Preferential Trade updates 11/21

China to apply to join Digital Economy Partnership Agreement

China will apply to join the Digital Economy Partnership Agreement to strengthen international cooperation on digital regulation. The pact known as DEPA currently covers Singapore, New Zealand and Chile, while Canada has expressed an interest to join it.

The EFTA - Indonesia CEPA entered into force on 1 November 2021

A new free trade agreement (FTA) between EFTA and Indonesia entered into force on 1 November 2021 after the ratification of all Parties. Negotiations on a Comprehensive Economic Partnership Agreement (CEPA) were signed in Jakarta, Indonesia on 16 December 2018. The first round was held in Jakarta in 2011, followed by 14 rounds and numerous expert meetings in the EFTA States and in Indonesia.

The CEPA covers all areas normally included in EFTA’s comprehensive free trade agreements, which are trade in goods and services, investment, intellectual property rights, competition, government procurement, trade and sustainable development as well as legal and horizontal provisions. The Agreement also contains a chapter on cooperation and capacity building.

The Agreement will provide access to operators from EFTA States for major export products such as fish and marine products, agricultural and food industry products like cheese, chocolates and coffee, industrial and technical products, machinery and watches, chemicals and pharmaceuticals. The CEPA will also stimulate trade in services, e.g. for energy related services, telecommunication services, the financial industry or through access for maintenance personnel. It further provides an enhanced framework for trans-border investment.

EFTA and SACU continue negotiations on an updated and expanded free trade agreement

Senior officials and experts from the Southern African Customs Union (SACU) and the European Free Trade Association (EFTA) Member States met through videoconference on 3 and 4 November 2021 to continue their negotiations on an updated and expanded free trade agreement.

Chief negotiator at the Norwegian Ministry of Trade, Industry and Fisheries acted as the EFTA spokesperson, while Deputy Director General, Department of Trade, Industry and Competition of South Africa, headed the SACU delegation. The review process covers trade in goods, rules of origin, trade facilitation and trade and sustainable development.

EFTA and Thailand Heads of delegation meet to discuss the resumption of free trade agreement negotiations

Heads of delegation from the EFTA States and Thailand met via videoconference on 2 November 2021 to discuss the resumption of negotiations towards a free trade agreement (FTA). Ambassador Markus Schlagenhof, Delegate of the Federal Council for Trade Agreements and head of the World Trade Division at the Swiss State Secretariat for Economic Affairs was the EFTA spokesperson, while Ms Auramon Supthaweethum, Director General of the Department of Trade Negotiations headed Thailand’s delegation.

Heads of delegation exchanged on recent domestic developments, the state of play of their respective domestic procedures, the scope of the negotiations as well as on the next steps towards their resumption.
Discussions were constructive and parties agreed to continue working together on the remaining steps required to resume FTA negotiations.

Modernised EFTA – Turkey free trade agreement enters into force

A new free trade agreement (FTA) between EFTA and Turkey entered into force on 1 October 2021 after the EFTA States and Turkey ratified it. A modernised FTA was signed in Iceland on 25 June 2018 after six rounds of negotiations, which started in September 2014. The new FTA replaces the agreement from 1992 on the same day.

The agreement covers trade in goods (industrial products, fish and marine products and processed agricultural products), trade in services, the protection of intellectual property rights, government procurement, competition, trade and sustainable development, institutional provisions and dispute settlement. In addition, updated bilateral agricultural agreements between the individual EFTA States and Turkey continue to form part of the instruments creating the free trade area. The FTA with Turkey is EFTA’s sixth most important preferential trade agreement.

Iran - Pakistan free trade agreement to be implemented within 3 months

Iran and Pakistan are going to implement a free trade agreement within the next three months. Iranian Industry, Mining, and Trade Minister made the announcement on the sidelines of the ninth meeting of the two countries’ Joint Economic Committee in Tehran. Banking relations, customs cooperation, border markets, barter trade, and coronavirus pandemic issues were among the subjects discussed at the meeting.

