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Sedat KOCABIYIK
Customs Consultant
With the entry into force of new trade policy measures, additional customs duties, and additional financial obligations, the issue of origin of goods continues to remind us of the importance of its role in foreign trade transactions. Origin determines the origin of an item, in other words, the economic nationality of the item. Suppose the origin of the goods is known. In that case, it is possible to determine whether a preferential tariff will be applied to those goods and whether the goods will be subject to trade policy measures, additional customs duties, or additional financial obligations.
The origin of the goods is regulated in the Customs Law under two headings: "non-preferential origin of the goods" and "preferential origin of the goods." Basic rules of origin are mentioned under the heading "Non-preferential origin of goods." The non-preferential origin of the goods appears in the implementation of the trade policy measures in force, in the regulations regarding additional customs duties, or other financial obligations such as further financial obligations. The "preferential origin" of the goods is the preferential tariff practices included in the agreements that require a preferential tariff application that Turkey has made with some countries or country groups, and the preferential tariff practices determined by the President and unilaterally recognized by Turkey for some countries, country groups or territories. Comes to the fore.
In this article, we will comprehensively review the latest regulations regarding the origin of goods in 2021, covering the following key topics.
- Following a significant change in customs regulations, the submission of the certificate of origin to the customs authorities for goods from EU countries is now required, accompanied by the A.TR Movement Certificate.
- Who can issue the certificate of origin for goods coming from EU countries?
- Latest status of proof of origin documents to benefit from a preferential tariff.
Following the amendment to the Customs Regulation, the certificate of origin for goods from EU countries must be submitted to the customs authorities accompanied by an A.TR Movement Document
The recent amendment to the Customs Regulation, published in the Official Gazette No. 31330 dated 10.12.2020, significantly alters paragraph (d) of the 4th paragraph of Article 205. This change is crucial for importers and customs clearance professionals.
First, let's examine the situation before this change. The old text stated that a certificate of origin should not be required for goods coming to our country from EU countries accompanied by an A.TR Movement Certificate, without prejudice to the situations determined by the risk criteria specified by the Ministry of Commerce. The thing to consider here was the risk criterion. You were ordering and presenting your goods to the customs office for import. When creating and registering your customs declaration, the risk criterion comes into play, and you see whether the system will request the certificate of origin. Woe to you if the system demands a certificate of origin! Of course, at this stage, the goods had arrived in the country and were in customs areas or warehouses, ready for customs clearance. While you could obtain the certificate of origin from some EU countries within one to three days, from some EU countries, this period could take longer, or you could not get the document. In this case, even though the importer's goods were of EU origin, they could be considered originating from a country subject to additional financial liability, customs duty, or trade policy measures. Prolonging this process due to the epidemic also brought new additional costs. The facilitation brought by the Ministry of Commerce did not help matters either.
What happened after the attachment?
By amending the Customs Regulation, the phrase "risk criterion" regarding the presentation of the certificate of origin was removed and replaced with "Without prejudice to the provisions of Article 47 of the Association Council Decision No. 1/95 regarding trade policy measures...", A.TR from EU member states It has been noted that the certificate of origin will not be required for the goods that come with a Movement Certificate to be released into free circulation. So, what is meant by the trade policy measures mentioned in the Association Council Decision?
Article 46 of the same Decision contains the following provisions: "As a deviation from the principle of free movement of goods set out in Part I of this Decision, one of the Parties shall take anti-dumping measures or other measures by the trade policy instruments mentioned in Article 44 in its relations with other parties or third countries." The Party that is about to receive the goods may subject the import of the relevant products from the territory of the other Party to these measures. In these cases, the Party taking the measure shall notify the Customs Union Joint Committee of the measure taken."
In essence, the Decision grants the parties the authority to 'take trade policy measures against third country products, as long as you notify the Association Committee of this situation.' This authorization carries significant implications for international trade and the relationships between the parties involved.
In this context, the trade policy measures that Turkey can implement are listed in the 4th article of the Import Regime Decision as follows:
- Legislation on the Prevention of Unfair Competition in Imports
- Legislation on Protective Measures in Imports
- Legislation on Quota and Tariff Quota Administration in Imports
- Legislation Concerning the Implementation of Surveillance in Imports
- Legislation on Surveillance and Protective Measures in the Import of Certain Textile Products
- Legislation on Surveillance and Protective Measures in Imports of Textile Products Originating from Certain Countries Outside the Scope of Bilateral Agreements and Protocols or Other Regulations
- Legislation on the Protection of Turkey's Commercial Rights
Article 47 of the Association Council Decision No. 1/95 states: "During the completion of the procedures regarding the import of products subject to trade policy measures, the authorities of the importing State request the importer to indicate the origin of the products in question in the customs declaration. "If deemed absolutely necessary due to serious and well-founded suspicions, additional supporting evidence may be requested to establish the true origin of the product in question." It is said. Companies clearly declare the origin of the goods on the invoice and in the customs declaration. In other words, they comply with the provision stated in the Association Council Decision. However, the lack of a sub-regulation explaining what these "serious and well-founded suspicions" are is a pressing issue that needs to be addressed.
