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EU Extends Trade Defence Rules to the Continental Shelf and the Exclusive Economic Zones of Its Member States

On 2 July 2019, the EU published a new Regulation establishing a customs tool to implement the application and collection of anti-dumping and/or countervailing duties on certain goods in the continental shelf or the exclusive economic zone of a Member State. This is one of several recent policy measures intended to modernise the EU’s trade defence regime. The new Regulation does not amend the Union Customs Code, but implements changes through a tailor-made ‘customs tool mechanism’. This new customs tool is said to align EU trade defence policies with those of trading partners such as the United States, India and Brazil. It is aimed to further strengthen the EU’s ability to protect its industry against unfair trade.

The continental shelf and exclusive economic zones (“EEZ”) of Member States are defined by the United Nations Convention on the Law of the Sea. The continental shelf of a coastal State “comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin, or to a distance of 200 nautical miles from the baselines from which the breadth of the territorial sea is measured where the outer edge of the continental margin does not extend up to that distance”. The EEZ is an area “beyond and adjacent to the territorial sea, subject to the specific legal regime” established in the United Nations Convention on the Law of the Sea.

Under the EU customs rules, trade defence measures were only applicable to goods imported into the customs territory of the Union, but not to goods brought to the continental shelf or EEZ of EU Member States, for instance for the exploitation of natural resources such as extraction of oil and gas and off-shore windmills. Therefore, economic operators could import dumped or subsidised products and place them under customs warehousing or inward processing, keep them under temporary storage or in a free zone and finally supply them to the EEZ or continental shelf of a Member State. A customs debt would not be incurred, as this operation was considered as re-export.

The new measures are intended to remedy what was considered a gap in the EU trade defence regime. The future inclusion of the EEZ and continental shelf means that goods imported to “an artificial island, a fixed or floating installation or any other structure” within that zone will be covered by the EU’s anti-dumping and anti-subsidy rules.

Specifically, this concerns all goods which are the subject of (i) a notice of initiation of an anti-dumping or anti-subsidy investigation; (ii) a Commission Implementing Regulation making imports subject to registration; or (iii) a Commission Implementing Regulation imposing a provisional or definitive anti-dumping or countervailing duty. However, only new investigations or interim reviews of existing activities initiated after 3 November 2019 will be concerned by the change.

The recipient has to declare receipt of such products within the continental shelf or EEZ of a Member State by lodging a receipt declaration without delay, at the latest within 30 days. For the purposes of the new Regulation, recipient means the person who is “the holder of a licence or an authorisation to carry out business activities in the continental shelf or in the EEZ of a Member State and receives or has arranged for the receipt of the product concerned on an artificial island, a fixed or floating installation or any other structure in that continental shelf or in that exclusive economic zone”.

The receipt declaration has to be lodged with the competent customs authority, which is determined according to whether the goods are brought from the customs territory of the EU or not. If the goods are brought from the customs territory of the EU, the customs authority of the Member State where the re-export declaration is accepted or the re-export notification or the exit summary declaration is registered is competent. If the goods are not brought from the customs territory of the EU, the customs authority of the Member State to which the continental shelf or EEZ belongs is competent, since it is best placed to carry out controls.

The receipt declaration has to be transmitted using electronic data-processing techniques. It has to contain the data elements set out in Part I of the Annex to the Regulation and shall be accompanied by the documents supporting those data elements. The mandatory data elements include, among others, the “name, address and EORI number of the recipient”, and the “description of the product concerned declared, commodity code — TARIC code and TARIC additional code (where applicable), gross and net mass, quantity expressed in supplementary unit (where applicable), country of origin code and/or, where applicable, country of consignment code”. For a full list of the mandatory data elements, Hong Kong traders are advised to peruse Part I of the Regulation’s Annex.

The customs authorities may allow these data elements to be provided without using electronic data-processing techniques, in which event the recipient has to use the paper form ‘Receipt declaration’ set out in Annex I Part II of the Regulation in an original and one copy together with the documents supporting the data elements provided in the form.

The European Commission developed the customs tool together with the national customs authorities of the EU Member States in order to ensure effective implementation. It will become applicable 4 months from the date of its publication in the Official Journal of the European Union, so as to give national customs authorities time to put in place the necessary administrative procedures.

Content provided by Picture: HKTDC Research
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