Review of Autonomous Duty Suspension by EU Commission

21 March 2014

Review of Autonomous Duty Suspension by EU Commission

The autonomous duty suspension scheme provides EU manufacturing businesses with an opportunity to import raw materials, semi-finished goods and components that are not available within the EU at zero or reduced duties. This scheme should not be confused with Inward Processing Relief (IPR) Suspension.

The scheme has been running for over 40 years and has recently been subject to review by the EU Commission. Full details of the 128 page report can be found here.

In summary:

• 1,600 products are subject to suspension as of late 2011 with approximately 300 of these subject to end use control;

• The annual average value of imports under suspension is £15.5bn and duty savings for beneficiaries are £792m;

• Approximately 80% of suspensions fell within two broad categories: micro/mechanics and chemicals;

• The study focused on the impacts resulting from suspensions and the way in which the scheme was operated;

• The study found that the core rationale of the suspension scheme remains valid;

• The average annual cost saving per commodity code linked to a suspension was approximately £504,000 and this typically accrues to a small number of companies, often just one;

• Once granted, suspensions typically last for 5 years and are automatically renewed if savings under the suspension are greater than £12,600 per annum; and

• The member states making greatest use of suspension applications are Germany, Hungary, Slovakia and the Czech Republic (more than 5% of all imports of the latter 3 countries were under suspension).

The following improvements flow from the report:

Awareness raising
The report points out that there is a current information imbalance with companies in certain countries and/or sectors, and in particular SME’s being unaware of the scheme.

Transparency for EU Producers
The report identified that EU producers manufacturing identical or replacement materials were sometimes unaware of the suspension applications and therefore failed to raise objections.

Dealing with objections
In principle the grounds for objections and blocking applications are where EU producers are able to provide “identical, equivalent or substitute products”. The practical implementation of this test is causing problems and hopefully we can expect better definition of these grounds and the test to be applied.

There are calls to lower the threshold of savings required to make an application, remove any end-use controls and involve trade associations.

We would encourage any businesses importing raw materials, semi-finished goods or components to carry out an assessment of whether it’s imports could be sourced from EU producers and, if not, to contact us to explore making a suspension application.

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