Breakfast Briefing on U.S. and E.U. Export/Customs Issues  December 9, 2010 Washington DC
Agenda <ul><li>Legislative Developments: EU Modernized Customs Code </li></ul><ul><ul><li>Customs Value </li></ul></ul><ul...
<ul><li>EU Modernized Customs Code </li></ul><ul><li>Drafting Process </li></ul>
EU Customs Code <ul><li>Customs Law: Uniform Rules for the EU </li></ul><ul><ul><li>EU Regulation: direct effect, as if en...
EU Modernized Customs Code <ul><li>MCC: Regulation 450/2008 </li></ul><ul><ul><li>Entry into force: same as MCCIP </li></u...
MCCIP: Drafting proces  <ul><li>MCCIP (latest publicly circulated draft September 2010) </li></ul><ul><li>Customs Code Com...
<ul><li>EU Modernized Customs Code  Customs Value </li></ul>
First Sale (Current) <ul><li>Based in article 147 EU Customs Code Implementing Provisions </li></ul><ul><li>“ (...) the fa...
First Sale (Current) <ul><li>Importer must prove that prior sale is for export to EU </li></ul><ul><li>Commentary No 7 EU ...
First Sale (MCCIP) <ul><li>Article 230-02 (draft 6 January 2010) </li></ul><ul><li>“ 1 (...) the customs value is determin...
Customs value - royalties <ul><li>Added to customs value if  </li></ul><ul><li>Payment is Condition of Sale (“ CoS ”) </li...
Customs value – related parties and transaction value <ul><li>Current: Customs may reject if “ they are not  satisfied, on...
<ul><li>EU Modernized Customs Code </li></ul><ul><li>Binding Tariff & Origin Information </li></ul>
BTI/ BOI <ul><li>New  grounds for refusing BTI/ BOI </li></ul><ul><ul><li>Simultaneous applications (prevention of “BTI/BO...
<ul><li>New  additional information to be provided for BOI  </li></ul><ul><ul><li>Indication by the applicant whether he h...
BTI/ BOI <ul><li>Procedures inconsistencies BTI/BOI (new) </li></ul><ul><ul><li>EU Member States endeavour to reach bilate...
<ul><li>Exchange of information EU Member States and Commission (new) </li></ul><ul><ul><li>changes in the application </l...
BTI/ BOI <ul><li>Legal Effect of BTI/BOI (new) </li></ul><ul><ul><li>New circumstance for revocation: published guidance o...
<ul><li>EU Modernized Customs Code  Customs procedures </li></ul>
Customs procedures <ul><li>Release for free circulation and relief from import duties </li></ul><ul><li>Special procedures...
Customs procedures <ul><li>Conditions authorisation special procedures: </li></ul><ul><ul><li>Licensee must be established...
Customs procedures <ul><li>Processing (Art 168-169 MCC, Art 752-01- 752-05 MCCIP) </li></ul><ul><ul><li>Inward processing ...
Customs procedures <ul><li>Customs Warehouse (Art 153-154 MCC, Art 733-01 & 733-02 MCCIP) </li></ul><ul><ul><li>4 types of...
<ul><li>  EU Modernized Customs Code   </li></ul><ul><li>Customs decisions </li></ul>
Right to be heard <ul><li>MCC introduces the right for a person to express his point of view before decision is taken (Art...
Right to be heard - exceptions <ul><li>Right to be heard does not apply in the following cases </li></ul><ul><ul><li>Where...
<ul><li>EU Modernized Customs Code  Authorised Economic Operator </li></ul>
AEO <ul><li>AEO-Certificates are renamed (Art 123-01 MCCIP) </li></ul><ul><li>AEOC-Certificate:  Customs  simplifications ...
AEO <ul><li>Specific AEO benefits (Art 123-02 MCCIP) </li></ul><ul><li>1) No re-examination of previously examined conditi...
AEO <ul><li>Specific AEO benefits AEO (Art 123-02 MCCIP) </li></ul><ul><li>5) Deemed to fulfil conditions of self-assessme...
AEO <ul><li>Specific AEO benefits AEO (Art 123-02 MCCIP) </li></ul><ul><li>8) No need to lodge or reduced data requirement...
