BREXIT Guidance for RE-KKUR Customers and Suppliers SUMMARY: RE-KKUR Plaster bead Products Product based on No-Deal Import Product Commodity or Tariff Code: HS 3925901000 No-Deal Import Tariff (WTO): 6.5% Rules of Origin EU: 3rd Country (WTO) This Information was correct as the 28th February 2019, based on No-Deal BREXIT. Full cost impact will be determined on whether UK leave with a Deal or No-Deal scenario. NB: in the event of No-deal scenario additional administrative costs consistent with activities required in Section 7 and 9 will incur additional costs to all imported goods. RE-KKUR Guidance on Possible Tariffs and Other Costs of International Trade. RE-KKUR has sought the necessary information and guidance for the possible “worst case scenario” - for EU Customer markets.… The information provided will cover the following subjects: • Import duties • VAT • Standards • Rules of Origin • Customs procedures (including Trusted Trader Scheme and Authorised Economic Operator status) • Other relevant matters 1. Present Situation – Single Market The European Single Market guarantees the free movement of goods, meaning the absence of border controls, customs duties and the removal of trade barriers among Member States. Thus, any product lawfully produced and marketed under the regulations of a Member State must, in principle, be admitted to the market of any other Member State. 2. Implications of No-deal Scenario The potential Impact of WTO Tariffs on Cross-Border Trade, alerts businesses to the possibility that, in the absence of a specific trade deal, the tariffs applied to third countries under WTO arrangements represent a fall-back scenario for goods trade and recommends that this scenario be examined. RE-KKUR is one of the first firms to do so. 3. WTO Default Tariff for RE-KKUR products Tariff code HS 3925901000 is the appropriate one for RE-KKUR’s main line - defined in the Plastics chapter of the Customs Code as: - fittings and mountings intended for permanent installation in or on doors, windows, staircases, walls or other parts of buildings. The current WTO tariff for such products is 6.5%.This would apply in the form of an import duty on RE-KKUR products sold to the Republic of Ireland, the Netherlands and other EU countries. 4. Non-Tariff Barriers We have considered non-tariff barriers such as quantity limits and technical requirements in the forms of licensing, labelling and standards. We believe that no such barriers will apply in the case of RE-KKUR exports to the EU. 5. Rules of Origin Non-preferential Rules of Origin will apply in this case of imports to the EU of ‘third country’ products coming from a territory without a free trade agreement. A certificate of origin will be needed. The Non-preferential origin requirement is for anti-dumping purposes and not an issue relevant to RE-KKUR’s trade. 6. Technical Specifications for Construction Products A number of EU regulations apply to construction products. They can only be placed on the European Union (EU) market if they fulfil the requirements established by Regulation (EU) No 305/2011 (OJ L-88 04/04/2011) (CELEX 32011L0305)). The Regulation lays down the basic requirements for construction works. Construction products should comply with the basic requirements in order to be incorporated in a construction work. The Construction Products Regulation (CPR) lays down harmonised conditions for the marketing of construction products. The CPR applies to any product or kit which is produced and placed on the market for incorporation in construction works in a permanent manner, including both buildings and civil engineering works. Construction products must be suitable for works that satisfy basic requirements: • Mechanical resistance and stability • Safety in case of fire • Hygiene, health and the environment • Safety and accessibility in use • Energy economy and heat retention • Sustainable use of natural resources The basic requirements constitute the foundation for the preparation of standardisation mandates and harmonised technical specifications. Those produced by RE-KKUR are not the subject of such technical specifications or official standards, however all RE-KKUR products to adhere to EUROCLASS E Fire rating and have been tested to BS EN ISO 11925-2:2010. 7. Customs Procedures and Paperwork The following is a summary of the current EU regulations for the import of goods from “third countries” and may be subject to our business, RE-KKUR and its customers after BREXIT. Please note that these obligations will be on RE-KKUR’s EU customers, but those buyers will require RE-KKUR’s cooperation and assistance with the material required for this documentation. Particular attention should be paid to the contents of the Commercial Invoice. We highlight the following requirements of EU importers: • The EORI Number EORI stands for Economic Operator Registration and Identification. The EORI number is an identifier, unique throughout the EU, assigned by a customs authority in a Member State to Economic Operators (EOs), both companies (legal persons) or natural persons. By registering for customs purposes in one Member State, an EO is able to obtain an EORI number which is valid throughout the EU. The operator will then use this number in all communications with any EU customs authorities where an EU-based identifier is required, for example in customs declarations. • Entry Summary Declaration (ENS) The carrier of goods entering the customs territory of the EU needs to lodge advance cargo information in the first customs office of entry to the EU. This information is provided through the Entry Summary declaration (ENS) which needs to be lodged in advance by the carrier of the goods, although in some cases it can also be done by the