Origin of goods

Do you comply or do you plan?

The rules determing the origin of goods are important both for importers and exporters. The application of tariff and non-tariff regulations will or may differ depending the country of origin. Every system of customs law or international trade law, whether on a national level or regional level (for example EU, EFTA, EEA, ASEAN, NAFTA, Mecrosur) uses the rules of origin for applying a wide range of import or export regulations.

In today's situation of international competition, a result of the continuing liberalization of international and regional trade, companies cannot any longer afford to ignore the advantages of customs planning. The production of goods is more and more characterized by a split of production processes and their individual production locations. Before ending as a final product, goods travel throughout the world or continents in order to enjoy comparative advantages. In that context, the rules for determining the origin of goods have a major impact on cost price of goods, namely whether and what amounts of customs duties or other levies will become due on import (or export where applicable).

The number of companies that do not, or not enough, pay attention to the possibilities of a planned use of the rules of origin should not be underestimated. Companies in high industrialized countries have become aware that the planning of production locations or locations for individual stages of production are essential for maintaining or improving their level of competitiveness.

Managing issues related to the rules of origin

Companies that want to cope with customs law in a professional way, and also want to benefit from customs law, need to adopt the perspective according to which customs law is considered as a process or a combination of processes. Such a perspective builds on:

• the identification of the relevant business environment (production, trade) of the company;
• the development and implementation of a customs duties/international trade law strategy;
• the application of a knowledgement and documentation policy for recording relevant information;
• the adoption of controlling methods for risk assessment, risk sourcing and the analyzation of risk indications.

Companies that choose to implement customs duties process management will invest in their future and make an important contribution to the securing of their business prospectives. The picture that can be drawn from case law is that companies, certainly those that regularly import or export goods, are responsible for the correctr application of import or export regulations. Anticipating instead of solving is the attitude that is needed for improving the international competitiveness of companies that are involved in international transactions with goods.

VAT plus GmbH can assist companies that want to establish a policy for customs duties process management. If you want to learn more about this service you can contact us by mail or phone (+41 31 312 27 54).