration the EU exporter must be a registered exporter.
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 Canada during 1 December 2015 to 1 December 2016.
You must check if you have been pre-registered by checking the Registered Exporters database.
Your code 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.
If you aren’t on the database but hold an approved exporter number you may use that until you’re registered. Please note that approved exporter numbers can’t be under this agreement after 31 December 2017. If you intend to continue exporting to Canada and want your customer to claim preferential duty, you must ensure you hold a registered exporter number by this date.
Approved exporter numbers will continue to be valid after 31 December 2017 for other existing agreements.
If you export to Canada and find you have not been pre-registered 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.
9. Payment and repayment of duty
The EU TARIC, UK Online Trade Tariff and CHIEF can be used to check the most up to date duty rates. In the meantime, there’s a risk you could overpay duty on products eligible for preference under the new arrangements.
If you imported and released to free circulation goods eligible for preferential duty on or after the date of implementation and pay the full duty rate shown in the tariff then you may make a claim for repayment by either:
emailing the National Duty Repayment Centre (NDRC) at: email@example.com
filling in the online form C285 Import and export: application for repayment or remission
Imports released to free circulation which aren’t eligible to preferential duty must pay the full duty and will be subject to post clearance action.
10. Contact details
Any questions regarding the implementation of these preferential arrangements in the UK should be emailed to: firstname.lastname@example.org.
Issued on 20 June 2017 by Customer Strategy and Tax Design, Customs Directorate, HMRC.