Global Outsourcing: Avoiding Trouble under European Customs, Trade and Export Laws

Presentation to the American Bar Association

Fall Meeting, London

October 4, 2007

Tim Hesselink

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I. Global Outsourcing

Definition Global Outsourcing

WTO – Dispute settlement USA – EC (DS315)– Customs classification

– Customs valuation

Other points of attention under EC customs & trade law:– EU Export Controls

– EU Product and Food Safety Requirements

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II. Customs classification

European Binding Tariff Information (BTI)

Validity: 6 years or 6 months?

European Court of Justice (ECJ) in case Timmermans (C-133/02 and C-134/02 dated January 22, 2004):

A BTI can be revoked because of:

(1) a wrong interpretation following error of assessment

(2) a wrong interpretation following evolution thinking classification

Conclusion: BTI offers no legal certainty (=possible trap)

Beware of the BTI: possible trouble following ECJ case law!!

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III. Customs valuation

Price actually paid or payable for the goods when sold for export to the customs territory of the Community

Where necessary some cost elements have to be added to this price, e.g.:

– Royalties or license fees – R&D

Royalties/license fees: condition of the sale of goods?

R&D: planning opportunities

Focus on assists and obtain a favourable ruling on customs valuation!

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IV. EU Export Controls

Complex mix of both EU and national legislation

Single EU system for export controls for dual-use items and technology (Regulation (EC) No. 1334/2000)

Annex 1 Regulation 1334/2000: list of dual-use items and technology Authorisation for export

Submit all relevant information (incl. CN-code)

Non-compliance: criminal liability and administrative penalties

Beware of national approach despite single EU system!

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V. Product and Food Safety Requirements

Consider all EU safety requirements!!

Mattel: massive recall Chinese-made toys

EC product and food safety legislation is developing fast

EC Toy Directive: essential safety requirements for toys (88/378/EEC). Certain materials (e.g. phthalates) may not be used as substances in toys (Directive 2005/84/EC)

Battery Directive (2006/66/EC): on batteries and accumulators and waste batteries and accumulators

EU General Food Law (Regulation (EC) No. 178/2002): general principles and requirements of food law safety