AEO <ul><li>AEO Criteria are similar: </li></ul><ul><ul><li>customs/ tax compliance, satisfactory system of managing comme...
AEO <ul><li>Examination of AEO criteria: </li></ul><ul><li>Similar, but MCCIP specifically provides that examination shall...
AEO <ul><li>AEO Transitional measures: </li></ul><ul><li>Criteria Article 14 MCC applicable to all economic operators appl...
<ul><li>  WTO DSB ITA </li></ul>
Agenda <ul><li>The ITA and the dispute </li></ul><ul><li>The WTO Panel Ruling </li></ul><ul><li>The legal effect of the Ru...
<ul><li>WTO DSB ITA </li></ul><ul><li>The agreement </li></ul>
Information Technology Agreement (“ITA”) <ul><li>1996: 14 WTO members (incl. EU) </li></ul><ul><li>To promote the key role...
Information Technology Agreement (“ITA”) <ul><li>IT products covered: </li></ul><ul><ul><li>Semiconductors, materials, man...
<ul><li>WTO DSB ITA </li></ul><ul><li>The dispute </li></ul>
The parties <ul><li>Complainants: </li></ul><ul><ul><li>United States of America </li></ul></ul><ul><ul><li>Japan </li></u...
Background to the dispute <ul><li>European Union Common Customs Tariff and related classification regulations and decision...
ITA <ul><li>FDP: Annex B:  “(including LCD, Electro luminescense, Plasma and other technologies) for products falling with...
<ul><li>WTO DSB ITA </li></ul><ul><li>Panel conclusions </li></ul>
FDP <ul><li>The Panel found that ITA covers: </li></ul><ul><ul><li>An array of non-CRT technologies, including LCD </li></...
FDP <ul><li>The Panel found that: </li></ul><ul><ul><li>EU Regulation 179/2009 (introducing a 14 % tariff for some FDP) in...
MFM <ul><li>The Panel found: </li></ul><ul><ul><li>the EU classified certain MFM for computers in dutiable headings, which...
STBC <ul><li>The Panel defined the STBCs at issue: </li></ul><ul><ul><li>Devices that enable a video monitor or television...
STBC <ul><li>The Panel found that EU Explanatory Notes require: </li></ul><ul><ul><li>STBCs with recording or reproducing ...
<ul><li>WTO DSB ITA </li></ul><ul><li>Legal effect in Europe </li></ul>
Legal effect in Europe <ul><li>WTO Agreements in principle do not have direct effect </li></ul><ul><ul><li>Importers can n...
Legal Effect in Europe <ul><li>Pending Question before ECJ: </li></ul><ul><ul><li>Can an importer rely on a WTO DSB Panel ...
<ul><li>WTO DSB ITA </li></ul><ul><li>Possible EU implementation </li></ul>
Possible EU implementation <ul><li>Reasonable period of time, to be negotiated </li></ul><ul><li>No agreement: arbitration...
Possible EU implementation <ul><li>Amendment of the EU Common Customs Tariff to reflect Panel report conclusions </li></ul...
Possible EU Implementation <ul><li>FDP: European Communities indicated that Classification Regulations 634/2005 and 2171/2...
<ul><li>WTO DSB ITA </li></ul><ul><li>Remedies for EU importers? </li></ul>
Possible remedies (past) <ul><li>Application for repayment of customs duties (Article 236 EU Customs Code): </li></ul><ul>...
Possible remedies (present and future) <ul><li>Appeal against assessments resulting from current and future imports </li><...
<ul><li>WTO DSB   ITA </li></ul><ul><li>Conclusions (?) </li></ul>
Conclusions <ul><li>Direct application of Panel report findings: </li></ul><ul><ul><li>“ No go” </li></ul></ul><ul><li>Ind...
Conclusions <ul><li>To protect interests pending ECJ question on status DSB Panel reports: </li></ul><ul><ul><li>Past: sub...
A Year-End Review of Import/Export Developments  Customs Developments in Europe November 30-December 1, 2010 Hyatt Regency...
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EU Customs Developments

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Overview of the status of EU draft implementing provisions for the modernized customs code and the EU position in the WTO ITA case.

