What's new in international trade?

What’s new in international trade?

Export Training Services launch a new "Health-Check" service

International trade is very dynamic with changes happening frequently. In addition, a company's trading patterns and business can change substantially over a relatively short period of time. An example of this is a company who once manufactured goods in the UK/EU and now look to sub-contracting this manufacturing function to somewhere like China or India. This creates a massive change to the business. Companies become importers and distributors overnight. They have changes in their costs, the origin of their products and to the procedures required to be fully HMRC compliant.

Furthermore, on the exporting side of the international trade scene, British companies appear to be looking more towards the BRIC type markets (Brazil, Russia, India & China) for their growth. The EU is in recession and any development in sales might be in more deep-sea markets. The export skills required to deal effectively with these markets are very different from those used when dealing with EU customers/countries. Companies may need to take stock of where they are and to ascertain whether their procedures/knowledge levels/systems and cost structures are as robust as they should be.

These are just some of the reasons that Export Training Services developed its "Health-Check" service. The service normally involves a one or two-day site visit where we conduct a "gap analysis". This will highlight where you are as a business in terms of export/import procedures, compliance, knowledge levels, systems in relation to where we would normally see a "best practice" company. Consideration will always be made on the size, volume, available resources and type of the business audited as any recommendations made will need to be commensurate to the business as it stands. Then we make recommendations on how you can "bridge the gap" to be truly "best practice" in the administration of your international business.

The "gap analysis" can include a management report (normally 14-18 page report) or perhaps the more cost-effective solution which is a de-brief meeting at the conclusion of the visit. During this time the hosting company can make notes and discuss our findings and recommendations.

Export Training Services has provided this service to many companies over the past 20 years but it has always been viewed as an "add-on" to the main training portfolio. In 2012 Export Training Services will be looking to develop this as a core activity within the business with a dedicated resource to meet this requirement.

Intrastat 2012

Companies who buy and sell goods within the EU should note that there are a couple of subtle changes to Intrastat for 2012.

Firstly, all supplementary declarations are to be made electronically from April 2012. HMRC have announced that they will not accept manual declarations from this time. Secondly, traders will have 21 days from the month's end to produce the supplementary declarations as opposed to the 2011 timescales of 30 days.

Other changes, which are indirectly related to Intrastat are the changes to Commodity Code numbers. Many traders will be aware that there are several changes to Commodity Code numbers from the 1st January 2012. Some numbers have changed quite dramatically especially in some paper related products.

Therefore, companies who move goods in international markets should go through the Commodity Code numbers being used to ensure that they are correct. Failure to obtain the correct Commodity Code will cause problems in submitting your Intrastat returns.

In addition, Duty/VAT and related HMRC charges are associated to the Commodity Code. Wrong numbers could mean wrong Duty/Tax rates!

Generalised Systems of Preferences (GSP)

The general principles of GSP as granted by the United Nations Conference on Trade and Development (UNCTAD) have been with us for many years. However, many traders have been aware that the current scheme is due to close at the end of 2011. GSP is a one-way (imports only so, non-reciprocal) trade agreement between the EU (donor countries) and beneficiary countries. The main idea is to assist countries with a lower GDP than the EU, to manufacture goods and sell their products to the EU market. Importers within the EU can import at a "preferential" rate of duty providing certain rules have been met. In particular GSP has quite complex rules of origin for products being traded under the regime.

The EU has announced that GSP will continue in its current form until 2017 with a few significant changes. One of these is in the special provision known as "Cumulation" The rules for cumulation have been simplified and the concept of "regional" cumulation (certain countries being grouped together) has meant that traders should find the complex area of whether their goods qualify under GSP or not easier to understand.

GSP Form A Certificates will still be used until 2017. After this date it is anticipated that a new scheme called the "Registered Export System" (REX) will be introduced which will change the current system quite radically. In essence we shall move from a paperwork driven regime to more of a self-certification one.

