Since the Registered Exporter system (the REX system) came into effect on January 1st 2017, we’ve had numerous questions from clients asking what they should do when re-consigning goods inside the EU or to Norway or Switzerland.
What is REX?
REX is the system of certification of origin of goods that is used in the Generalised System of Preference (GSP) of the European Union. In short, it replaces the “old” certificate of origin Form A with a “statement on origin” of the goods on the invoice (or another commercial document). The exporter who draws up the statement is required by his customs administration (or other competent authority) to be registered in a database. A similar setup was established with the EU free trade agreement with South Korea, so the statement on the invoice is not new to the GSP.
How will this change how we conduct transactions?
In one-to-one transactions, the change will in fact save time and money, because this no longer requires the issuing of documents to be stamped by customs or other agencies. However, there are challenges relating to what is required when an EU buyer receives goods that will be forwarded to their client, who makes the import clearance.
The client will want to prove the origin of the goods in their customs declaration to benefit from a lower duty rate so the client must be informed. For this reason, the first buyer may also have to be registered in the REX-system as a “re-consignor”.
What are the key issues to consider when creating new statements of origin?
The rules are outlined in the Implementing Act (IA) of the Union Customs Code (EU regulation 2015/2447).
The key rule for replacing a statement is that the original statement must comply with the rules in the IA. This is also true for the replacement statement, which must contain the particulars mentioned in Annex 22-20 of the IA. The re-consigner must be registered in REX if,
- The goods are sent elsewhere in the EU and the value of the original consignment is higher than 6000 Euro
- If the goods are sent to Norway or Switzerland.
If the re-consignor is not registered in REX, they can still consign goods (where the value of the original consignment exceeds 6000 Euro) inside the EU but then the goods must be delivered with a copy of the original statement. In most cases this will be the invoice, which gives the (end) buyer all the information about the original seller`s prices, margins etc. Inter-company sales excluded, this is often not the information the re-consignor likes to share. However, this can partially be solved if the initial statement is placed on another commercial document, for example a packing list.
How does the change affect the handling of goods?
The articles in the IA describing the replacement of a Form A and the replacement of the origin statement both state the goods must be placed under the control of an EU customs office. Replacement of a Form A usually takes place when goods are temporarily stored in a bonded warehouse and requires action from customs, verification and storing of the original Form A and issuing the replacement. Replacing the statement does not involve any action from customs, apart from the requirement that the goods are placed under their control. Strictly speaking this means a statement can’t be replaced when the goods are still in transit. Goods are under customs control when they arrive in the EU, so the re-consignor would have to wait until the goods are in the port before they can make their invoice or packing list, which presents some practical issues.
If you would like more information or advice on REX, or information on any of our services, please give us a call on +44 (0)845 519 0878.