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EU Customs Developments

  1. 1. Breakfast Briefing on U.S. and E.U. Export/Customs Issues December 9, 2010 Washington DC
  2. 2. Agenda <ul><li>Legislative Developments: EU Modernized Customs Code </li></ul><ul><ul><li>Customs Value </li></ul></ul><ul><ul><ul><li>First Sale </li></ul></ul></ul><ul><ul><ul><li>Royalties & License Fees </li></ul></ul></ul><ul><ul><li>Binding Tariff & Origin Information </li></ul></ul><ul><ul><li>Customs Procedures </li></ul></ul><ul><ul><li>Authorised Economic Operator </li></ul></ul><ul><ul><li>Customs Decisions </li></ul></ul><ul><li>WTO DSB Report in Information Technology Agreement Dispute </li></ul>
  3. 3. <ul><li>EU Modernized Customs Code </li></ul><ul><li>Drafting Process </li></ul>
  4. 4. EU Customs Code <ul><li>Customs Law: Uniform Rules for the EU </li></ul><ul><ul><li>EU Regulation: direct effect, as if enacted by national legislative </li></ul></ul><ul><li>Modernised Customs Law </li></ul><ul><ul><li>EU Modernized Customs Code (“ MCC ”): Regulation 450/2008 </li></ul></ul><ul><ul><li>EU Modernized Customs Code Implementing Provisions (“ MCCIP ”): drafting stage </li></ul></ul>
  5. 5. EU Modernized Customs Code <ul><li>MCC: Regulation 450/2008 </li></ul><ul><ul><li>Entry into force: same as MCCIP </li></ul></ul><ul><ul><li>No later than 24 June 2013 </li></ul></ul>
  6. 6. MCCIP: Drafting proces <ul><li>MCCIP (latest publicly circulated draft September 2010) </li></ul><ul><li>Customs Code Committee (“ CCC ”), 27 national reps, chaired by EU Commission (DG TAXUD) </li></ul><ul><ul><li>CCC General Customs Legislation section </li></ul></ul><ul><ul><li>CCC Customs Valuation section </li></ul></ul><ul><li>Draft MCCIP as agreed by CCC will be lodged as legislative proposal by EU Commission </li></ul>
  7. 7. <ul><li>EU Modernized Customs Code Customs Value </li></ul>
  8. 8. First Sale (Current) <ul><li>Based in article 147 EU Customs Code Implementing Provisions </li></ul><ul><li>“ (...) the fact that the goods which are the subject of a sale are declared for free circulation shall be regarded as adequate indication that they were sold for export to the customs territory of the Community. In the case of successive sales before valuation, only the last sale, which led to the introduction of the goods into the customs territory of the Community , or a sale taking place in the customs territory of the Community before entry for free circulation of the goods shall constitute such indication ” </li></ul><ul><li>“ Where a price is declared which relates to a sale taking place before the last sale on the basis of which the goods were introduced into the customs territory of the Community, it must be demonstrated to the satisfaction of the customs authorities that this sale of goods took place for export to the customs territory in question .” </li></ul>
  9. 9. First Sale (Current) <ul><li>Importer must prove that prior sale is for export to EU </li></ul><ul><li>Commentary No 7 EU Customs Code Committee (Customs Valuation Section) </li></ul><ul><ul><li>goods manufactured according to EC specifications, or are identified (according to marks etc.) as having no other use or destination </li></ul></ul><ul><ul><li>goods were manufactured specifically for a buyer in the EC </li></ul></ul><ul><ul><li>specific goods are ordered from an intermediary who sources from a manufacturer and goods are shipped directly to the EC </li></ul></ul><ul><li>Once transaction value is chosen based on First Sale, no change possible (“ Unifert ”) </li></ul>
  10. 10. First Sale (MCCIP) <ul><li>Article 230-02 (draft 6 January 2010) </li></ul><ul><li>“ 1 (...) the customs value is determined under the transaction value method if the goods have been the subject of a sale for export to the customs territory of the Union at the time of acceptance of the declaration for free circulation.: </li></ul><ul><li>[In the case of successive sale, the transaction value is determined on the basis of the last sale in the international supply chain before the goods are introduced into the customs territory/released for free circulation ]. </li></ul><ul><li>2. In the cases where the goods are (re)sold while under, in particular customs warehousing procedure or in free zones, the customs value is determined on the basis of the last sale before the introduction of the goods into the customs territory of the Community or on the basis of the last sale before the release of the goods for free circulation, as appropriate. </li></ul>
