Let Sleeping Dogs Lie: Are You Ready for REX?

Posted by Arne Mielken on January 10, 2017

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REX.jpgGlobal companies - particularly those using Amber Road’s software solutions - know that only with a superior system that deciphers complex terms, coverage and rules of origin for trade agreements can they leverage substantial costs-savings, whilst maintaining highest levels of compliance. Therefore, it comes as no surprise that these leading global players have been buzzing with questions on the recently adopted Registered Export System (REX). 

We have provided some answers to frequently asked questions to ensure you are ready for these immediate changes.

What is REX?
Europeans, Austrians and Italians in particular, are very fond of Rex. He was a much-loved and admired German Shepherd police dog that starred in the weekly TV show Kommissar Rex.  He worked to solve crimes with the homicide units of the Vienna Kriminalpolizei and the Carabinieri in Rome. Sadly, the show went off the air in 2015. Just two years later REX has been reborn. Rather than conjuring up memories of the four-legged detective, those in international trade are now experiencing REX as the latest complex - and perhaps beautiful - invention of the European Union. While intended to make the life of the international trade community easier, some say its made things far more difficult.

The EU formally introduced REX on January 1, 2017. The new self-certification system will be phased in by 2020, and will eventually replace the requirement for Generalised Scheme of Preferences (GSP) certificates. Currently, imports from GSP beneficiary countries are entitled to preferences if accompanied by a GSP certificate Form A or an appropriate invoice declaration.

Why does this matter to my business? Some of our clients aren’t even in the EU!
REX is particularly relevant if you are based in GSP beneficiary countries and export goods to the EU. The EU's GSP allows developing countries to pay fewer duties on their exports to the EU. This gives them important access to EU markets and should, therefore, contribute to their economic growth.

Which countries are included in the GSP scheme?
This can vary, as adjustments are made based on economic growth or a country’s inclusion in a different trade deal with the EU.  As of January 1, 2017, Iraq, the Marshall Islands, Tonga, and Fiji lost their benefits because they are now deemed ”upper-middle income" countries. Cameroon and Georgia lost their GSP status because of Free Trade-type arrangements they now enjoy with the EU. You can find a full up-to-date list of GSP-eligible countries in Amber Road’s Global Knowledge® trade content repository.

Do EU GSP tariff benefits cover all products exported from a GSP-eligible country?
Unfortunately, they do not. Some industries in GSP countries are doing much better than others, so this is also taken into account when deciding on granting unilateral preferential treatment. As such, some product groups have lost GSP preferences even though the country remains eligible. In 2017, for example, product groups who will lose their GSP preference include mineral products, inorganic/organic chemicals, textiles, iron/steel, motor vehicles, bicycles, aircraft and spacecraft, ships, and boats originating in India. For Indonesia, live animals and animal products (excluding fish), animal or vegetable oils, fats, and waxes lose GSP preference. This affects Kenya’s live plants and floricultural products, while Ukraine is impacted on a list of products including railway and tramway vehicles and products, animal or vegetable oils, fats, and waxes.

What do exporters of GSP countries have to do in regards to REX?
They will have to register with their competent authorities who will issue them an individual REX number. In order for preferences to be claimed on imports into the EU, the REX number must be declared together with a statement on origin unless the value of the consignment falls below the threshold of €6,000.

When can I get a REX number?
There will be a transition period to allow exporters to be registered, so expect communication from your local customs authorities. Until a GSP beneficiary country is officially implementing REX, please note that GSP certificates and invoice declarations may still be presented to claim preference. Whenever a GSP certificate or invoice declaration is presented, the current procedures and codes still apply.

Which countries have introduced REX?
Angola, Burundi, Bhutan, Democratic Republic of Congo, Central African Republic, Comoros, Congo, Cook Islands, Djibouti, Ethiopia, Micronesia, Equatorial Guinea, Guinea Bissau, India, Kenya, Kiribati, Laos, Liberia, Mali, Nauru, Nepal, Niue Island, Pakistan, Solomon Islands, Sierra Leone, Somalia, South Sudan, Sao Tomé & Principe, Chad, Togo, Tonga, Timor-Leste, Tuvalu, Yemen, and Zambia.

Other countries will follow in 2018 and 2019.

What should traders in the EU do?
If your business exports raw materials/components to a GSP beneficiary country that has implemented REX, and the materials are incorporated into a product which is then imported into the EU under GSP, it is likely that you must also register with your local customs authorities. You may also need to register if you send those GSP goods to other EU Member States, Switzerland, or Norway.

What do importing/exporting businesses need to do to register with local customs authorities?
You need to provide your EORI number and your Approved Exporter number, if applicable.

How can importers/exporters check if an exporter in a GSP country has already registered for REX?
The EU will be providing access to a central database containing the details of all the REX traders within the EU and GSP beneficiary countries. The database will be published here

How can EU importers make a preference declaration under REX?
To claim preference under REX, importers must construct a special alphanumeric code combination at item level of the customs declaration, consisting of:

  1. A 2-digit alpha code of the REX beneficiary country
  2. Specially designed REX document code
  3. Other 30 characters (e.g. for the invoice reference number)

A status code may also have to be declared. For non-REX GSP declarations, such as goods accompanied by a GSP certificate Form A or an invoice statement originating from either a beneficiary country in transition or implementing REX at a later date, the current procedure codes continue to apply.

How can our clients see what a statement on origin looks like under REX?
Amber Road publishes all relevant customs forms, statements, and certificates as templates within Global Knowledge®, along with all document requirements for import and export controls, taxes, duties, and fees that may be requested by the EU or its Member States. This includes the template of what the correct origin statement for REX should look like. 

If you ask me what my overall thoughts are on REX - I prefer the TV show.

Export Management

This post was published on January 10, 2017 and updated on January 10, 2017.

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Topics: Export Management, Export License Management, Export Compliance

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