Follow these pointers to qualify for duty-free entry to EU

05 Mar 2000 - by Staff reporter

Look to your Rules of Origin, writes Alan Peat

NOW THAT the SA/ European Union (EU) Trade Development and Co-operation Agreement (TDCA) has been pulled from the brink of extinction, exporters aspiring to duty-free entry to the EU market have breathed a sigh of relief.
But, before gaily moving off into what you hope are duty-free exports, you will have to look to your Rules of Origin (RoO), according to Riaan de Lange, senior manager of the customs and international trade consultancy at Deloitte & Touche.
If you can't comply with the RoO provisions, you won't qualify for duty-free entry, he told FTW.
These RoO provisions are contained in Protocol I of the Agreement and entitled: Concerning the definition of the concept of originating products and methods of administrative co-operation.
Title II of the Protocol is where the definition of originating products lies.
In the TDCA agreement there are two possibilities.
The first is products wholly obtained in South Africa.
The second is that SA-made products can incorporate materials that have not been wholly obtained in SA. In this case, said De Lange, the materials must undergo sufficient working or processing in SA.
And it's in Articles 5 and 6 that you'll find whether you qualify in this respect or not - under the titles Sufficient worked or processed products and Insufficient working or processing operations.
Another way of meeting the originating criteria is through bilateral cumulation and/or cumulation with African Caribbean and Pacific (ACP) States - detailed in Article 3 as cumulation of origin.
It allows for materials originating in the EU or the ACP states (Lome Convention members) to be considered as materials originating in SA - provided they are incorporated in an SA-sourced product.
Any working or processing carried out within the Southern African Customs Union (SACU) will be considered as South African when further processing takes place here, said De Lange. As for ACP materials, they will only be considered if the value added in South Africa exceeds the value of the materials used in the ACP countries.
If you want to know how much SA working you must do on your product(s) read Annex II of the Protocol - with the self-explanatory heading: List of working or processing required to be carried out on non-originating materials in order that the product manufactured can obtain originating status.
Even if you do comply with RoO, you will still have wasted your efforts if your exports to the EU are not accompanied by an EUR1 movement certificate. This is issued by one of 21 designated SA Revenue Service (SARS) offices in this country.
Any appropriate documentation that supports the claim that exports are originating products should accompany the application.
It is important to bear in mind, said De Lange, that - even though the issuing authority signed the EUR1 form - the responsibility for the correctness of the information provided rests with the exporter.
SARS has the right to verify compliance by requesting any documentary evidence or by carrying out any verification visit, either before the EUR1 is issued or at any later time. The issuing authority will retain all EUR1 forms for a minimum period of three years.
The authorities at either end of the export route can also question each other, De Lange added. They can request each other to verify the authenticity of movement certificate; the originating status of the products, or the fulfilment of the other requirements of the Protocol, he said.
Possibly the single most important question from exporters is: How should the EUR1 be completed?
With great care, is De Lange's answer.
Exporters should be cautioned that it's more than simply collecting an EUR1 and completing it, he
said. Careful consideration should be given to the information that is required, and the substantive proof that is required to comply with the originating product requirements.
It cannot be overly emphasised that companies involved in the exportation of product should spend some time ensuring that they do comply. At the end of the day it is not worth the risk of neglecting this.