EY Global Trade Alert: Monthly Customs Update June 2021

Recast of the EU dual-use regulation

On 20 May 2021, a recast of the Council Dual-Use Regulation 428/2009 has been published. The new Regulation 2021/821 enlarges the scope of export controls due to new and updated definitions and launches a mechanism to control the export of cyber-surveillance technology. Moreover, the new EU dual-use regulation introduces two new EU general export license and enhances the harmonization of rules on the control of technical assistance and makes the requirements for obtaining general and individual export licenses more stringent. 

Tariff Suspension and tariff quota

On 18 June 2021, Council Regulations (EU) 2021/1051 and 2021/1052 were published amending the existing Regulations for respectively tariff quotas and tariff suspensions.

Bank Melli case developments create a gateway for Iranian entities to invoke EU law to block US sanctions

The Advocate General of the ECJ, Gerard Hogan, has issued a non-binding opinion on the scope of the EU Blocking Regulation (EC) No 2271/96  in the ongoing case of Bank Melli Iran vs Telekom Deutschland GmbH (C-124/20), in which the latter, as the defendant, gave notice to terminate all contracts with Bank Melli following US sanctions against Iran in 2018. The EU Blocking Regulation prohibits EU businesses from complying with certain extraterritorial US sanctions targeting Iran.

Upholding a strict interpretation, AG Hogan stated that an EU entity seeking to terminate a contract with an Iranian company must be able to demonstrate before a national court that such termination is for objective reasons unrelated to US sanctions. In this context, US sanctions alone are no valid reason for the termination of a contract. While the AG’s Opinion is non-binding, it is likely and possible for the European Court of Justice to take a similar strict approach in its interpretation of the Blocking Regulation. The final judgement may have a significant impact on how businesses balance their compliance with US sanctions with their obligations under EU law.

Implementation of the EU-Ghana Interim Economic Partnership Agreement

1 July 2021 marks the start of the full implementation of the interim Economic Partnership Agreement (iEPA) between the EU and Ghana. Since 2016, the iEPA has guaranteed duty- and quota-free access of Ghanaian products into the EU internal market. However as of now, roughly 80% of the total volume of EU goods exported to Ghana can also be imported duty free in Ghana; this includes the removal of tariffs on intermediary goods and machinery from the EU. Certificates of origin and origin declarations have been developed and the systems are in place for commencing the tariff eliminations for EU products entering Ghana.

Anti-dumping and countervailing duties

The Commission has published various regulations imposing anti-dumping duties, namely:

• Commission Implementing Regulation 2021/939 of 10 June 2021 imposes a provisional anti-dumping duty on imports of mono ethylene glycol (currently falling under CN code ex 2905 31 00) originating in the United States of America and the Kingdom of Saudi Arabia. 
• Commission Implementing Regulation 2021/940 of 10 June 2021 imposes a provisional anti-dumping duty on imports of birch plywood (currently falling under CN code ex 4412 33 00) originating in Russia. 
  
  

USTR announces and immediately suspends additional tariffs in Digital Services Taxes (DST) investigations

On 2 June, the USTR announced new additional tariffs at a 25% duty rate on goods from Austria, India, Italy, Spain, Turkey, and the United Kingdom; while immediately suspending the new duties for a period of up to 180 days to provide additional time to complete multilateral negotiations on international taxation. The USTR decided to impose these duties after the conclusion of the investigations, in which the US found the DSTs implemented by the countries listed to be discriminatory against US companies. 

Decisive step in ending the Airbus-Boeing dispute

On 15 and 17 June, the USTR announced the formation of a US-EU and US-UK Cooperative Framework for Large Civil Aircraft (LCA), putting an end to the long-running Airbus and Boeing disputes. Both parties agreed to suspend countermeasures related to the dispute for a period of 5 years starting from 4 July 2021. Within the Cooperative Framework, a working group will be set up to resolve future LCA disputes. The US and EU/UK will jointly analyze and address non-market practices and both parties will limit subsidies that would cause negative effects to the other party.

PLDA reporting

Earlier this year, the Belgian Customs Authorities implemented automated PLDA reporting, only available for AEO accredited companies and with less data elements than previous reports. In response to the economic operators feedback, the Customs Authorities are willing to review the dataset and have requested the economic operators for a proposal for the dataset. The private sector should therefore mutually agree on a common dataset. Members of the National Forum have emphasized the importance of compliance (including VAT) and requested access for non-AEO companies.

Brexit update

On 15 June, the United Kingdom and Australia agreed in principle on a comprehensive free trade agreement under which they aim to make it easier to access each other’s markets, for food and services for example. The agreement foresees in an elimination of tariffs on Australian and British goods with a 15-year transition period. The deal is the first major trade agreement negotiated by the United Kingdom since leaving the European Union and does not build on agreements the United Kingdom had when it was an EU Member State.

On 30 June, the European Commission granted a 3-month extension to the grace period allowing chilled meat products from Great Britain to move into Northern Ireland until 1 October.

Trade Watch, issue 2 2021 available

The latest edition of our Trade Watch can be found here. This edition covers a special ‘Post-Brexit’ section and other highlights, such as the ECJ’s judgement on transport costs and customs value under DAF delivery terms, two new advisory opinions of the Technical Committee on Customs Valuation, insights in the use of customs warehouses for e-commerce fulfillment, the impact of new EU e-commerce VAT rules on customs, and much more!