 |
|
Trade and Customs
General
With Latvia’s accession to the European Union, the ”acquis communautaire” has been adopted, although certain transitional rules remain in place and the process of practical implementation may still be deficient in some areas. For both investors and merchants, Latvia has become a member of the European Trade and Customs Union as part of the Single Market. Trade with member states is therefore subject to EU and implementing domestic legislation only, while trade with countries outside the EU has come under a largely new regime defined by EU legislation and treaties.
The EU customs regime is mainly governed by the EU Customs Code as the main body of substantive law, as enforced by Council Regulation No. 2913/92 and implemented by the Commission Regulation No. 2454/93,
Council Regulation 918/83, which establishes up a unified system of customs duty relief, and Council regulation No 2658/87, which institutes a binding tariff and (statistics) nomenclature as well as the Common Customs Tariff, but in practice defined as well through:
- domestic legislation incorporating various EU directives,
- domestic legislation regulating customs authorities and organisation
and further supplemented by international treaties, among them the WTO normative body including the General Agreement on Tariffs and Trade (GATT) Convention on Harmonized Commodity Description and Coding System, the TIR Convention and the ATA Convention on Temporary Imports and Exports.
Trade with EU Member States
The following changes currently affect trade with EU member states:
Most customs barriers have been abolished, eliminating all customs clearance procedures within the Single Market and instead placing them under the regime of the Community Customs Code, specified by the Latvian implementing legislation and several immediately applicable EU regulations.
With the exception of certain rules on allowances for individual travellers that remain in force until all relevant EU law has been transformed, no quantitative restrictions exist any longer.
VAT, excise duties and special taxes are no longer treated as customs duties.
Goods that either originate in any of the old or new member states, or products coming from a third county which are considered to be in free circulation in a member state, are now fully eligible for free intra-community circulation.
Products coming from a third country shall therefore be considered to be in free circulation in a member state, if the import formalities have been complied with and any custom duties or charges have equivalent effect which are payable have been levied in that Member state, and if they have not benefited from a total or partial drawback of such duties or charges.
Declarations of the Latvian customs authorities on the origin of goods (BOI) or compliance to tariff code (BTI) have become valid throughout the EU.
The database-reliant NCTS (New Computerized Transit System) – in some parts operational since July 2003 – has replaced paper-bound transit proceedings, enabling both companies and customs authorities to trace and control the movement of goods electronically.
Transitional rules and exceptions
Certain rules and exceptions apply until full practical and legal integration into the customs union is accomplished:
- Ongoing clearance proceedings started prior to accession must be completed, although no duties apply if all proper documentation is provided.
- Certain exceptions apply with regard to agricultural goods and goods from production facilities that fall short of EU licensing standards; the latter may not be exported to other EU countries or be subject to specific rules and procedures.
- Licences issued prior to May 1 have to be reviewed with regard both to their overall validity and necessity.
Authorizations issued by Latvian authorities prior to accession concerning (1) inward processing (2) outward processing and (3) conversion, are void since April 30, 2005. Community law must be adhered to additionally.
Authorizations issued by Latvian authorities prior to accession concerning (1) bonded warehousing, (2) temporary admission/usage, (3) special handling and (4) free yones and free warehouses must fully comply with Community since May 1, 2005, either by way of formal adjustment, or revocation and re-issuance.
Statements and declarations made by Latvian authorities have lost all binding character they may have had prior to accession.
Latvia maintains four free trade zones (FTZ) following bilateral negotiations with the EU during accession talks. These areas include the Free Ports of Riga and Ventspils and the Special Economic Zones of Liepaja and Rezekne. These privileged areas comprise largely similar benefits for the investor, including significant tax reductions.
Deliveries of agricultural goods are subject to specific regulations and exceptions from general procedures.
Trade with Countries Outside the EU
General
National customs tariffs have been replaced by the “Common Customs Tariff” (CCT), which applies to the import of goods across the external borders of the EU. While the tariff is common to all EU members, the rates of duty differ depending on the type and origin of the product, as gauged along economic and political considerations. The “tariff” so refers to the combination of the classification of goods (so-called “nomenclature”) and the duty rate that applies to the respective class. The tariff further reflects all other specific EU legislation that impacts the customs duty rate on a particular import. In order to facilitate some degree of practicality, the Customs Code (Art. 12) requires the issuance of binding tariff information (BTI) to any economic operator, allowing for proper classification of the goods in the tariff and statistical nomenclature. The BTI system is established by way of a data-base maintained by the Commission, available at
http://europa.eu.int/comm/taxation_customs/dds/en/ebticau.htm.
Since May 1, 2004, as an EU member Latvia enjoys preferences stipulated in the trade agreements between the EU and third countries. The EU has concluded ”preverential” agreements with individual countries or groups of countries by means of freetrade agreements and customs.
