25 Aug 2015
Trade Regulations of the EU
The European Union (EU) is now a trading bloc comprising 28 countries in Europe. All Member States adopt common external trade policy and measures. Meanwhile, 19 EU Members, including Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain, have adopted the euro as their legal tender.
The EU’s Common Commercial Policy covers all the main measures affecting trade in goods and services and almost all trade-related issues. Trade-related areas partially covered by the common trade policy include: company law, indirect taxation, standards and other technical regulations, and enforcement of intellectual property rights.
One of the most important aspects of the EU trade policy is that the EU is a customs union. The same import duties are charged on imports from third countries regardless of the country of entry into the EU. The main principles of customs law are regulated at EU level, although the customs authorities of the EU Member States are in charge of their application.
The EU also applies trade defence measures against imports from third countries under various Union trade defence instruments, the main ones being anti-dumping, countervailing and safeguard instruments.
All Members of the EU have adopted a common trade policy towards imports from third countries. The EU has a relatively liberal import regime. In general, import licensing is not required for products entering an EU country, except for certain sensitive products like agricultural goods, tobacco, weapons, etc., and products governed by quantitative restrictions (i.e. quotas) and surveillance.
The EU has also restrictions and prohibitions regarding the importation of pirated or counterfeit goods and some chemical products containing hazardous substances, restrictions on genetically modified organisms and imports of live animals and animal products.
Textiles and Clothing
Upon the expiry of the textile safeguard quotas by the end of 2007, a joint system with China had been established to monitor EU imports of Chinese textiles and apparel, which was scheduled to operate for one year, covering 8 out of the 10 previously restricted categories. Starting 1 January 2009, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU.
Controls on Other Sectors
The EU import licensing system is based on the premise that no import licences are required unless specific products are subject to import surveillance, quantitative restrictions or safeguard measures.
As regards import surveillance, specific products may be monitored by the EU in order to increase transparency in trade, but without the purpose of imposing limits on access to the EU market. As a result of this surveillance, statistical controls and further controls on the origin of the products are established. In such cases, the objective is to avoid eventual diversion of trade and customs fraud. EU surveillance measures apply to certain iron and steel imports from countries other than the countries of the European Free Trade Association (EFTA), countries which are parties to the Agreement on the European Economic Area (EEA), and Turkey. Surveillance measures also apply to certain textile products, wood and potassium chloride from specific countries, but not currently from mainland China or Hong Kong.
Restricted Use of Hazardous Materials
To combat the spread of the Asian longhorn beetle, the EU introduced in July 1999 emergency controls on wooden packaging materials originating in the Chinese mainland. Wood covered by the measures must be stripped of its bark and free of insect bore holes greater than 3 mm across, or have been kiln-dried to below 20% moisture content.
For health reasons, the EU has adopted a Directive on the control of the use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. As effective from January 2007 the EU has adopted a Directive to ban the use of some phthalates in certain PVC toys and childcare articles permanently. In addition, the EU has adopted a Directive to prohibit from September 2003 the trading of clothing, footwear and other textile and leather articles containing azo dyes, from which aromatic amines may be derived.
Meanwhile, the EU has adopted a number of Directives for environmental protection, which may have an impact on the sales of a wide range of consumer goods and consumer electronics. Notable examples include the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) implemented in July 2006. On 3 December 2008, the European Commission (EC) presented two proposals: one for a recast RoHS Directive and the other for a recast WEEE Directive.
The recast RoHS Directive was published on 1 July 2011 and entered into force on 2 January 2013. The new Directive continues to prohibit EEE that contains the same six dangerous substances as the old RoHS Directive. Nonetheless, the new Directive will widen, as from 22 July 2019, the current scope of the previous RoHS Directive, by including any EEE that will have fallen out of the old RoHS Directive’s scope, with only limited exceptions.