  11. 11. Customs value - royalties <ul><li>Added to customs value if </li></ul><ul><li>Payment is Condition of Sale (“ CoS ”) </li></ul><ul><ul><li>Payment is required by seller/related company </li></ul></ul><ul><ul><li>Payment is made to fulfil obligation of seller </li></ul></ul><ul><ul><li>Goods may not be sold/produced without royalty-payment ( new ) </li></ul></ul><ul><ul><li>Distribution royalties excluded if not CoS </li></ul></ul><ul><li>Related to imported goods </li></ul><ul><ul><li>If rights for which royalties are paid are embodied in goods ( new ) </li></ul></ul>
  12. 12. Customs value – related parties and transaction value <ul><li>Current: Customs may reject if “ they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable ”, Article 181a ICCC </li></ul><ul><li>MCCIP: Customs may request additional information if “ they have reasons to doubt the truth or accuracy of the declared customs value ”, Article 230-16 MCCIP </li></ul>
  13. 13. <ul><li>EU Modernized Customs Code </li></ul><ul><li>Binding Tariff & Origin Information </li></ul>
  14. 14. BTI/ BOI <ul><li>New grounds for refusing BTI/ BOI </li></ul><ul><ul><li>Simultaneous applications (prevention of “BTI/BOI shopping”) </li></ul></ul><ul><ul><li>No intended use </li></ul></ul><ul><li>BTI/BOI binds customs, as well as holder </li></ul><ul><ul><li>Holder has to inform customs authorities that he owns BTI/BOI: Box 44 SAD (check) </li></ul></ul><ul><li>Validity BTI/BOI 3 years (was: 6 years) </li></ul>
  15. 15. <ul><li>New additional information to be provided for BOI </li></ul><ul><ul><li>Indication by the applicant whether he has applied for or obtained BTI/BOI for goods identical or similar as those in application and whether, to applicant’s knowledge, such BTI/BOI has already been issued </li></ul></ul><ul><ul><li>indication by the applicant whether to his knowledge the goods are subject to any legal or administrative proceeding concerning origin or a court ruling on origin </li></ul></ul><ul><ul><li>indication whether application relates to import or export </li></ul></ul>BTI/ BOI
  16. 16. BTI/ BOI <ul><li>Procedures inconsistencies BTI/BOI (new) </li></ul><ul><ul><li>EU Member States endeavour to reach bilaterally agreement within 3 months </li></ul></ul><ul><ul><li>If not bilaterally solved, EU Member States to submit matter to the European Commission </li></ul></ul><ul><ul><li>EU Member States may not make any decision until the Committee has reached agreement </li></ul></ul><ul><ul><li>Commission may instruct the EU Member States to revoke BTI decision and to indicate correct tariff clarification </li></ul></ul>
  17. 17. <ul><li>Exchange of information EU Member States and Commission (new) </li></ul><ul><ul><li>changes in the application </li></ul></ul><ul><ul><li>notification and details where BTI is annulled, revoked or ceases to be valid </li></ul></ul><ul><ul><li>notification if period of extended use of BTI is granted indicating the end date and the quantities to be covered </li></ul></ul>BTI/ BOI
  18. 18. BTI/ BOI <ul><li>Legal Effect of BTI/BOI (new) </li></ul><ul><ul><li>New circumstance for revocation: published guidance on the interpretation of the customs nomenclature established by the Customs Code Committee </li></ul></ul>
  19. 19. <ul><li>EU Modernized Customs Code Customs procedures </li></ul>
