EU Customs and Trade Agreements

On April 19, Crowell & Moring’s International Trade Attorneys hosted a webinar on “Trade in 2018 – What’s Ahead?”

Please click here to register and view the webinar on demand.


From the Section 232 national security tariffs on steel and aluminum imports to the ongoing NAFTA re-negotiation, the Trump administration is seeking to implement significant changes in international trade policy and enforcement. Economic sanctions on Russia continue to expand, the future is far from clear regarding Iran, and perhaps North Korea is coming into focus. A new Asia trade agreement without the United States, and a bumpy road ahead for Brexit all make for uncertainty and the need for enhanced trade risk management. Join us as we identify the international trade risks and opportunities likely to continue and grow in 2018.

Our Crowell & Moring team discussed predictions for the remainder of the year, with cross-border insights from our practitioners in the U.S., London, and Brussels. Topics included likely trends and issues in the U.S. and EU including:

  • Trade policy developments: Section 232, NAFTA renegotiation, and trade remedies
  • Sanctions in Year Two of the Trump Administration: Russia, Iran, North Korea, and beyond
  • Anti-money laundering (AML) and beneficial ownership
  • Supply chain risk management: blockchain, forced labor, the U.K. Modern Slavery Act, and GDPR
  • Europe: Brexit, the EU’s 4th AML Directive, and the EU/U.K. AML enforcement
  • CFIUS: how significant is the new legislation?
  • Export controls: Wither reform?
  • Import and customs

In the context of the negotiations on the terms of the transition period during which the U.K. will remain bound by EU rules following its official exit, the applicability and enforcement of international trade agreements between the EU and third countries is an important question. Although the U.K. would remain bound by the terms of the free trade agreements (FTA) concluded by the EU, the major trading partners with which these FTAs have been concluded would not necessarily be bound to respect the terms of the agreements in relation to the U.K.

Certain trading partners including Canada and Japan appear determined to follow a more conciliatory approach, emphasizing the desirability of preserving a degree of predictability in their trade relations with the U.K. Japanese officials have mentioned the onerous nature of renegotiating existing trading terms with the U.K., while Canadian officials refer to the fact that the FTA with the EU (CETA) has been concluded and entered into force so recently.

However, other trading partners including Chile and South Korea have suggested they might seek to condition the extension of their FTAs’ applicability to the U.K. during the transition period. South Korea in particular appears to see two opportunities to extract concessions from the U.K. to remedy the trade deficit it has maintained with the U.K. in recent years. The first opportunity would arise in the context of agreeing to the transition period, and the second in the subsequent negotiation of bilateral trade terms with the U.K. to apply after the transition period.

As a result, in an attempt to protect FTAs from renegotiation, the EU and U.K. will likely agree on a declaration confirming the continued applicability of these FTAs to the U.K. during the transition period.

Because the U.K. will require its own customs laws following its exit from the European Union, the U.K. Government has issued a White Paper outlining the options for the customs policy to be pursued by the U.K. from March 2019 onwards. In the context of the ongoing withdrawal negotiations with the EU and in view of the new Customs Bill’s passage, the U.K. Government is now following through on an important commitment made in the White Paper to engage with stakeholders and receive their comments.

Please click here for more information.

On December 20, 2017, the Court of Justice of the European Union (CJEU) decided that a company may not use transaction value for customs valuation purposes when a transfer price consisted of both an amount initially invoiced and declared, and a flat-rate adjustment made after the end of the accounting period.

The Community Customs Code (CCC) and its related jurisprudence provides that customs value must be determined primarily according to the transaction value method, with the price actually paid or payable for the goods to be adjusted where necessary to avoid establishing an arbitrary or fictitious customs value. The CJEU found that uncertainty regarding future adjustments at the end of the accounting period made it impossible for the transfer price to be used as the transaction value for imports into the EU.

Please click here for more on this decision, as well as a discussion on how the U.S. continues to allow importers to use the transaction value method of appraisement.

Unlike the NAFTA negotiations, discussions to modernize the Global Agreement between the EU and Mexico are proceeding steadily, such that the parties are still adhering to their objective of reaching an agreement in principle by the end of 2017. A fifth round of negotiations took place in Brussels at the end of September, followed by an important intercessional meeting in mid-October. A sixth round of negotiations is scheduled for the end of November in Mexico.

The parties report achieving progress in the areas of customs and trade facilitation, rules of origin, good regulatory practice, technical barriers to trade, digital trade, and investment. However, further work remains in the thornier areas of public procurement, dispute settlement, geographical indications, and the sectoral annexes for automobiles, pharmaceuticals, and wines.