You are bringing your goods from an EU member country accompanied by an A.TR Movement Certificate. Consider that you have made your declaration for import. Will the officer in charge of the customs administration have any doubts about the origin of the goods? Or is this initiative left to them? Suppose a sub-regulation by the ministry clarifies the issue. In that case, trade will be facilitated for foreign traders, and it will also be possible to eliminate the additional costs of issuing a certificate of origin.
With the change made, it is evident that the cent customs administrations should not request the certificate of origin goods coming from EU countries compared to the A.TR Movement Certificates are not subject to trade policy measures. However, it should be remembered that there are still hesitations about the trade policy measures in practice.
Who can issue the certificate of origin for goods coming from EU countries?
Article 38 of the Customs Regulation states who can issue the certificate of origin. However, in import transactions from EU countries, we may encounter situations where the country of trade differs from the country of shipment and export of the goods. In cases where the certificate of origin was issued by the country of trade, certificates of origin submitted to the customs authorities were not accepted, claiming that the country of export or origin should issue the document. To summarize this situation with an example, in a trade transaction carried out by a company whose headquarters is in Germany and whose branch is in Austria, the goods are shipped to our country by the company's branch in Germany. The company's branch issues the A.TR Movement Certificate and has it visited by the relevant country authorities. However, the certificate of origin is issued from the company's headquarters in Germany. Since the country of origin and export country of the goods was Austria, the certificate of origin issued by Germany was not accepted by the customs administrations, citing Article 38 of the Customs Regulation, because "the competent authorities of the country of origin or the exporting country must issue the document."
In such cases, companies had to request a new certificate of origin from the country where the goods were shipped. This process could take longer, and companies had to pay additional storage until the certificate of origin was received. In addition, if the certificate of origin could not be obtained, companies could face extra tax payments. In our other articles about the origin of goods, according to the "Common Customs Code" put into effect in the European Union with the Council Regulation No. 2913/92 dated October 12, 1992, the "Community Customs Territory" of the European Union is defined as "European Union" Customs Territory." We mentioned that EU countries consider themselves a single country and that this is the primary purpose of the customs union. In this context, we were stating that the current practice is unfair, considering the integration of EU countries.
The General Directorate of Customs published an economic article regarding the solution to the problems on the subject. The article states that in shipments from EU countries, in cases where the trading country and the export country are the same or the shipping country is a different EU member country, the certificate of origin should be accepted regardless of which one it is issued by. In addition, it is reminded that certificates of origin issued by non-EU countries should only be issued by the country of origin or the exporting country. With this regulation, the hesitations about where to issue the certificate of origin in trade from EU countries have been eliminated. However, considering the problems experienced so far, this is also a late decision.
Latest status of proof of origin documents to benefit from a preferential tariff
Until November last year, if the customs duties applied to goods were applied the same or zero for all countries, it was not possible to use a certificate of origin for these goods to prove that they did not originate from the country where trade policy measures, additional customs duties, and additional financial obligations were applied. To explain this situation with an example, in a trade transaction carried out within the scope of "Pan European Mediterranean Cumulation of Origin," a certificate of origin that allows benefiting from the preferential regime means that the customs duty applied for that good in the import regime decision published every year is the same or zero for all countries. It could not be used as a "proof of origin" document submitted to the customs administration in this case. In this case, submitting a certificate of origin may be necessary. We pointed out that this practice was unfair and that the certificate of origin issued was a valid certificate of origin regardless of whether it provided benefits from a preferential regime. We argued that it was wrong for a valid document issued for goods within the scope of agreements to lose its function in this way.
In its thrifty article published on the subject, the Ministry of Commerce stated that, regardless of whether a concessional tax rate is applied according to the Import Regime Decision for goods imported from countries that are party to a preferential trade agreement, the goods submitted to the customs administrations must be subject to the condition that these goods are within the scope of a preferential trade agreement and do not violate the direct transportation rule. It emphasizes that the documents of origin that enable you to benefit from the preferential regime should be accepted as valid proof of origin documents regarding trade policy measures, additional customs duties, or additional financial obligations. A separate "certificate of origin" should not be required. In this context, if a good is within the scope of an agreement, it is not subject to the direct transportation rule. The form and format issue the certificate of origin; it becomes possible to use the certificate of origin as the "proof of origin" regardless of the customs duty applied to the goods.
The mentioned "Direct Transportation Rule" means that the goods within the scope of the agreement that will benefit from a preferential tariff are shipped directly to the party country without being subjected to any processing in a country other than the agreement party countries, as a condition for them to benefit from preferential treatment. As an exception to this situation, goods constituting a single consignment may be transferred or temporarily stored, provided that they are under the supervision of the customs authorities of the country in which they are transited or stored and have not undergone any processing other than unloading, reloading or operations aimed at preserving them in good conditions, within the scope of the agreement. It is also possible to transfer the found items to the country party to the agreement via other countries.
We extend our sincere thanks to the Ministry of Commerce for its efforts in clarifying the rules regarding the origin of goods. We look forward to continued efforts in this direction.