importer-consignee, or a representative of the carrier or importer. The ENS declaration must be lodged even if the goods are not going to be imported to the EU. The deadlines for the lodging of the ENS vary according to the mode of transport carrying the goods into the customs territory of the EU. In RE-KKUR’s case, the most relevant mode is road traffic and the deadline is at least 1 hour before arrival. Part of the information that the carrier must include in the ENS comes from documents originated by the exporter: bill of lading and commercial invoices, for example, so it is crucial that these reach the party responsible for the lodging of the ENS in a timely and accurate manner. • Import Procedures Goods imported into the EU customs territory must be accompanied by a summary declaration, which is presented to the customs authorities of the place where they are to be unloaded. Goods are then placed under the temporary storage situation (not exceeding 90 days in any case), which means that they are stored under customs supervision until they are placed under any of the following customs procedures or re-exported: o Release for free circulation Goods are "released for free circulation" when the conditions relating to importation into the EU have been duly fulfilled (payment of tariff duties and other charges, as appropriate, application of non-tariff commercial policy measures and completion of the other formalities related to the import of the goods). Release for free circulation confers on non-Union goods the customs status of "Union goods". Once duties, value added tax (VAT) and any applicable excise duties have been paid, goods are "released for consumption", as they have satisfied the conditions for consumption in the Member State of destination. o Special procedures Goods may be placed under any of the following categories of special procedures – external or external transit; storage; specific use and processing. • Customs Declaration - SAD (Single Administrative Document) The SAD is the main customs form used in international trade. It is known as form C88 in the UK. It was introduced to facilitate trade to and from the EU. It does not apply to trade within the Single Market. It includes information about the goods, their movement, the goods commodity code and the customs procedure code. The document contains 54 boxes and the full version comes in eight parts for use at different stages of the trading process. The Single Administrative Document (SAD) may be presented either by physically lodging it at the designated Customs office, or electronically submitting it via a computerised customs clearance system called Automated Entry Processing (AEP). The SAD can be presented to the customs authorities by the importer or his representative. • Value for Customs Purposes Customs authorities use the value of imported goods as one of the elements to assess the amount of duty (customs debt), which has to be paid before goods can enter the EU, since most customs duties and VAT are expressed as a percentage of the value of the goods being declared. The definition of the value for customs purposes relies on the concept of "transaction value", which is the commercial value of the merchandise at the point of entry in the EU. • Commercial Invoice The commercial invoice is a record of the transaction between the exporter and the importer. Once the goods are available, the exporter issues a commercial invoice in order to charge the importer for the goods. The commercial invoice contains the basic information on the transaction and is always required for customs clearance. Although some entries specific to the export-import trade are added, it is similar to an ordinary sales invoice. The minimum data generally includes the following: o Exporter and importer information (names and addresses) o Date of issue o Invoice number o Description of the goods (name, quality, etc.) o Unit of measure o Quantity of goods o Unit value o Total item value o Total invoice value and currency of payment. The equivalent amount must be indicated in a currency freely convertible to Euro or other legal tender in the importing EU country o The terms of payment (method and date of payment, discounts, etc.) o The terms of delivery according to the appropriate Incoterm o Means of transport No specific form is required. The commercial invoice is to be prepared by the exporter (RE-KKUR) according to standard business practice and it must be submitted in the original along with at least one copy. In general, there is no need for the invoice to be signed. In practice, both the original and the copy of the commercial invoice are often signed. 8. Customs Value Declaration A Customs Value Declaration must be presented to the customs authorities where the value of the imported goods exceeds €20,000. The Customs Value Declaration must be drawn up conforming to form DV 1. This form must be presented with the Single Administrative Document (SAD). The main purpose of this requirement is to determine the value of the transaction in order to fix the customs value (in other words the taxable value) to apply the tariff duties. 