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Trade Regulations of the EU

The European Union (EU) is now a trading bloc comprising 27 countries in Europe. All member states adopt common external trade policy and measures. Meanwhile, 13 EU members including Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Slovenia and Spain have adopted the Euro as their legal tender.

Trade Policy

The EU's Common Commercial Policy covers all the main measures affecting trade in goods and services and almost all trade related issues, including company law, indirect taxation, standards and technical regulations, and enforcement of intellectual property rights. Another important aspect of the EU trade policy is that the EU is a customs union: same import duties are levied on imports from third countries regardless of the country of entry.

The EU trade policy expresses its commitment to trade liberalisation - eliminating trade restrictions and customs barriers - both across Europe and worldwide. The EU encourages liberal trade policies to ease the flow of goods and services through its principles of binding tariffs and no discrimination between trading partners.

Import Restrictions

The EU implements trade defensive measures recognising the right of its members to counter unfair trade practices. These are a) surveillance measures - import licensing system for monitoring purposes; b) quotas on imports of some products originating from outside to protect harmful massive imports, e.g. China textiles and clothing; and c) safeguard measures to restrict some specific imports; d) anti-dumping measures.

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.

The HKTDC Research monitors regularly on changes in trade policies and restricted measures of the EU and publish the Business Alert - EU for information of trading community in Hong Kong. Also the Anti-dumping Actions are updated on a regular basis in the HKTDC website.

Textiles and Clothing

The Chinese mainland and Hong Kong's textiles and clothing exports to the EU were previously subject to quantitative restrictions under the WTO Agreement on Textiles and Clothing. Since 1 January 2005 these quantitative restrictions on Hong Kong textiles and clothing exports have been eliminated completely. The EU has continued to impose safeguard quotas on 10 categories of Chinese textiles products for the period of 2005-2007.

Beginning from 1 January 2008 the current EU quantitative restrictions on China exports of textiles and clothing will be abolished and replaced by a new surveillance system monitoring the issue of export licences in the Chinese mainland on eight categories, namely T-shirts, pullovers, trousers, blouses, dresses, brassieres, bed linen and flax yarn.

Controls on Other Sectors

In addition to the textiles and clothing and products mentioned in the above, special importing measures are implemented in the following sectors:

Food Safety: The EU imposes wide-ranging framework legislation regulating all types of food and animal feed in the Community, and laying down the general principles and requirements of food law, and procedures in matters of food safety. Mainland China and Hong Kong distributors of food based products should be aware of the Regulation provisions which lay out tougher inspections, monitoring and rapid alert systems.

a) Agricultural Products - Import certificates are required by the EU prior to clearance for monitoring trade flows;

b) Iron and Steel Products - subject to different control measures which may include surveillance, or double checking system with or without quantitative restrictions;

c) Animal Health - As a general rule, the exporting country must be on a positive list of eligible and authorised countries to supply such products; valid Health Certificate issued by the competent authority of exporting country.

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 also adopted a number of Directives for environmental protection, impacting 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 the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) to be effective in July 2006.

Product Safety

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 t o 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. The obligation to affix the CE mark extends to all products within the scope of the directives providing for its affixing and which are intended for the Community market. Thus, the CE Marking must be affixed to all new products, whether manufactured in the Member States or in third countries; to used and second hand products imported from third countries; and to substantially modified products that are subject to directives as new products.

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.

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, including mainland China, can benefit from lower or zero import duties. Hong Kong had been excluded from the EU's GSP since May 1998.

The GSP classifies products into two categories, namely sensitive products that enjoy the benefits of reduced tariff rates by 3.5 percentage points, and non-sensitive products that enjoy total tariff suspension. But a number of mainland origin goods such as plastic and rubber, paper items, consumer electronics, watches, jewellery, textiles, clothing, certain chemicals, articles of leather and fur skins, footwear, glass and ceramic products, base metals, furniture and toys, games and sporting goods, are excluded from GSP.

Import Documentation

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$ 263.8 billion in Jan-Sept 2007, accounting for 13.5% of the worldwide total. Major export items comprised chiefly of telecommunications equipment and parts, articles of apparel of textile fabrics, toys and games and sporting goods, audio and video recorders and players etc. The bulk of these goods were originated from the Chinese mainland.

Hong Kong imports from the EU in Jan-Sept 2007 were valued at HK$150.5 billion, or 7.2% of the total. Major imported commodities included telecommunications equipment and parts, pearls, precious and semi-precious stones, semiconductors and electronic valves/tubes etc. Please click here for a market profile on the EU.