The Global Agreement’s trade pillars, which entered into force in 2000 for goods and 2001 for services, preceded by a number of years the Commission’s drive to conclude trade agreements that are more ambitious in scope to address, for example, regulatory barriers to trade, sustainable development, government procurement, and intellectual property rights. The legal underpinnings of the important EU-Mexico trade relationship were therefore due for an update.

As it has come to coincide with the review of the North American Free Trade Agreement over the past year, the renegotiation of the Global Agreement between the EU and Mexico is marked by a sense of relative urgency. While the EU maintains a tough line on key negotiating positions including trade in services and government procurement, ultimate agreement with the EU will help Mexico secure one of its major trade relationships.

For more information, contact: Charles De Jager

Recent Trends Following Entry into Force of Union Customs Code (UCC)

Under EU customs law, economic operators can obtain reimbursement or remission of customs duties, broadly speaking, in three different situations:

  • Where the customs authorities committed an error which could not be detected by the importer acting in good faith.
  • Where the customs duties were not legally owed, or to use the Union Customs Code’s approach, where customs duties have been paid in excess.
  • Where it would be unjust that the importer bears the burden of customs duties. In such cases, based on equity, the importer must be in a so-called “special situation.”

The above conditions, albeit with a different wording, were already present in the previously applicable Community Customs Code. They have been widened by the administrative practice of the European Commission deciding such cases, as well as by the case law of the Court of Justice of the European Union (CJEU). The latter took the view that importers could use such provisions to obtain before the national customs authorities of the EU member states reimbursement of antidumping duties that were not legally due by arguing before customs and the judicial authorities that the underlying antidumping regulation at issue was defective.

Reimbursements have also been granted as a consequence of a review of the tariff classification of the product, as well as in cases where incorrect certificates of preferential origin were issued by third countries’ authorities or accepted by the EU customs authorities. The provisions on reimbursement add to the ones related to appeals and litigation with customs, thereby establishing a so-called “double avenue approach”: on the one hand companies can use all available appellate procedures against customs while, on the other hand, and at the same time, they can file a request for repayment and remission of duties.

The Union Customs Code has streamlined the above procedures by establishing a three-year deadline from importation (or from the further initiation of audit action by customs) to file reimbursement or remission requests.

The ruling of the CJEU on 18 January 2017 in Case C-365/15, Wortmann KG Internationale Schuhproduktionen, is of particular importance in this context. The ruling provides that where customs duties, including antidumping duties, are collected by the customs authorities of the EU member states in breach of EU law, there is an obligation on such authorities not only to reimburse such duties, but also to reimburse them with interest running from the date of payment of duties to customs by the parties involved.

Although a strict literal interpretation of both the former provisions in force and of those of the UCC would call for an outcome opposite to the above-mentioned judgment concerning interest, the CJEU’s reasoning based on general principles of EU law allowed for importers fully to recover interest.

The above demonstrates that EU customs law must be read and interpreted in light of general EU law. It also evidences that there are great opportunities for companies under the UCC provisions on repayment and remission of duties. Unfortunately, companies do not yet rely upon these provisions as they should.

For more information, contact: Jeff Snyder, John Brew, Charles De Jager

Prepared as part of our occasional collaboration with Laura Beretta and Davide Rovetta, Grayston & Co., Brussels.

Following the initiation of the EU-Singapore Free Trade Agreement (EUSFTA), the European Commission sought an Opinion from the Court of Justice of the European Union (CJEU) on the allocation of competence between the EU and its Member States regarding the Agreement. The EUSFTA provides that it is to be concluded as an agreement between the EU and Singapore without the Member States’ participation. However, in her recently published Opinion, CJEU Advocate General Eleanor Sharpston concluded that the EUSFTA can only be concluded by the European Union and the Member States acting jointly.

AG Sharpston reviewed the areas of the agreement for which the EU enjoys exclusive external competence and those for which it shares external competence with the Member States. Among the latter areas are certain transport services and related government procurement, the non-commercial aspects of intellectual property rights, fundamental labor and environmental standards, and dispute settlement, mediation and transparency mechanisms applicable in the areas of shared competence. Because these parts of the EUSFTA do not fall within the EU’s exclusive competence, AG Sharpston concluded that the Agreement cannot be concluded without the Member States’ participation. She further concluded that the EU has no external competence to agree to be bound by the part of the Agreement terminating bilateral agreements between certain Member States and Singapore.

In accordance with CJEU procedures, the Opinion of the Advocate General is delivered ahead of the CJEU’s decision, which is expected later in 2017 and is likely to follow largely AG Sharpston’s Opinion. A more detailed review of the issues will be provided in a future issue on the basis of the CJEU’s decision. The ultimate decision of the CJEU may have a significant impact on the EU’s ability in the future to conclude comprehensive free trade agreements with third countries.

For more information, contact: John Brew, Charles De Jager