The Free Trade Agreement between the EU and Canada will apply the drawback provision from next week. We explain what it means....
The Comprehensive Economic and Trade Agreement (CETA) between the European Union and its member states, on the one hand, and Canada, on the other, was published in the Official Journal of the European Union No. L 11 on January 14, 2017. The trading part of the agreement has been provisionally applicable since September 21, 2017 (Official Journal of the European Union No. L 238/9 of September 16, 2017). Article 2.5 of the agreement provides for a prohibition of draw-back. According to Paragraph 3 of this article, the draw-back prohibition applies three years after the agreement has come into force. According to a communication from the European Commission, the draw-back ban will apply from September 21, 2020, three years after the provisional application of the trading part of the agreement. "Draw-back prohibition" means that preference certificates may not be issued in certain circumstances. This is where on-originating materials have been used in the production of originating goods for which that were placed under a special customs procedure (and had their duty suspended on import). This affects, in particular, the inward processing customs procedure. Origin certificates, giving grounds to duty reduction, cannot be issued since the envisaged import duties in question have not been collected in the first place. German customs advises that the issuance of an origin declaration (not observing the draw-back prohibition) automatically leads to customs debt arising according to Art. 78 Union Customs Code (UCC). The date of acceptance of the re-export declaration is decisive for the incurrence of a customs debt (cf. Art. 78 para. 1 UCC).