9. Required Freight Documents Depending on the type of transport used, the following documents are to be filled in and presented to the customs authority of the importing EU country upon importation in order for the goods to be cleared: • Bill of Lading This is issued by the shipping company to the operating shipper, confirming that the goods have been received on board. In this way the Bill of Lading serves as proof of receipt of the goods by the carrier obliging him to deliver the goods to the consignee and it contains: o the details of the goods o the vessel o the port of destination • Road Waybill (CMR) A document containing the details of the international transportation of goods by road, set out by the Convention for the Contract of the International Carriage of Goods by Road 1956 (the CMR Convention). The convention enables the consignor to have the goods at his disposal during transportation. It must be issued in four copies and signed by the consignor and the carrier. a) The first copy is intended for the consignor. b) The second remains in the possession of the carrier. c) The third accompanies the goods and is delivered to the consignee. d) The fourth one must be signed and stamped by the consignee and then returned to the consignor. Usually, a CMR is issued for each vehicle. • ATA Carnet Admission Temporaire/Temporary Admission carnets are international customs documents to allow the temporary importation of goods, free of customs duties and taxes. They are issued by the chambers of commerce in the majority of the industrialised world. ATA carnets can be issued for the following categories of goods: o commercial samples o professional equipment o goods for presentation or use at trade fairs, shows, exhibitions, etc. • TIR Carnet The TIR Carnet is a customs transit document used for the international transport of goods, a part of which must be made by road. They allow the transport of goods under a procedure called the TIR procedure (1975 TIR Convention). The TIR system requires: o goods to travel in secure vehicles or containers o all duties and taxes at risk throughout the journey to be covered by an internationally valid o guarantee o the goods to be accompanied by a TIR carnet o customs control measures in the country of departure to be accepted by the countries of o transit and destination. • Freight insurance Insurance covers common risks during handling, storing, loading or transporting cargo, but also rare risks, such as riots, strikes or terrorism. There is a difference between the goods transport insurance and the carrier's responsibility insurance. The covered risks, fixed compensation and indemnity of the contract of transport insurance are left to the holder's choice. Nevertheless, the hauler's responsibility insurance is determined by different regulations. Depending on the means of transport, indemnity is limited by the weight and value of the goods and is only given in cases where the transporter cannot be held responsible. The insurance invoice is required for customs clearance only when the relevant data do not appear in the commercial invoice indicating the premium paid to insure the merchandise. • Authorised Economic Operator (AEO) Any economic operator established in the customs territory of the Union who is part of the international supply chain and is involved in customs-related operations, may apply for AEO status. The status is that of a “trusted trader” and confers a number of benefits in dealing with Customs authorities – simplicity, ease, speed and good relations. However, the application process is seen as onerous for small firms. Furthermore, the benefits of AEO are limited if the system is not widespread amongst other economic operators. At present, there are only 600 AEOs in the UK, many of them intermediaries such as freight forwarders. The AEO system was developed by the World Customs Organisation and is encouraged by the EU. Some other countries are adopting the scheme and signing Mutual Recognition agreements with the EU to ensure that their economic operators can avail of the AEO benefits in their trade with EU partners. The UK government would have to have such a Mutual Recognition Agreement with the EU for NI firms to access the AEO benefits. 10. Value Added Tax In the case of importation of goods, VAT is usually charged when customs clearance procedures take place in order to be released for consumption within the importing country. There would be no change to the existing VAT rates – 23% in the RoI and 21% in the Netherlands but there would be a change to the procedure, affecting cash flow, namely the requirement on the importer to pay the requisite duty and VAT at the point of entry or to lodge a customs guarantee with Irish (or Dutch) Customs to cover the VAT obligation. 11. Conclusions We trust that our report presents clearly the impacts on RE-KKUR and its customers in the event of a no-deal Brexit. It is difficult to estimate the probability of that circumstance and one’s estimate would change frequently in this current dynamic environment. However, it is clear that both parties will be effected financially and administratively, therefore it is as important than ever, that we all work through these next few years closely and together. 12. Appendix: Further Information on EU Customs Procedures For Goods from Third Countries. More information can be found in the Guidance Document on Customs Formalities on Entry and Import into the European Union, at the EORI Guidelinesand at the page on National Customs Websites for information on Customs for specific Member States. Entry Summary Declaration (ENS) The ENS declaration falls within the scope of the Import Control System (ICS). There is a Guidance Document on Customs Formalities on Entry and Import into the European Union, including information about the ENS. Import Procedures European Commission, Taxation and Customs Union, UCC Guidance documents: https://ec.europa.eu/taxation_customs/business/union-customs-code/ucc-guidancedocuments_en#import_and_entry Customs Value European Commission, Taxation and Customs Union, Value of Declared Goods: http://ec.europa.eu/taxation_customs/customs/customs_duties/declared_goods/index_en.htm RE-KKUR, 5 DRUMBRUGHAS AVENUE, DRUMBRUGHAS NORTH, LISNASKEA, BT92 0QQ, NORTHERN IRELAND+44 (0)28 6772 1233INFO@RE-KKUR.COM Developed by Jacada Digital Re-Kkur (NI) Limited 2019