  20. 20. Customs procedures <ul><li>Release for free circulation and relief from import duties </li></ul><ul><li>Special procedures </li></ul><ul><ul><li>Common rules special procedures (Art 135-143 MCC) (authorisation, administration, discharge of procedure, equivalent goods) </li></ul></ul><ul><ul><li>Transit (external and internal transit) </li></ul></ul><ul><ul><li>Storage (temporary storage, customs warehousing and free zones) </li></ul></ul><ul><ul><li>Specific use (temporary admission, end-use) </li></ul></ul><ul><ul><li>Processing (inward and outward processing, usual forms of handling) </li></ul></ul><ul><li>Departure of goods from customs territory EC </li></ul>
  21. 21. Customs procedures <ul><li>Conditions authorisation special procedures: </li></ul><ul><ul><li>Licensee must be established in EU </li></ul></ul><ul><ul><li>Necessary assurance of proper conduct, in cases where custom debt is incurred, must provide guarantee </li></ul></ul><ul><ul><li>Economic Conditions (Art 710-07 MCCIP) </li></ul></ul><ul><ul><li>Amended rules for retroactive authorisation (conditions, and maximum period 3 years) </li></ul></ul>
  22. 22. Customs procedures <ul><li>Processing (Art 168-169 MCC, Art 752-01- 752-05 MCCIP) </li></ul><ul><ul><li>Inward processing suspension combined with processing under customs control </li></ul></ul><ul><ul><li>Inward processing draw-back is not included </li></ul></ul><ul><ul><li>Common valuation principles for output products under processing and usual forms of handling (under bonded warehousing) </li></ul></ul>
  23. 23. Customs procedures <ul><li>Customs Warehouse (Art 153-154 MCC, Art 733-01 & 733-02 MCCIP) </li></ul><ul><ul><li>4 types of warehouses: </li></ul></ul><ul><ul><ul><li>Public customs warehouse type I: responsibility holder of authorisation </li></ul></ul></ul><ul><ul><ul><li>Public customs warehouse type II: responsibility holder of procedure </li></ul></ul></ul><ul><ul><ul><li>Public customs warehouse type III: operated by customs authorities </li></ul></ul></ul><ul><ul><ul><li>Private customs warehouse </li></ul></ul></ul>
  24. 24. <ul><li> EU Modernized Customs Code </li></ul><ul><li>Customs decisions </li></ul>
  25. 25. Right to be heard <ul><li>MCC introduces the right for a person to express his point of view before decision is taken (Article 16 sub 4) </li></ul><ul><li>MCCIP sets the criteria (Articles 124-1-01 and 124-03 MCCIP) </li></ul><ul><ul><li>‘ Customs Communication’ must include reasons and refer to all documents and information related to the intended decision </li></ul></ul><ul><ul><li>‘ Point of view’ must be expressed within 30 days, after which considered waived </li></ul></ul><ul><ul><li>Verification customs declaration : ‘Customs Communication’ and ‘Point of view’ may be made orally, right to request a written ‘Customs Communication’ remains open (30 days) </li></ul></ul><ul><ul><li>If time limit applies to Customs decision: suspended as from communication of intent for 30 days </li></ul></ul>
  26. 26. Right to be heard - exceptions <ul><li>Right to be heard does not apply in the following cases </li></ul><ul><ul><li>Where a request for a decision may not be accepted </li></ul></ul><ul><ul><li>Where the decision at stake is a BTI/BOI (Article 20 of MCC) </li></ul></ul><ul><ul><li>In case of refusal of the benefit of a tariff quota (Article 33 sub 4 of MCC) </li></ul></ul><ul><ul><li>Where the nature or the level of the threat to the security of the Community and its residents, to human, animal or plant health, to the environment or to consumers so requires </li></ul></ul><ul><ul><li>Where the decision relates to enforcement measures </li></ul></ul>
  27. 27. <ul><li>EU Modernized Customs Code Authorised Economic Operator </li></ul>
  28. 28. AEO <ul><li>AEO-Certificates are renamed (Art 123-01 MCCIP) </li></ul><ul><li>AEOC-Certificate: Customs simplifications </li></ul><ul><ul><li>Conditions in Articles 123-08 through 11 </li></ul></ul><ul><li>AEOS-Certificate: Security and Safety , facilitations of customs controls relating to security and safety for goods </li></ul><ul><ul><li>Conditions: Articles 123-08, 123-09 and 123-12 </li></ul></ul><ul><li>AEOF-Certificate: AEOC + AEOS Certificate </li></ul>