The EU regulation for the new rules under GSP is:

Regulation (EU) No 1063/2010

Trader can find more details on GSP at the following EU website:

www.ec.europa.eu/taxation_customs

Incoterms 2010 - International Chamber of Commerce (ICC)

Importers, exporters and freight forwarders should be aware that the latest revisions of Incoterms; Incoterms 2010 is nearly upon us. The ICC publication was released to the public release at the end of September 2010, with Incoterms 2010 taking effect on the 1st January 2011. Since 1936, the ICC has periodically revised Incoterms in order to ensure that they are kept up-to date and in-line with modern business practice. Changes in international trade is fast moving and the latest terms and interpretations will assist traders in ensuring that the terms they use in their everyday shipping contracts are relevant and up-to-date.

Some changes from Incoterms 2000 include:

• A clearer distinction between terms designed
  for multimodal use and marine use only.
  
  
• Cargo Security (more detail on the requirements of security messages)
  
  
• Some streamlining of the 13 terms.
  (DES/DEQ/DAF/DDU being removed from the 2010 publication).
  
  
• Introduction of two new terms DAT/DAP
  
  
• Terms designed for domestic and trade between Customs
  Duty free trading areas, like the EU, as well as international business.
  

Importers and exporters can keep tabs on the release of this publication by reference to the official ICC website:

www.iccwbo.org

Export Training Services ran a very successful series of half-day Incoterms 2010 workshops in major cities around the UK at the end of 2010 and start of 2011. The workshops have now finished as this subject is included within our Export Starter Course as a core subject. However, Export Training Services can provide this workshop as an "In house" course option. A typical Incoterms 2010 course take three and a half hours and a company can run both a morning and afternoon session if they wished to split the numbers of delegates.

For more details please contact Mark Burgess at: mark@export-training.co.uk

Modernising the Customs Code (MCC) … post 2011

Many importers and exporters will be unaware of the changes being implemented within the EU under the MCC banner. Customs procedures are changing and this could have a major impact on how an exporter/importer administrates their shipments in and out the EU. In this article we shall highlight two of key regimes under the MCC changes.

Authorised Economic Operator (AEO Status)

AEO status went live within the EU on the 1st January 2008. It is not mandatory and importers, exporters, freight forwarders, carriers etc have had to make a commercial decision as to whether or not they wish to apply for this Security and Customs status. This is not for the faint-hearted and anyone looking into the AEO standards criteria will recognise that this is a major project involving many key personnel in the business. However, the EU see AEO as a key component within the MCC changes and although still not mandatory, AEO will provide Customs with the confidence they need to grant authorisations for specific regimes like: Inward Processing, Simplified Entry Procedures (CFSP) and Warehousing. Therefore, any trader who currently enjoys the benefits of these regimes will need to consider AEO very seriously or their business could be affected. Customs will use AEO in order to judge a traders "risk score" when granting Duty/VAT relief authorisations post 2011.

For more information on AEO here is an official EU website >>

Electronic Entry Declarations (transitional period running from July 2009) post 2011.

Under the MCC changes importers and exporters (perhaps with assistance from their freight forwarders) will be required to submit an electronic message to Customs before the goods physically arrive or leave the Customs territory of the EU. The main thrust of the changes are Security based, as Customs see prior notification of goods as key to protecting our borders. Commission Regulation No. 273/2009 details that this procedure will commence in some EU countries from July 2009. Export Training Services do not foresee a major problem for UK exporters as the UK has, for many years, had a pre-clearance system called New Export System (NES). Currently, exporters or their freight forwarders declare the goods to Customs prior to the goods arrival at the port/airport. Our main concern rests with importers and the messaging requirements prior to the goods arrival into the EU. How will an importer know the key data elements required by Customs on a repair and return shipment? Will the supplier have the systems and knowledge to provide an electronic message in good time? Is this something that an importer will contract-out to their logistics provider? These are a few of the many key questions that need answering before the MCC changes.

Time is running out as the transitional period is nearly upon us. Importers/exporters need to look closely at the data elements required under this EU regime and ensure that they have identified how they will comply. Failure to do so will cause delays in clearance and extra costs. AEO traders (see previous article) will be required to submit a "simplified" amount of data. Non-AEO traders will be required to supply the full data content before the goods arrival otherwise delays in clearance will be inevitable.

More detail information on this can be found under the Official Journal Regulation (EC) No. 273/2009.