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Opening of Quotas and Suspension of Tariffs by EU Could Lead to Trading Opportunities for Hong Kong Sellers

On 1 January 2018, two product-related Regulations which were published in the EU’s Official Journal began to apply EU-wide. One of these opens and provides for the management of autonomous tariff quotas for certain agricultural and industrial products, while the other suspends the autonomous common customs tariff duties on certain agricultural and industrial products. Hong Kong sellers may benefit from the trading opportunities which are triggered due to the entry into effect of these Regulations.

Council Regulation 2017/2466, the first of the two new Regulations, states that in order to ensure the sufficient and uninterrupted supply of certain goods that are insufficiently produced in the EU, and to avoid disturbances on the market for certain agricultural and industrial products, autonomous tariff quotas had already been opened by framework Council Regulation 1388/2013. It is important to note that products within those tariff quotas can be imported into the EU at reduced or zero duty rates. For those reasons, it is deemed necessary to open, with effect from 1 January 2018, tariff quotas at zero duty rates for an appropriate volume as regards 12 new products. In the case of five additional products, the quota volume has been increased, as such increase is believed to be in the interests of economic operators within the EU.

However, among other changes brought about by the new Regulation, the EU deems it necessary, in the case of 12 other products, to close the autonomous tariff quotas with effect from 1 January 2018, as it is felt to be not in the Union's interest to maintain those quotas.

The changes regarding the tariff quotas for the products concerned, provided for in the Regulation, have to apply from 1 January 2018. As a result, the Regulation has been made to enter into force as a matter of urgency.

Regarding the products for which quota volumes can be imported duty free, these include paracetamol, aluminium tube or pipe fittings for affixing to radiators of motor bikes, exhaust valves for use in the manufacture of motorcycle exhaust gas systems, and lambda sensors for permanent incorporation into motor cycle exhaust systems.

Hong Kong traders are advised to examine new Council Regulation 2017/2466 closely, in order to evaluate the changes made to the Annex in respect of the products covered and the conditions attached thereto.

The second Regulation of interest, namely, Council Regulation 2017/2467, amends Regulation 1387/2013 (a framework Regulation as well), which suspends the autonomous common customs tariff duties on certain agricultural and industrial products. Interestingly for Hong Kong traders, this new Regulation states that the EU production of 67 products that are not listed in the Annex to framework Council Regulation 1387/2013 is not sufficient to cover the needs of the EU industry. It is therefore in the interests of the EU to suspend the autonomous common customs tariff (CCT) duties on those products, which include the following:

  • Palm oil, coconut (copra) oil and palm kernel oil intended for the manufacture of certain products;
  • Various types of fruit (e.g. mango, papaya) purees;
  • A vast number of chemicals including colourants;
  • Inks including for printing;
  • Tapes and films of various varieties;
  • Transformers, circuit boards and certain types of batteries;
  • Several electronic components.

Furthermore, among other matters, it is deemed necessary to modify the conditions for the suspension of autonomous CCT duties for 49 products listed in the Annex to Regulation 1387/2013 in order to take into account technical product developments and economic trends on the market. In addition, certain product classifications have been amended in order to allow industry to fully benefit from the suspensions in force.

What may prove unfortunate for some Hong Kong businesses, it is no longer in the interests of the EU to maintain the suspension of autonomous CCT duties for 92 products listed in the Annex to Regulation 1387/2013. Suspensions for those products have therefore been deleted from that Annex.

In order to avoid any interruption of the application of the autonomous suspension scheme, the changes provided for in the new Regulation regarding the suspensions for the products concerned have to apply from 1 January 2018. The Regulation has therefore entered into force as a matter of urgency.

Hong Kong traders are advised to closely examine new Council Regulation 2017/2467 to evaluate how best they may benefit from the zero-rated duties introduced as from the beginning of this year, and other changes that have been brought about due to the Regulation.

Content provided by Picture: HKTDC Research
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