UK Govt to Allow Self-Declaration for Import Origin Proof

The government has proposed a shift to self-certification for proving the origin of imported products from FTA nations to facilitate easier business operations. This change is aimed at simplifying the process for importers seeking duty concessions under free trade agreements.

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Understanding Free Trade Agreements

In an FTA, customs duties on most goods traded between two countries are either significantly reduced or eliminated. Currently, importers must provide a certificate of origin from the FTA partner to avail these concessions. The new proposal allows for different types of proof of origin as specified in trade agreements.

The Budget documents reveal that Section 28 DA is being amended to accept various proofs of origin. This amendment aligns with new trade agreements that permit self-certification. Proof of origin can be a certificate or declaration issued according to a trade agreement, certifying that the goods meet the country of origin criteria and other specified requirements.

Amendments in Customs Act

An amendment in the Customs Act has been proposed to replace the term "certificate" with "proof." The think tank GTRI noted that FTA tariff preferences could be obtained by submitting either a certificate of origin issued by an agency in the FTA partner country or through self-certification by the exporter. Each FTA specifies which method is acceptable to the importing country's customs.

Section 28DA of the Customs Act, which deals with FTAs Rules of Origins and CAROTAR (Customs Administration of Rules of Origin under Trade Agreements Rules 2020), has been amended. The updated section now includes both certificates of origin and self-certification as valid proofs of origin.

Implications for Importers

GTRI Founder Ajay Srivastava explained that these rules ensure importers provide adequate proof that goods claiming FTA tariff concessions meet all rules of origin criteria. However, they also impose additional conditions beyond those agreed in the trade pact. For instance, while the FTA text places responsibility on the certificate issuing authority to verify production details and value addition, CAROTAR rules require importers to have sufficient information about regional value content and product-specific criteria specified in the trade agreement.

Importers must provide this information as required by CAROTAR rules or risk losing FTA tariff concessions. The rules also state that having a certificate of origin from an issuing authority does not relieve importers of the responsibility to exercise reasonable care.

Expert Opinions

Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co., commented on the amendment, stating, "The amendment to accept different types of proof of origin is a forward-thinking change for ease of doing business." This change is expected to streamline processes and reduce bureaucratic hurdles for businesses engaging in international trade under FTAs.

The proposed amendments aim to simplify procedures for importers while ensuring compliance with trade agreements. By allowing self-certification, the government hopes to promote ease of doing business and enhance trade efficiency.