UPS Global Webinar: Europe’s New Union Customs Code: How It May Affect Your Trade

UPS Global Customs Webinar 26 April 2016

Europe’s Union Customs Code

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Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Europe’s Union Customs Code

• Panelist

• Norm Schenk, LCB

• Public Affairs Vice President

• Panelist

• Walter Van der Meiren

• Customs Brokerage Director

• Host

• Greg Maddaleni, LCB

• Customs Brokerage Manager

Presenters

Changing the global trade landscape





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UCC Changes

Agenda

UCC objectives

Legal framework

Timing

• Staggered approach but the clock is ticking

UCC changes

Questions and answers





World trade projections

Source: April 2016 WTO analysis

European trade is expected to grow at or above global trade rates

-1.8%

-0.3%

3.2%

4.3%

3.2%3.7%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2012 2013 2014 2015 2016P 2017P

World Imports

North Am Central/South Am Asia M.E./Afr. Europe

0.8%

1.7%2.0%

3.7%

3.1%

4.1%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2012 2013 2014 2015 2016P 2017P

World Exports

North Am Central/South Am Asia M.E./Afr. Europe





UCC Objectives

• Streamline customs legislation and procedures

• Offer greater legal certainty and uniformity to businesses

• Increase clarity for all EU customs officials

• Simplify customs rules/procedures

• Facilitate more efficient customs transactions

• Complete the shift by Customs to a paperless and fully electronic environment

• Reinforce swifter customs procedures for economic operators (AEO)





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UCC legal framework

UCC

Work ProgramTransitional

Delegated Act

IT Deployment – December 2020

Implementing provisions

Delegated act Implementing act

BPM

Guidelines

Source: http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm





Jan 2017

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Timeline for implementation

May 2016 Mar 2019

Dec 2020

Oct 2020

Feb 2020

Binding

origin

Temporary

Storage

Warehousing

Binding tariff

Proof of union

status

Exporter

declaration

Region

centralised

clearance

Guarantee

Entry summary

declaration

Completion of

IT

enhancements






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Discussion overview

Being AEO

• What it now means to be AEO certified

Facilitating the movement of goods

• Export

• Import

• Intra

• Storage/ Warehousing

Financial

• Binding tariff

• Trade agreements

• Value / valuation

• Customs debt

Safety & security

• Entry summary declaration





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First topic: being AEO

Being AEO



• Export

• Import

• Intra


Financial

• Binding tariff



• Customs debt

Safety & security






Authorised Economic Operator: a prerequisite to other benefits

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What is changing:• New criteria:

• Satisfactory compliance history in other taxation areas

• Practical standards of competency (3 years experience)

or hold professional qualifications in customs matters

• Timing: immediate

Import Export

• Criteria: Compliant and trustworthy economic operator

• Authorisation for customs simplifications (AEO C) or

Authorisation for security and safety (AEO S)

• Benefits:

• Access to customs simplifications

• Few physical and documentary controls






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Second topic: facilitating the movement of goods

Being AEO



• Export

• Import

• Intra


Financial

• Binding tariff



• Customs debt

Safety & security






Processes facilitating the movement of goods: export

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• To export means to take Union goods outside the customs territory

of the Union

• A Union exporter:

– Is established in the Union customs territory

• Has a fixed place of business

– Has the power to take goods outside of the Union

• Alternative: use customs representative with indirect representation

Exporter definition

What is changing:

- Narrower definition on who has power to export

- Timing: TBD






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Processes facilitating the movement of goods: import

Centralised clearance, simplified release, self assessment

• Centralised clearance

– Declaration to be lodged at office in EU member state which granted

authorisation

– Goods to be presented and imported into another member state

• Entry into the declarant’s records

– Allows releasing goods using a simplified data set (followed with a

more comprehensive entry)

• Self assessment

– Authorised entity takes responsibility and performs certain

formalities/controls normally undertaken by customs

What is changing:

- New procedures and processes requiring IT systems and

guidance documents to be developed (1 Oct 2020)

- AEO C authorisation is a pre-requisite






Declarations associated with shipment movements: intra-Europe

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• Maritime movements between member states

• The PoUS will become electronic with the Master Reference

Number as a unique identifier

• Economic operators who are approved as authorised issuers may

issue a customs goods manifest as proof themselves

Proof of union status (PoUS)

What is changing:• To become an electronic process

• Timing: 1 March 2019






Declarations associated with shipment movements: warehousing

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• Temporary storage

• Ability to move goods under temporary storage

• 90 days

• Warehousing

• Simplification: 6 types going down to 3 levels

• Reduction for warehouse guarantees with AEO C authorisation

Temporary storage and warehousing

What is changing:• Authorisation for temporary storage required

• In bond document no longer required

• 90 days to postpone payment of customs duties

• Warehousing: simplification of designations

• Timing: immediate






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Third topic: classification /financial

Being AEO



• Export

• Import

• Intra


Financial

• Binding tariff



• Customs debt

Safety & security


Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and

other public sources and reflects prevailing conditions and our opinions and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and

completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of this presentation, or for the consequences of any actions taken on the basis of the information provided.


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Financial

• Binding tariff information

• Economic operators can obtain tariff classification for goods they intend to import

or to export

• Valid for three years

• Binding upon the holder (once determined, must be applied)

• Valid across EU


What is changing:• Validity changed from 6 years to 3 years

• Once attained, must be applied – declarant must inform customs

• Timing: 1 May 2016





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Financial

• Binding origin information (BOI)

• For non-preferential origins

• Binding upon the holder

• A BOI decision can be issued upon application and provides legal certainty

regarding the determination of origin of goods

• Non-preferential list rules are applicable for more products.

