Week two - Foreign trade regulation in the EU Flashcards
8 stages of the EU economic integration
1) preferential agreement
2) free trade area
3) tariff union
4) tariff and customs union
5) common market
6) economic union
7) monetary union
8) political union
what is a free trade area
- prohibition between member states of custom duties (tariffs) and measures having an equivalent effect
what is a customs union
- prohibition between member states of custom duties (tariffs) and measures having an equivalent effect
- common external tariffs in their relations with third countries
what is a tariff and customs union
- prohibition between member states of custom duties (tariffs) and measures having an equivalent effect
- common external tariffs in their relations with third countries
- common customs legilsation: community customs code
in the EU what was the transition of moving from a community customs code to a modernised customs code
- rationalise and reduce the number of customs procedures
- computerisation of all customs formalities
- centralisation customs system
what are the objectives of the public offices located in borders, ports and airports in EU states
- control the transit of passengers and goods entering or leaving the EU territory
- to collect the export or import taxes from goods imported depending on the country of origin
what is TARIC and its main components
- it is the main element of external commercial protection, three components:
1) tariff nomenclator (tariff classification codes)
2) common customs tariffs
3) non-tariff measures established in the common EU commercial policy
what is the tariff nomenclator and its objective
- description, order and methodical listing of goods that are traded internationally using a numerical code and description of product
- it comprises a set of rules and principles that help locate a product
- its objective is to identify goods easily
what is a tariff
an external tax applied to goods imported to the EU
what is the objective of a tariff
to protect the EU economic activity against the competition of foreign products
four types of tariffs:
1) ad valorem - % of the customs value
2) specific - fixed quantity per unit or weight
3) mixed - ad valorem + specific
4) composed - ad valorem + max or min specific
what is the value that’s used to calculate the tariffs
customs value - the price that is estimated to be set for the goods, at the point in time when customs duties are due, as a result of a sale occurred in free competition
what is customs value equal to
customs value = transaction value: price actually paid or payable for the goods when they are sold to be exported to the EU common customs territory
when is the transaction value not applicable
when there are special conditions that make the price actually paid does not correspond to a free competition sale price
what are the subsidiary methods when it is not possible to apply the transaction value
- transaction value of identical goods or similar goods
- subtractive procedure
- reconstructive value
- combination of the above
what does it mean by the origin of goods
- economic nationality of goods in international trade
- geographic link of a commodity to a given country which is considered to have produced that product or has transformed it
how are origins distinguished
- preferential: gives tariff advantages
- non-preferential: applies third country tariffs
what are the certificates of preferential/non-preferential origins
- preferential: the declaration of origin must be certified with a proof of origin (declaration in the invoice)
- non-preferential: certificate of origin from a specific country
what is a customs duty
an obligation to pay import or export duties of goods (10 days, possible to extend this to 30 days)
when are there customs duties on imports and exports
imports - since the goods are in free circulation
exports - since the customs declaration
what are the customs destinations and customs regimes grouped into and what are they
1) general regimes (exports and imports)
2) special regimes: these make the general case more flexible to adapt to all possible economic situations
examples of special regimes
- transit (internal and external)
- deposit (customs and free zone)
- economic regimes (active and passive perfectioning)
- special destinations (temporary imports, destruction, abandon and re-exports)
what is meant by free circulation
free circulation of goods (imported from third countries) within the EU
when will a foreign product be in free circulation
- it has fulfilled all import formalities
- has paid the customs duties and other equivalent taxes or duties
once goods in free circulation have VAT applied, what are they called
community goods
when is VAT applied for goods in free circulation
in the final destination
when is VAT applied for goods released for consumption
in the entry country
when is VAT due
- imports from third countries: same time as tariffs
- intra EU introductions (imports within the EU): liquidation of VAT is done by the importer/buyer in its country
exemptions of VAT
- goods that are going to be exported
- goods in free duty zones
- temporary imports
what is VAT
an indirect tax levied directly on consumption, taxing the delivery of goods and the provision of services
why are exports free from VAT in the EU
to avoid double taxation, allowing EU goods to access international markets under the same condition as those in other countries
what are the two categories of transit
- internal: community commodities, free circulation goods but no released for consumption
- external: non-community commodities
define customs deposit
warehouses under customs control where goods remain for an unlimited time with no VAT, duty or tariff
what are the benefits of customs deposit/warehouses
- at the time of importing the good, the owner may not know the final destination of the good
- firms can defer the payment of tariffs and VAT depending on whether they sell to EU or foreign customers
- goods can be preserved or prepared for distribution
what are deposits in free zones
areas that are not considered to be within the EU community customs area
what are temporary admissions on imports
allows using the EU customs territory but import taxes and duty are suspended
what is destruction under customs control
the destruction of commodities implies no payment of duties or tariffs
what are abandoned goods to the public treasury
once the goods are presented to customs, the consignee of the goods may decide to not give it a customs destination, it may be tacit or explicit
what is re-exporting (outside the EU)
goods that exit from the EU common customs territory that had previously been imported through the temporary imports regime or introduced through a customs deposit or warehouse regime
