For LDC exporters and EU importers, getting back to origins

Digital system set to streamline procedures for trade from LDCs to the EU

Two percent. That is the approximate amount of total European Union (EU) trade that comes from Least Developed Countries (LDCs).

And consider that for LDCs, the EU is their second largest export market.

There could and should be more trade between the two – and a new system is working to achieve just that.

Recognizing that market access is critical so that global trade benefits reach those that need it most, the EU granted duty-free rights to goods coming from LDCs in 2000 under the Everything but Arms initiative. But the EU’s rules on certifying the origin of goods continued to be an obstacle, so in 2011 more flexible criteria for developing countries were unveiled. And now, in another move to support this trade and simplify processes, an electronic system to certify origins is making things quicker and easier all around.

“This system represents a great opportunity for the Central African Republic [CAR] where the export levels are relatively low and where many export procedures are not streamlined. This system offers greater simplicity for our exporters, thereby helping to boost the exports from CAR to the EU market,” said M. Edward Mologodo, the Enhanced Integrated Framework (EIF) National Implementation Unit Coordinator at the CAR Ministry of Commerce and Industry.

He added, “We just signed up to the system. The next step is to reach out to our exporters.”

EVOLUTIONARY

This new system plays a vital role. It helps LDCs to reap greater benefits from duty-free, quota-free access to the EU market while streamlining certification requirements for goods produced by LDCs.

Annette Ssemuwemba, EIF Deputy Director

The Registered Export System (REX) started in 2017 and offers a way for exporters to self-certify the origin of their goods once the country has registered those businesses. Getting countries signed on is an ongoing process, and regional trainings are being held so the right people understand the system and start getting their exporters aware of the new practices.

“The objective is to facilitate trade and simplify procedures, and for those countries that have already signed on, we have seen that. Now the exporters declare the origin of their goods on their commercial documents, they provide those documents to the importer, and there are no longer the sometimes burdensome procedures to get certificates of origin,” said Christophe Fontaine, Policy Officer on Rules of Origin at the European Commission.

“It will take time to get all LDCs on board. It took also time at the beginning on the EU side; the importers and the exporters in the EU also needed to understand the new process,” he added.

EIF, with its mandate to support trade in LDCs, has been helping countries like CAR and Tuvalu get signed on to REX.

“The EIF programme supports LDCs to become more active players in international trade, every step of the way. And this new system plays a vital role. It helps LDCs to reap greater benefits from duty-free, quota-free access to the EU market while streamlining certification requirements for goods produced by LDCs,” said EIF Deputy Director Annette Ssemuwemba.

“The non-compliance beyond the transitional period would immediately hurt the capability of LDC exporters to reach EU markets as they would have to pay most favoured nation tariffs. That is why EIF is happy to be assisting our partner countries to sign on to REX,” she added.

GAME CHANGER

For those LDCs that have initially signed on, the new system is working.

REX is a game changer for all stakeholders, LDC governments, exporters, importers and also customs authorities in the EU. It’s a game changer because it transfers the responsibility of certification of origin of goods from governmental authorities to economic operators.

Christophe Fontaine, Policy Officer on Rules of Origin at the European Commission

“Myanmar and Nepal are applying the system completely. For Myanmar they have 500 exporters registered and for Nepal almost 800. That’s already quite good as we are only two years in, and as we are moving from a system of certificates issued by government authorities and we need to make sure everyone from government to businesses to the EU side are on board,” Fontaine said.

Previously, LDC exporters to the EU had to obtain from their competent authorities a form on certification of origin every time their products reached EU borders. Today, LDC exporters just need to be registered at home in the REX database and indicate a statement of origin containing their registration number on their commercial documents. REX helps to save time, cuts red tape and improves efficiency.

With its decade of partnership with ministries of trade in LDC governments, EIF is continuing to work closely with its partner countries, including Equatorial Guinea and Liberia, so they know about the changes and how to proceed and get registered. The next stage is to reach out to The Gambia and Guinea that are scheduled to start using the system in July 2019.

Fontaine said of REX, “It’s a game changer because it transfers the responsibility of certification of origin of goods from governmental authorities to economic operators. On origin matters, exporters and importers are therefore impacted. Competent authorities need also to adapt.

“In the past, exporters were asking for certificates of origin to their competent authorities without always knowing if their goods satisfied the rules of origin; the competent authorities had that expertise and issued certificates of origin only for originating goods. Under the REX system, the exporters declare the origin of their goods themselves, they have to know the rules of origin for their products.

He added, “Competent authorities surely have a role to play in the future to support their exporters in understanding the rules of origin. On the EU side, importers were used to relying on certificates of origin issued by governmental authorities, while under REX the governmental authorities do not intervene in the making out of statements on origin. So yes, REX is a game changer for all stakeholders, LDC governments, exporters, importers and also customs authorities in the EU.”