CIRFS: European Man-made Fibres Association

…40, rue Belliard I B – 1040 Brussels T: +32 2 880 52 91 I E: [email protected] W: www.cirfs.org VAT Number: BE0451.888.158 Concrete proposals to improve the inward processing regime The purpose of the present document is to provide concrete proposals to improve transparency in the current inward processing regime. We emphasize that these proposals would not require a revision of the existing Union Customs Code legal package1 but would offer mechanisms and procedures to improve transparency in the EU and guarantee the rights of defense of each interested party during the inward processing procedure. This would ultimately improve the analysis to be made by the Commission and Member States of the “economic conditions” when an inward processing application is filed, as required by the Union Customs Code. 1.

…of the “economic conditions” when an inward processing application is filed, as required by the Union Customs Code. 1. ISSUES AT STAKE Article 211(4)(b) of the Union Customs Code provides that inward processing authorisations “shall be granted only where […] the essential interests of Union producers would not be adversely affected by an authorization for a processing procedure (economic conditions)”2. The way IP requests are currently examined undermines the practical effect of this provision. • Member States are in charge of examining IP requests. In case a Member State has evidence that the essential interests of Union producers are likely to be adversely affected as a result of an IP request, it is required to submit it to the EU Customs Expert Group to have an examination of the economic conditions at EU-level.

…is required to submit it to the EU Customs Expert Group to have an examination of the economic conditions at EU-level. However, a Member State will only examine an IP request and its potential impact in the light of its national industry, thus avoiding an examination of a potential impact on Union producers located outside its territory. In case this Member State has no local industry for that product, it would not be able to perform an appropriate examination of the IP request in accordance with Article 211(4)(b) of 1 i.e. the Union Customs Code, the UCC Delegated Act, the UCC Implementing Act, the UCC Transitional Delegated Act, the UCC Work Programme, and the Implementing Regulation on Technical arrangements for developing, maintaining and employing electronic systems for the exchange of information and for the storage of such information under the UCC.

…and employing electronic systems for the exchange of information and for the storage of such information under the UCC. 2 Such economic conditions are deemed to be fulfilled except in certain situations, for example: (i) for products subject to an agricultural measure falling under Article 85(1) UCC; (ii) if evidence exists that the essential interests of Union producers are likely to be adversely affected. For instance, for the Union industry, the essential interests of Union producers would be affected in case importers process goods subject to a trade defense measure in the EU and then reexport these goods outside the EU to such an extent that this would give significant market shares to dumped imports to the detriment of Union producers. Ref.

…an extent that this would give significant market shares to dumped imports to the detriment of Union producers. Ref. Ares(2022)6465574 - 19/09/2022 40, rue Belliard I B – 1040 Brussels T: +32 2 880 52 91 I E: [email protected] W: www.cirfs.org VAT Number: BE0451.888.158 • the Union Customs Code. Union producers cannot help the Member State to make a proper examination of the IP request and its potential impact, as IP requests are not public. Union industries are thus only entitled to provide their views on IP requests in case a Member State asks for an examination of the economic conditions at the EU-level by the Customs expert group. • Moreover and quite importantly, there are cases of IP applications filed in Member States where there is local production, and where neither local nor Union producers were consulted by the national authorities petitioned to grant the IP authorization.

…neither local nor Union producers were consulted by the national authorities petitioned to grant the IP authorization. This lack of transparency encroaches upon the rights of defence of Union producers that are not able to defend their business interests. • When a Member State considers that an inward processing application is likely to adversely affect the essential interests of Union producers, such an application is transmitted to the EU Customs Expert Group to allow an examination of the economic conditions at the EU level. During this procedure, the Union producers should be able to effectively exercise their rights before the EU Customs Expert Group. However, to date, there is no specific provision in the Terms of Reference or in the Rules of Procedure of the Customs Expert Group that guarantee an effective exercise of the Union producers’ rights of defense.

Procedure of the Customs Expert Group that guarantee an effective exercise of the Union producers’ rights of defense. • Furthermore, it is not clear what rules the national authority follows to verify the Union producers’ interests or if there are any common guidelines to follow by local authorities to ensure that the Union producers have been consulted. 2. PROPOSALS TO IMPROVE TRANSPARENCY To guarantee full practical effect of Article 211(4)(b) of the Union Customs Code, CIRFS submits the following proposals: 1) The creation of a database at the EU level for interested parties to consult the non-confidential versions of inward processing applications and authorizations a.

…for interested parties to consult the non-confidential versions of inward processing applications and authorizations a. Access to the non-confidential versions of inward processing applications filed in the 27 Member States Since there is currently no public information allowing Union producers to become aware of the inward processing applications submitted in the 27 Member States, they are thus not able to contribute to the assessment made by the Member State where 40, rue Belliard I B – 1040 Brussels T: +32 2 880 52 91 I E: [email protected] W: www.cirfs.org VAT Number: BE0451.888.158 the inward processing application is filed as to whether this application could adversely affect the essential interests of the Union producers.

…is filed as to whether this application could adversely affect the essential interests of the Union producers. While the cooperation between Member States at an earlier stage should also be encouraged, the Union industry should also be able to get access to the non- confidential versions3 of inward processing applications filed in the 27 Member States through a centralized EU-wide database to assess whether an (or several) inward processing application(s) is (are) likely to adversely affect the essential interests of Union producers and to inform the Member State concerned accordingly. b.

…to adversely affect the essential interests of Union producers and to inform the Member State concerned accordingly. b. Access to the non-confidential versions of inward processing authorizations in the 27 Member States The access to the non-confidential versions of inward processing authorizations in the 27 Member States is critical for the Union producers to assess the cumulative impact of any new inward processing applications filed before the national authorities of a Member State or to determine if a precedent already exists. c. Proposed model for a centralized EU-wide database The database could be designed on the same model as the existing European Binding Tariff Information (EBTI) database which appears to be accessible to the public online4 and which was set up for transparency reasons5, as should be the case for IP applications and authorisations.

…online4 and which was set up for transparency reasons5, as should be the case for IP applications and authorisations. An online platform at the EU level - the Customs Decisions System (CDS) – was already set up to enable economic operators to introduce their applications for customs decisions or authorisations before the national authorities of the Member States. Documents regarding inward processing applications and decisions are thus already exchanged online via the centralized EU-wide CDS. However, Union producers or their 3 Non-confidential version of applications would contain essential non-confidential elements such as: the product imported, the transformation envisaged, a range for the quantity imported under IP and the Member State where the application has been filed.

…envisaged, a range for the quantity imported under IP and the Member State where the application has been filed. To protect confidential business information, the confidential elements of the applications would not be disclosed (e.g. name of the importer, price of the imported product, customers etc.). 4 https://ec.europa.eu/taxation_customs/dds2/ebti/ebti_consultation.jsp?Lang=en 5 The Commission indicates that “[For the EBTI] [t]he decisions are made public for transparency reasons, but all confidential information is protected.” See https://ec.europa.eu/taxation_customs/business/calculation- customs-duties/customs-tariff/ebti-european-binding-tariff-information_en . Indeed, to the best of our knowledge, there is nothing in the EU customs legislations that required that BTI decisions be disclosed via a public database.

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