Moreover, REACH, an EU Regulation which stands for Registration, Evaluation, Authorisation and Restriction of Chemicals, entered into force in June 2007. Among others, it requires EU manufacturers and importers of chemical substances (whether on their own, in preparations or in certain articles) to gather comprehensive information on properties of their substances produced or imported in volumes of 1 tonne or more per year, and to register such substances prior to manufacturing in or import into the EU.
The EU has a wide range of legislations governing the safety of consumer products in the Community. Suppliers should be aware of the general safety requirements, and to inform consumers of the risks that the product might pose and of the precautions they should take, and to notify the relevant authorities if they discover that a product is dangerous so that action can be taken to avoid the risks for consumers. Market surveillance and enforcement are carried out by competent authorities appointed at the EU level. Sectors with specific EU provisions are toys, chemicals, electric equipment, cosmetics, pharmaceuticals, recreational craft etc.
Labelling and Marking Requirements
Wide ranging EU directives provide framework for EU laws on labelling and marking requirements to enhance consumer protection, with major sectors being the labelling and presentation and advertising of foodstuffs, labelling and standard product information of the consumption of energy and other resources of household appliance.
The CE marking is mandatory and must be affixed before any product subject to it is placed on the market and put into service (save where specific directives require otherwise). Where products are subject to several directives, which all provide for the affixing of the CE marking, the marking indicates that the products are presumed to conform to the provisions all these directives.
Generally there is no EU law requiring common consumer goods (non-edible) to bear marks indicating their origin. If such origin marks are applied to the goods, they must be accurate. The EU has presented a proposal in December 2005 for a Council Regulation on the indication of the country of origin of certain products imported from third countries including Hong Kong and Chinese mainland. However, in October 2012 the Commission withdrew its proposal, opining that it might fall foul of the WTO Agreement on Technical Barriers to Trade and be considered as protectionism.
Tariff Classification and Import Duties
The EU adopts the Harmonised Commodity System to determine the commodity codes and relevant import duties. The Customs authorities impose import duties on the CIF value of the imported goods. However, the general rule is that the customs value will be the transaction value, i.e. the price actually paid which may include expense items like commission and brokerage, cost of container, cost of packing, royalties and licence fees, cost of transportation and insurance of the imported goods, and loading and handling charges associated with the transport of the imported goods.
The EU has a generalised system of preferences (GSP) in force whereby certain products of some beneficiary countries, can benefit from lower or zero import duties. The EU’s new scheme on generalised system of preferences (“GSP”) entered into effect on 1 January 2014. Under the new scheme, tariff preferences are removed for imports into the EU from countries where per-capita income has exceeded US$4,000 for four years in a row. As a result, the number of countries that enjoy preferential access to EU markets was reduced from 176 to less than 80. While the Chinese mainland remains a beneficiary, many of its exports such as toys, electrical equipment, footwear, textiles, wooden articles, and watches and clocks have already been “graduated” from the preferential treatment. Hong Kong had been excluded from the EU's GSP since May 1998.
The documents to accompany the customs declaration will generally include the followings: the commercial invoice; the value declaration, where the customs value is to be established; a certificate of origin or invoice declaration where the application for a preferential tariff treatment is requested; an authorisation or certificate of authenticity where a favourable tariff treatment is requested; an import authorisation or licence where this is stipulated in EU or national law.
Hong Kong's Trade with the EU
Hong Kong's total exports to the EU amounted to HK$156.4 billion in January-June 2015, accounting for 9.1% of the worldwide total. Major export items comprised chiefly of telecommunications equipment and parts, computers, pearls, precious & semi-precious stones, electrical apparatus for electrical circuits, articles of apparel of textile fabrics, jewellery, semi-conductors, electronic valves & tubes, toys and games and sporting goods. The bulk of these goods were originated from the Chinese mainland.
Hong Kong imports from the EU in January-June 2015 were valued at HK$142.1 billion, or 7.2% of the total. Major imported commodities included telecommunications equipment and parts, computers, pearls, precious and semi-precious stones, electrical apparatus for electrical circuits and articles of apparel, of textile fabrics etc. Please click here to read the market profile of the EU.