What is changing:• Origin rules: apply “list rules” regarding non-preferential agreements

• Timing: January 2017

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and

reflects prevailing conditions and our opinions and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public

sources or which was otherwise reviewed by us. SCS accepts no liability for the content of this presentation, or for the consequences of any actions taken on the basis of the information provided.


Financial

• Elimination of first sale rule

– Must apply the last sale to determine value

– Only where binding contract already in place before 18 Jan 2016 is there an exception

• Royalties and license fees (and assists)

– Generally should be included with the value of the goods

• Considered a condition of sale

• Guarantees

– Compulsory throughout the EU

– Single guarantee to cover multiple procedures, movements and declarations

– An AEO C authorisation required to reduce the guarantee to cover the payment of actual debts

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What is changing:• Valuation: elimination of first sale and broader inclusion of royalties, fees and assists

• Guarantees: will become mandatory across the Union and will require AEO status for attaining a waiver


Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and

reflects prevailing conditions and our opinions and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public

sources or which was otherwise reviewed by us. SCS accepts no liability for the content of this presentation, or for the consequences of any actions taken on the basis of the information provided.


Financial

• All amounts on dutiable shipments may be be collected, even under 10 Euro

• Following Member States have announced they will collect all amounts

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Member State Country Code Current New

Czech Republic CZ No YesIreland IE No Yes

Republic of Latvia LV No Yes

Kingdom of the Netherlands

NL No Yes

Republic of Austria AT No Yes

United Kingdom of Great Britain

and Northern IrelandUK No Yes

Customs Debt

What is changing:• All amounts will be collected, will have an impact on duties and VAT to be paid





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Fourth topic: safety & security

Being AEO



• Export

• Import

• Intra


Financial

• Binding tariff



• Customs debt

Safety & security






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Safety and Security

Entry summary declaration

• 7 + 1 elements of information prior to loading

• Dual filing

• 6 Digit HTS code mandatory

• Applicable to all shipments, value independent (currently only for

shipments with a value above 22 Euro)

What is changing:• Applicable to all shipments (not just ocean)

• Timing: 1 October 2020






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Preparedness timelines vary

May 2016AEO authorisation / temporary storage / warehousing

/ binding tariff0 Months

Jan 2017Binding origin information 8 Months

Mar 2019 Proof of union status* 22 Months

Feb 2020Exporter declaration* 45 Months

Oct 2020Centralised clearance / guarantee / entry summary

declaration*53 Months

Dec 2020Completion of IT enhancements* 56 Months

* IT enhancements to be performed by AEO in anticipation of these deadlines






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Questions and answers

UPS Trade Management Services – when you join forces with an expert

UPS TMS consulting services UPS TMS managed services

Improve compliance and reduce the possibility of errors Improve processing and reduce your exposure to issues

of noncompliance

Minimise the chance of costly delays Simplify broker management with one point of contact

and greater consistency

Decrease time spent on customs issues Increase time to focus on business growth

Reduce the risk of violating government regulations for

trade programs

Decrease the chance of post-entry penalties due to

incorrect filings

Capitalise on accurate classifications

to reduce tariffs

Streamline data management to maximise filing

efficiency





Union Customs Code in a nutshell

The European Union is establishing a new legal framework intended to (1) simplify and standardise customs rules and

procedures, (2) increase the security of the supply chain and (3) facilitate more efficient customs transactions via a completely

paperless process, using electronic communication and centralised IT systems for both businesses and customs authorities.

The implementation of the UCC requires changes to business models and impacts customer supply chains. Some of the major

changes for importers and exporters are:

Financial• The current first sale rule will be replaced by a last sale only rule,

possibly increasing the amount of duties to be paid when

importing.

• Royalties and license fees will generally be considered to be paid

as a condition of sale of the goods and should be included in the

customs value, possibly increasing the amount of duties to be

paid when importing.

• Under the current legislation, a member state has the discretion

to decide when a guarantee is or isn’t required. Under the UCC

there will be circumstances where the provision of a guarantee is

compulsory

Physical Handling• Warehouse types change – new authorisations will need to be requested (between

now and 2019)

• The time limit for goods under the Temporary Storage procedure will increase from

20/45 to 90 days, making it ;ore attractive alternative to customs warehousing

Safety and Security

• In order to obtain certain customs simplifications (i.e. centralised clearance,

guarantees...), the authorization as Authorised Economic Operator Customs

becomes mandatory.

• An AEO C authorisation will be required in order to reduce the guarantee to cover the

payment of actual debts

All communications between customs authorities and economic operators must be electronic, however there will be transitional period between 1st of May 2016 and 31 December 2020, in which a series of IT systems will gradually be implemented by the EU Commission, Member States and Trade.






Europe’s UCC

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• The Union Customs Code will change how trade is conducted in the European Union

• Please consult UPS’s Union Customs Code Customer Guide

• Ask today upon checking out

• Contact your UPS sales executive

• Upcoming webinar topics:

• May 19: Continued ACE implementation – upcoming milestones and deadlines

• Trans-Pacific Partnership (summer 2016)

The material and information contained in this document is for general information purposes only. UPS does not act as a customs law adviser. You

should not rely upon this material or information as a basis for making any business, legal or any other decisions. UPS makes no representations or warranties

of any kind, express or implied about the completeness, accuracy, reliability, suitability or availability with respect to the material and information contained in

this document for any purpose. UPS will not be liable for any false, inaccurate, inappropriate or incomplete information presented in the document.

Thank you

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Business

UPS Global Webinar: Europe’s New Union Customs Code: How It May Affect Your Trade