The Union Customs Code (UCC) is part of the modernisation of customs and serves as the new framework regulation on the rules and procedures for customs through out the EU. Its substantive provisions enter into force on 1 May 2016. The Goal is a Paperless, Automated System, Which Will Make it Faster and Easier for Companies to Engage in International Trade With Member Countries of the EU.

But in order to comply with this new program, companies must understand the new technology requirements and clearance processes. Below is more information to get started.

While the UCC will simplify the EU’s Customs process, the information required to file via the UCC will increase. Companies (referred to as economic operators) that engage in international trade with the EU, including American companies exporting to their own EU-based subsidiaries, will have to coordinate with the buyer  to determine if they are eligible for this simplified process, which isn’t easy.

Although not mandatory, to fully benefit from the new UCC Act, companies should  meet the new criteria for Authorized Economic Operator (AEO) status. Companies currently having AEO status will need to reapply, as the criteria have changed.  Any company in the global supply chain, such as manufacturers, importers, exporters, freight forwarders, clearance agents and carriers, are eligible to apply.

The AEO program, similar to the U.S.’s Customs-Trade Partnership Against Terrorism (C-TPAT) program, establishes standards to secure supply chain operations. To qualify for AEO status, a company must meet certain conditions and criteria, such as the ability to meet practical standards of competence, with a minimum of three years’ practical experience in doing international trade with the EU Companies with AEO status are deemed lower risk, given priority treatment, can do self-assessments, and have faster and easier Customs processing under UCC.

Companies qualifying for UCC, under certain circumstances, can clear goods with a single document, reducing the number of documents required for import/export, centralize Customs clearance, and do self-assessment, enabling a simpler and faster clearance process. Both buyer and seller need to coordinate the UCC simplified process to achieve best results.

One area to be particularly cautious about under UCC are binding tariff rulings. Economic operators will be required to follow any binding tariff ruling for three years instead of six (although the ruling can be contested), and share this information with their customs brokers to ensure goods are properly declared at the time of entry.

Since tariff classification is the basis for determining customs duties, export refunds and the application of other related legal provisions (e.g. import/export certificates), an accurate ruling is imperative. Too often a bad ruling request – where a product is poorly described or the request doesn’t include the correct documentation -- can lead to a negative outcome, and a company is then required to pay more in tariffs than it should.

The takeaway for importers and exporters on getting ready for UCC:

※ Developa centralized approach to compliance. Align your classification team to manage classification accuracy and restrict who can contact a Customs agency for issues that will impact related parties in multiple countries.

※ Don’t wing it. Bring in trade compliance specialists where needed, and make sure to provide ongoing compliance training for your internal team.

※ Investin technology. A centralized product data repository enables organizations to access and update product information across the enterprise.

※ Provide cross-company support to your trade compliance team to fully take advantage of UCC and other new or updated trade regulation programs.