  29. 29. AEO <ul><li>Specific AEO benefits (Art 123-02 MCCIP) </li></ul><ul><li>1) No re-examination of previously examined conditions for further applications for simplified procedures </li></ul><ul><li>2) Provide customs representation in other EU Member State where holder AEOC or AEOF is established </li></ul><ul><li>3) Comprehensive guarantee waiver or reduced guarantee (Art 322-04 (1) MCCIP) </li></ul><ul><li>4) Deemed to fulfil conditions centralised clearance (Art 106 MCC) </li></ul>
  30. 30. AEO <ul><li>Specific AEO benefits AEO (Art 123-02 MCCIP) </li></ul><ul><li>5) Deemed to fulfil conditions of self-assessment (Art 116 (2) d MCC) </li></ul><ul><li>6) Deemed to fulfil conditions for granting the authorisation for entry in the records (107 MCC) </li></ul><ul><li>7) Notification a priori when consignment is selected for physical control (goods entering EU) </li></ul>
  31. 31. AEO <ul><li>Specific AEO benefits AEO (Art 123-02 MCCIP) </li></ul><ul><li>8) No need to lodge or reduced data requirements for exit summary declaration. If export declaration is lodged by representative, representative needs AEOS or AEOF </li></ul><ul><li>9) Subject to fewer physical and document based control (or priority) </li></ul><ul><li>10) Priority for consignments of holders AEO/AEOF if there are incidents requiring closing or re-opening customs office of entry or exit </li></ul>
  32. 32. AEO <ul><li>AEO Criteria are similar: </li></ul><ul><ul><li>customs/ tax compliance, satisfactory system of managing commercial and transport record, solvency, security and safety standards </li></ul></ul><ul><li>New criteria: </li></ul><ul><ul><li>standards of competence and professional qualifications (Art 14 d MCC, Art 123-22 MCCIP) </li></ul></ul><ul><ul><li>With respect to security/safety: contact person competent for safety and security related questions </li></ul></ul>
  33. 33. AEO <ul><li>Examination of AEO criteria: </li></ul><ul><li>Similar, but MCCIP specifically provides that examination shall be suspended during criminal proceedings if the authorities have reasons to believe that an act which gives rises to criminal court proceedings related to customs or tax infringements is perpetrated by applicant </li></ul>
  34. 34. AEO <ul><li>AEO Transitional measures: </li></ul><ul><li>Criteria Article 14 MCC applicable to all economic operators applying for AEO </li></ul><ul><li>AEO- certificates issued prior to MCCIP continue to be valid unless there is evidence of non-compliance </li></ul><ul><li>Customs can examine this situation within a transitional period of 24 months (Art 920-01 MCCIP) </li></ul>
  35. 35. <ul><li> WTO DSB ITA </li></ul>
  36. 36. Agenda <ul><li>The ITA and the dispute </li></ul><ul><li>The WTO Panel Ruling </li></ul><ul><li>The legal effect of the Ruling in Europe </li></ul><ul><li>Affected European rules </li></ul><ul><li>The implementation of the Panel ruling </li></ul><ul><li>Are there any remedies for importers for past and present customs duties paid? </li></ul>
  37. 37. <ul><li>WTO DSB ITA </li></ul><ul><li>The agreement </li></ul>
  38. 38. Information Technology Agreement (“ITA”) <ul><li>1996: 14 WTO members (incl. EU) </li></ul><ul><li>To promote the key role of trade in the development of information industries </li></ul><ul><li>Elimination of customs duties for IT products, no later than 1 January 2000 </li></ul><ul><ul><li>Annex A: identifies IT products covered by HS Heading (4-digit level) </li></ul></ul><ul><ul><li>Annex B: identifies IT products covered by description (regardless of HS classification) </li></ul></ul>
  39. 39. Information Technology Agreement (“ITA”) <ul><li>IT products covered: </li></ul><ul><ul><li>Semiconductors, materials, manufacturing and testing equipment </li></ul></ul><ul><ul><li>Calculators, cash registers, accounting machines, translation machines, franking machines </li></ul></ul><ul><ul><li>Computers (“automatic data processing machines”), components and related equipment (including network equipment) </li></ul></ul><ul><ul><li>Telecommunication devices, components and equipment </li></ul></ul>