There are free trade agreements such as the European Economic Area (EEA) – the EU, Iceland, Norway and Liechtenstein- which promote and maintain trade links between the European Union and its neighbouring countries and include most of the former EFTA countries. There is also a free trade agreement with Switzerland, which is the member of EFTA that did not join the EEA. Lastly, there are free trade agreements with central and east European countries like for example Bulgaria and Romania. Customs are playing an important role in this context, since these agreements aim at achieving trade promotion by mutual tariff concessions and help to prepare for accession.
All these agreements are linked, as the origin rules allow the use of each other's products in further manufacture.
Additionally, the European Union has concluded Customs Union agreements with Turkey, San Marino and Andorra.
Customs duties are payable in the country of entry, where imported goods are cleared for intra-Community circulation.
Certificates of origin issued between Latvia and third countries have remained in force only if they do not contradict existing EU preferential agreements (which will regularly not constitute an obstacle), were issued prior to accession and are notified with the customs authorities before September 1, 2004. The certificates will so remain valid for up to three years and warrant preferential tariff treatment, rendering the goods free of customs duty. General information on the rules of origin can be found at
http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/index_en.htm
Importing Goods
Various rules apply to specific products being imported into the customs territory of the EU or, in some cases, when exported from it. The Integrated Tariff of the Community, referred to as TARIC (“Tarif Intégré de la Communauté”), contains and makes accessible all product-related regulations.
(see http://www.europa.eu.int/comm/taxation_customs/dds/en/tarhome.htm)
Importing goods is subject to two key concepts the EU has implemented in order to ensure product safety and standardize quality: the CE mark and the New Approach directives. The former certifies that a specific product meets EU health and safety requirements and so allows manufacturers to circulate industrial products freely within the EU, while the latter erect standards for broad product groups. Certification can be obtained through (1) manufacturers by self-certification, (2) the European standards organizations CEN, CENELEC and ETSI, and, (3) so-called “notified bodies”, i.e., product certification authorities appointed by domestic governments.
Labelling requirements are now completely harmonized with EU regulations. The exact requirements depend on the type of product and the intended usage. Labels must generally be in Latvian, can be either affixed to the product or placed on an attached leaflet, containing the name of the product, the name of the manufacturer, and in some cases, instructions for use.
For more information on point see
http://europa.eu.int/comm/trade/issues/respectrules/tdi_enlarg/exporters.htm.
Trade Defense
Since the date of EU accession on May 1, 2004, the new member states no longer apply trade defense action on a national basis. All measures taken by the new member states have become inoperative, and any on-going investigations by the new member states have not been continued. At the same time, EU trade defense measures in place have now taken full effect with regard to Latvia.
Repayments and Remission
The threshold value up to which Member States are authorised to make decisions with regard to non-recovery and repayment or remission of customs duties is currently set at
More information on this practically quite relevant aspect can be found at
http://europa.eu.int/comm/taxation_customs/customs/rem_en.htm#titre.
EU Tariff Quotas
Starting May 1, 2004, companies have been able to serve EU tariff quotas that allow for the importation of a limited amount of specific goods in a limited period of time at reduced or zero rate customs duties.
Depending largely on the political developments currently in the balance, the EU is likely to further increase the quotas for steel and textiles and other goods from certain countries, namely Russia, the Ukraine and Kazakhstan (steel) and China (certain consumer products), in order to account for the growing need following accession.
The quotas are established on an annual basis; only declarants may apply for participating in the quota allocation and will be supplied on a first-come, first- served basis.
Inform ation on the respective quotas and their allocation status can be obtained at
http://ec.europa.eu/taxation_customs/dds/en/qotcau.htm
under the keyword “quota”; details on Latvian domestic administration and the serving of tariff quotas is available on the home page of the State Revenue Service at
http://www.vid.gov.lv/user/view.asp?CId=3&ID=120.
Russia and the CIS
Trade with Russia has been and will remain a mainstay of Latvia’s economy, with Russia being Latvia’s largest non-EU trade partner, and entrepreneurs from the old member states increasingly using Latvia’s unique capacities as a cultural and commercial “bridge” to approach the Russian markets.
The trade relations between Russia and the EU are subject to the Partnership and Cooperation Agreement (PCA) of 1997 that grants Russia Most Favoured Nation Status. The Agreement has been extended to the new member states including Latvia by a Protocol on 27 April 2004.
Consequently, with the exception of certain steel products, no restrictions on import or export quantities exist.
Similar (but not always nearly as favourable) PCAs have been concluded with Armenia, Azerbaijan, Belarus , Georgia , Kazakhstan , Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. A good starting point for researching EU trade relations with CIS countries is
http://europa.eu.int/comm/external_relations/ceeca/index.htm.
Additional information at:
http://www.fm.gov.lv/
http://www.vid.gov.lv/
http://www.komin.lv/
http://www.latsert.lv/
