Let sleeping dogs lie: Who is ready for REX?
04 January 2017
Members of the Institute of Export & International Trade (IOE&IT), the professional membership body representing and supporting the interests of everyone involved in importing, exporting and international trade, know that making the effort to decipher the complex terms, coverage and rules of origin for trade agreements can allow them to leverage the substantial cost-savings that they offer, whilst maintaining highest levels of compliance. It comes, therefore, as no surprise that these leading global players have been buzzing with questions on the Registered Exporters (REX) System. We interviewed the Young President of the IOE&IT, Mr. Arne Mielken and asked some burning questions on REX.
IOE&IT: Arne, what is REX?
Arne: Europeans, in particular Austrians and Italians, are very fond of Rex. Kommissar / Il commissario Rex, was, of course, a much loved and admired German Shepherd TV police dog, who solved weekly crimes for the homicide unit of Vienna Kriminalpolizei or the Carabinieri in Rome. The show stopped in 2015. Only two years later, in 2017, REX is reborn. For those in International Trade, REX now has a less generous and exciting meaning. No more crime solving or barking for that matter. Now, REX is a) global, b) complex, c) another beautiful invention of the European Union to make the life of the international trade community easier (or some say, more difficult!).
IOE&IT: What has happened on 1 Jan 2017 in the EU as regards REX?
Arne: On 1 January 2017, the EU introduced formally the Registered Exporters (REX) System. This is a system of self-certification, which will eventually replace the requirement for GSP certificates on a phased basis by 2020. Currently imports from GSP beneficiary countries are entitled to preference if accompanied by a GSP certificate Form A or an appropriate invoice declaration.
IOE&IT: But the UK is leaving the EU….
Arne: HMRC has issued Customs Information Papers (CIP) detailing how the Registered Exporters (REX) System will work in the UK. Until the authorities change it, REX applies. After Brexit, we will see if the system has proven its worth to be maintained. What is clear is that when a country leaves the EU, it leaves its GSP system and REX as well. It may continue to use a GSP system and a REX system but this would be a UK only one, unless agreed otherwise.
IOE&IT: Why does this matter to my business? Some of our clients are not even situated in the EU?
Arne: REX is particularly relevant if you are an exporter to the EU and based in “GSP beneficiary countries”. The EU’s “Generalised Scheme of Preferences” (GSP) allows developing countries to pay fewer or no duties on their exports to the EU. This gives them important access to EU markets and should, therefore, contributes to their economic growth.
IOE&IT: Which countries are included in the GSP scheme?
Arne: This can vary as adjustments are made to take account of economic development or their inclusion in a different trade deal with the EU. The EU Commission publishes an up-to-date list of GSP eligible countries. As such, you will see that as of 1 January 2017, Iraq, the Marshall Islands, Tonga and Fiji lost their benefit because they are now deemed ”upper-middle income” countries. Cameroon and Georgia lost their GSP status because of Free Trade type arrangements they now enjoy with the EU.
IOE&IT: Do EU GSP tariff benefits cover all products exported from a GSP-eligible country?
Arne: Unfortunately not. Some industries in GSP countries are doing much better than others, so this is also taken into account when deciding on granting unilateral preferential treatment. As such, some product groups have also lost GSP preferences, even though the country overall remains eligible. Sounds complex? Don’t worry. To help you deal with any GSP issues you come across, as an IOEIT member, our Technical Help for Exporters Helpline service comes as part of your membership package. Together we can identify all products which have or have lost their GSP benefit for particular products. For 2017, for example, products groups which lose their GSP preference include mineral products, inorganic/organic chemicals, textiles, iron/steel and its articles, other base metals and their articles, motor vehicles, bicycles, aircraft and spacecraft, ships and boats originating in India. For Indonesia, live animals and animal products (excluding fish), animal or vegetable oils, fats and waxes lose GSP preference. Kenya is affected for live plants and floricultural products and for Ukraine, the list of products includes railway and tramway vehicles and products, animal or vegetable oils, fats and waxes.
IOE&IT: What do exporters of GSP countries have to do as regards REX?
Arne: They will have to register with their competent authorities who will issue them with an individual REX number. In order for preference to be claimed on imports into the EU, the REX number must be declared together with a statement on origin unless the value of the consignment falls below €6000.
IOE&IT: When will I get this REX number?
Arne: A period of transition will allow exporters to be registered, as HMRC has already detailed in its CIP. Until a GSP beneficiary country is officially implementing REX, please note that GSP certificates and invoice declarations may still be presented to claim preference. Where a GSP certificate or invoice declaration is presented the existing procedures and codes still apply.
IOE&IT: Which countries have introduced REX as of 1 January 2017?
Arne: Angola, Burundi, Bhutan, Democratic Republic of Congo, Central African Republic, Comoros, Congo, Cook Islands, Djibouti, Ethiopia, Micronesia, Equatorial Guinea, Guinea Bissau, India, Kenya, Kiribati, Laos, Liberia, Mali, Nauru, Nepal, Niue Island, Pakistan, Solomon Islands, Sierra Leone, Somalia, South Sudan, Sao Tomé & Principe, Chad, Togo, Tonga, Timor-Leste, Tuvalu, Yemen, Zambia. Other countries will follow in 2018 & 2019.
IOE&IT: What do traders in the EU do as regards REX?
Arne: If your business exports raw materials/components to a GSP beneficiary country, which has implemented REX to be incorporated into a product, that is then imported into the EU under GSP (known as bilateral cumulation arrangement), it is likely that you also must register with your local customs authorities within a certain time period of that country introducing REX. You may also need to register if you send the GSP goods on to other EU Member States, Switzerland or Norway.
IOE&IT: What do importing/exporting businesses need to register with local customs authorities?
Arne: You are likely to need to provide your EORI number and your Approved Exporter number, if you have one.
IOE&IT: How can an importers/exporter check if an exporter in a GSP country has already registered for REX?
Arne: The EU will be providing access to a central database containing the details of all the REX traders within the EU and GSP beneficiary countries. The URL for the database will be published in due course here: https://ec.europa.eu/taxation_customs/registered-exporter-system_en
IOE&IT: How can EU importers make a preference declaration under REX?
To claim preference under REX, importers must construct a special alphanumeric code combination at item level of the customs declaration, consisting of:
a) the 2-digit alpha code of the REX beneficiary country +
b) the specially designed REX document code +
c) the other 30 characters, e.g. for the invoice reference number.
A status code may also have to be declared. For non-REX GSP declarations, i.e. goods accompanied by a GSP certificate Form A or invoice statement originating from either a beneficiary country in transition or implementing REX at a later date, the current procedure codes continue to apply.
IOE&IT: How can our clients check what a statement on origin look like under REX?
Arne: The Delegated and Implementing Acts of the EU Union Customs Code contain templates of official statements/certificates. This includes the template of what the correct origin statement for REX should look like.
IOE&IT: What do you think about REX?
Arne: I preferred the TV show.
IOE&IT: Thank you for your time.