  40. 40. <ul><li>WTO DSB ITA </li></ul><ul><li>The dispute </li></ul>
  41. 41. The parties <ul><li>Complainants: </li></ul><ul><ul><li>United States of America </li></ul></ul><ul><ul><li>Japan </li></ul></ul><ul><ul><li>Taiwan </li></ul></ul><ul><li>Respondents: </li></ul><ul><ul><li>European Union </li></ul></ul>
  42. 42. Background to the dispute <ul><li>European Union Common Customs Tariff and related classification regulations and decisions </li></ul><ul><ul><li>Flat Panel Display Devices (“FDP”): 14 % unless solely or principally for use with computers: 0 % </li></ul></ul><ul><ul><li>Multifunctional Digital Machines (notably multifunctional printers/faxes/scanners, “MFM”): 6 % </li></ul></ul><ul><ul><li>Set-Top Boxes with communication function (“STBC”): 14 % when comprising additional functions (recording) </li></ul></ul>
  43. 43. ITA <ul><li>FDP: Annex B: “(including LCD, Electro luminescense, Plasma and other technologies) for products falling within this agreement, and parts thereof ”, Annex A: Input/output units for computers </li></ul><ul><li>MFM: Annex A: Input/output units for computers </li></ul><ul><li>STBC: Annex B: &quot; Set top boxes which have a communication function: a microprocessor based device incorporating a modem for gaining access to the Internet and having a function of interactive information exchange &quot; </li></ul>
  44. 44. <ul><li>WTO DSB ITA </li></ul><ul><li>Panel conclusions </li></ul>
  45. 45. FDP <ul><li>The Panel found that ITA covers: </li></ul><ul><ul><li>An array of non-CRT technologies, including LCD </li></ul></ul><ul><ul><li>No limitations with regard to connectors/sockets </li></ul></ul><ul><ul><li>No requirement that FDP may only connect with computer </li></ul></ul><ul><ul><li>Ability to display signals from sources other than computer does not exclude FDP from zero rate, but: </li></ul></ul><ul><ul><ul><li>The mere capability to receive signals from computers is not enough </li></ul></ul></ul>
  46. 46. FDP <ul><li>The Panel found that: </li></ul><ul><ul><li>EU Regulation 179/2009 (introducing a 14 % tariff for some FDP) in conjunction with EU Common Customs Tariff 2007/2008 and EU Classification Regulations 634/2005 and 2171/2005, is inconsistent with ITA </li></ul></ul><ul><ul><li>Regardless of the suspension of the 14% tariff in EU Regulation 179/2009 </li></ul></ul>
  47. 47. MFM <ul><li>The Panel found: </li></ul><ul><ul><li>the EU classified certain MFM for computers in dutiable headings, which is not consistent with ITA </li></ul></ul><ul><ul><li>EU Classification Regulations 517/1999, 400/2006 and the relevant headings of the EU Common Customs Tariff are inconsistent with ITA. </li></ul></ul>
  48. 48. STBC <ul><li>The Panel defined the STBCs at issue: </li></ul><ul><ul><li>Devices that enable a video monitor or television to receive and decode digital television broadcasts from a communication channel, which are capable of connecting to the Internet through an in-built WLAN, ISDN or Ethernet device, and </li></ul></ul><ul><ul><li>STBCs which comprise a recording or reproducing function, such as a hard disk or DVD drive. </li></ul></ul>
  49. 49. STBC <ul><li>The Panel found that EU Explanatory Notes require: </li></ul><ul><ul><li>STBCs with recording or reproducing function and with ISDN, WLAN or Ethernet technology to be classified outside the scope of the duty-free EU heading, and </li></ul></ul><ul><ul><li>to classify those STBCs in dutiable headings respectively requires duties to apply to at least some STBCs covered under ITA </li></ul></ul><ul><ul><li>Thus the EU Common Customs Tariff and Explanatory Notes operating together are inconsistent with ITA </li></ul></ul>
  50. 50. <ul><li>WTO DSB ITA </li></ul><ul><li>Legal effect in Europe </li></ul>
  51. 51. Legal effect in Europe <ul><li>WTO Agreements in principle do not have direct effect </li></ul><ul><ul><li>Importers can not directly rely on WTO Agreements </li></ul></ul><ul><ul><li>Importers can not rely directly on Panel reports (?) </li></ul></ul><ul><li>European Court of Justice (“ECJ”) can however examine validity of EU legislation which </li></ul><ul><ul><li>Directly implements WTO Agreements </li></ul></ul><ul><ul><li>Explicitly refers to WTO Agreements </li></ul></ul>