Japan, Colombia agree to accelerate EPA negotiations

Japan and Colombia have agreed to proceed with negotiations on a bilateral economic partnership agreement swiftly. The agreement was reached when Japanese Chief Cabinet Secretary Hirokazu Matsuno held talks with visiting Colombian Vice President and Foreign Minister Marta Lucia Ramirez at the prime minister’s office in Tokyo. The two also confirmed cooperation toward realizing a free and open Indo-Pacific. Matsuno sought understanding and cooperation for Japan’s efforts to resolve the problem of Japanese nationals abducted by North Korea decades ago. Ramirez pledged her support for Japan on the matter.

South Korea, Singapore aim to strike digital trade deal this year

South Korea and Singapore agreed Monday to conclude their digital trade pact this year in a move to deepen broader trade and economic ties. The agreement was made during the meeting between Seoul’s Trade Minister and Singaporean Second Minister for Trade and Industry held in Seoul. The two sides agreed to speed up working-level negotiations with a goal to conclude the Digital Partnership Agreement (DPA) within this year, as their talks, which began in July last year, are in the final stage.

The digital pact is meant to set up rules for digital transactions, to facilitate trade in the digital realm, and to better protect consumers over the course of online trade. If concluded, it will be the first trade agreement of its kind for South Korea. Singapore is South Korea’s 12th-largest trading partner and has a similar digitization level, according to the ministry.

South Korea in close consultation with Mexico to resume FTA talks

South Korea and Mexico have "closely discussed" the possible resumption of negotiations for a bilateral free trade agreement. The two nations began talks on a strategic economic complementary agreement in 2006, but the negotiations have been stalled since 2008 amid opposition from businesses in the Latin American country.

Mexico is South Korea’s largest export destination in the Central and South American region, and the two sides have "complementary trade structures" so that a free trade agreement, if clinched, is expected to create huge economic effects. South Korea mainly sells vehicles, chips and steel products to Mexico, and Mexico’s major export items are oil, minerals and auto parts.

Ukraine, Canada agrees to start talks on revision of FTA agreement

Ukraine and Canada have agreed to start negotiations on revising the free trade area agreement (FTA), the Ministry of Economy said on the website on Nov. 3 following a meeting of the Ukrainian side with Ambassador of Canada to Ukraine Larisa Galadza on Nov. 2. According to the statement, this involves an analysis of the further development and deepening of the provisions of the agreement and its extension to areas that are currently not covered.

Claiming preferential rates of duty between the UK and EU

If your goods originate in the EU or UK, you may be able to claim a preferential rate of duty when imported into the respective countries and released to free circulation. This means they’ll be free of Customs Duty.

Rules of origin

To claim preferential rates of duty, your product must originate in the EU or UK (as the exporting country) as set out in Chapter 2 of the Trade and Cooperation Agreement ‘rules of origin’ and the ‘Product Specific Rules of Origin’ in Annex 3. The introductory notes to product specific rules of origin can be found in Annex 2. You’ll need to know how to classify your goods when checking the product specific rules. If your goods do not meet the rules of origin requirements (or if you cannot prove that the goods meet them) you’ll still need to pay Customs Duty. To find out the rate of duty, you’ll need to classify your goods correctly.

Proof of origin

To benefit from preferential tariffs when importing into the UK from the EU (or importing into the EU from the UK), the importer will need to declare they hold proof that the goods comply with the rules of origin. You’ll be entitled to claim the preferential rate of duty if you have either:

• a statement on origin that the product is originating made out by the exporter
• the importer’s knowledge that the product is originating

Statement on origin

When exporting from the EU to the UK a statement on origin can be made out by any exporter where the value of the consignment is 6,000 euros (currently £5,700) or less. Above this amount the EU exporter must have a Registered Exporter (REX) number and include it in the statement. When exporting to the EU you must include your Economic Operator Registration and Identification (EORI) number in any statement you issue to your EU customer, regardless of the value. The statement on origin must be provided on an invoice, or any other document, including commercial document (excluding a bill of lading), describing the originating product in sufficient detail to enable its identification. You can claim preference for different goods on the same document. You’ll need to clearly identify the goods that are originating and non-originating. There is no fixed method for doing this – the only requirement is that those goods are clearly indicated. It will be valid for 2 years from the date it was made out on imports into the UK and 12 months for imports into the EU.