  52. 52. Legal Effect in Europe <ul><li>Pending Question before ECJ: </li></ul><ul><ul><li>Can an importer rely on a WTO DSB Panel report with regard to the examination of the validity of EU Regulations, also in respect of the interpretation of headings of the EU Common Customs Tariff concerning imports prior to the WTO Panel report? </li></ul></ul>
  53. 53. <ul><li>WTO DSB ITA </li></ul><ul><li>Possible EU implementation </li></ul>
  54. 54. Possible EU implementation <ul><li>Reasonable period of time, to be negotiated </li></ul><ul><li>No agreement: arbitration within 90 days after adoption of DSB Panel report </li></ul><ul><ul><li>Guideline: 15 months maximum implementation period </li></ul></ul>
  55. 55. Possible EU implementation <ul><li>Amendment of the EU Common Customs Tariff to reflect Panel report conclusions </li></ul><ul><li>Withdrawal of EU (Classification) Regulations inconsistent with ITA </li></ul><ul><li>Withdrawal of EU Binding Tariff Information (“BTI”) inconsistent with ITA? </li></ul><ul><ul><li>BTI relies on EU Regulations, which are still in effect unless found unvalid by ECJ/withdrawn </li></ul></ul><ul><ul><li>BTI holder would have to rely directly on Panel report to challenge BTI (direct effect?) </li></ul></ul>
  56. 56. Possible EU Implementation <ul><li>FDP: European Communities indicated that Classification Regulations 634/2005 and 2171/2005 would be withdrawn  </li></ul><ul><li>MFM: EU indicated that Classification Regulations 517/1999 and 400/2006 would be withdrawn as of October 2009 </li></ul><ul><li>EU DSB informed the DSB that it intended to implement the recommendations and rulings of the DSB and that it would need a reasonable period of time to do so, meeting 25 October 2010, the European Union </li></ul><ul><li>EU pushes for review of ITA (non-tarriff barriers and product expansion) </li></ul>
  57. 57. <ul><li>WTO DSB ITA </li></ul><ul><li>Remedies for EU importers? </li></ul>
  58. 58. Possible remedies (past) <ul><li>Application for repayment of customs duties (Article 236 EU Customs Code): </li></ul><ul><ul><li>3 years </li></ul></ul><ul><ul><li>“ Import duties shall be repaid in so far as it is established that when they were paid the amount of such duties was not legally owed” </li></ul></ul>
  59. 59. Possible remedies (present and future) <ul><li>Appeal against assessments resulting from current and future imports </li></ul><ul><ul><li>Administrative review by customs </li></ul></ul><ul><ul><li>Followed by judicial review </li></ul></ul>
  60. 60. <ul><li>WTO DSB ITA </li></ul><ul><li>Conclusions (?) </li></ul>
  61. 61. Conclusions <ul><li>Direct application of Panel report findings: </li></ul><ul><ul><li>“ No go” </li></ul></ul><ul><li>Indirect application of Panel report finding: </li></ul><ul><ul><li>ECJ case law supports that the ECJ could declare relevant EU (Classification) Regulations unvalid due to inconsistency with ITA and EU WTO obligations </li></ul></ul><ul><ul><li>Which depends on questions currently pending before ECJ </li></ul></ul>
  62. 62. Conclusions <ul><li>To protect interests pending ECJ question on status DSB Panel reports: </li></ul><ul><ul><li>Past: submit repayment applications </li></ul></ul><ul><ul><li>Present & future: challenge assessments </li></ul></ul><ul><li>Practical issues: </li></ul><ul><ul><li>Customs can progress cases with denials, requiring subsequent appeals </li></ul></ul><ul><ul><li>“ Automatic challenge” of assessments is not available in all EU countries and suspends statute of limitations for customs challenging your entries on different grounds (e.g. Value) </li></ul></ul>
  63. 63. A Year-End Review of Import/Export Developments Customs Developments in Europe November 30-December 1, 2010 Hyatt Regency, Santa Clara, CA Jasper Helder, Amsterdam [email_address] + 31 20 551 75 79

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