1. TRADE REGIMES
On June 27, 2014 in Brussels, Belgium was signed the Association Agreement between the Republic of Moldova, on the one hand, and the European Union and the European Atomic Energy Community and its Member States, of the other part, which was on 2 July 2014 ratified by the Moldovan Parliament.
The ratification was made by Law No. 112 of July 2, 2014, promulgated by Presidential Decree no. 1237 of 8 July 2014. This legal framework has completed the internal ratification procedures of the Association Agreement Moldova - EU.
The Moldova-EU Association Agreement enters into force after ratification by all parties (RM European Parliament and the 28 EU Member States), according to the internal procedures of each state. Under these procedures the Agreement shall enter into force on the first day of the second month following the date of deposit of the last instrument of ratification with the General Secretariat of the Council of the European Union.
However Moldova and the European Union decided provisional application of certain parts of the Agreement of 1 September 2014. In this respect, the EU Council adopted The decision 2014/492 / EU of 16 June 2014 on the signing, on behalf of the European Union and the provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and its Member States, of the one part, and the Republic of Moldova, on the other hand one.
Part of the Moldova-EU association agreement is the free trade agreement - DCFTA whose provision requires the creation of the Deep and Comprehensive Free Trade Area between Moldova and the EU. The Free Trade Agreement aims at the opening of markets for goods and services trade, gradually taking over European standards and norms governing the quality of products and services.
The provisions of this Agreement assume the gradual liberalization (up to 10 years from the date of signature) of trade in goods and services, free movement of labor, reduction of customs duties and non-technical barriers, the abolition of quantitative restrictions and harmonization of Moldovan legislation with EU legislation.
Between Moldova and the EU the (ATP) trade regime is currently operating, adopted by Regulation (EC) no. 55/2008 of 21 January 2008, introducing autonomous trade preferences for the Republic of Moldova.
Given the importance of ensuring legal certainty for producers, exporters and importers from Moldova as well as the commitments on the creation of the Deep and Comprehensive Free Trade between the EU and Moldova, the Council adopted a series of amendments to Regulation (EC) no. 55/2008, the latter being adopted by Regulation (EU) No. 38/2014 of the European Parliament and of the Council of 15 January 2014.
On October 7, 2014 the Government of Moldova adopted the Decision no. 808, by which was approved the National Implementation Plan of the Association Agreement.
This Plan provides the review by the Committee on Trade Association of the possibility of accelerating and broadening the spectrum of elimination of customs duties on trade between Moldova and the EU. As a result, it will be introduced a new autonomous preferential trade regime that provides benefits to export higher than ATP and long-term predictability for business and investment.
It should be noted, that the autonomous trade regime only works for products originating in Moldova, which is confirmed by the movement certificate EUR.1.
Where the manufacturer from Moldova may find, which fee is applicable for his product under the autonomous preferential regime?
Primarily by consulting the Regulation (EC) no. 55/2008. In addition, the information on the autonomous trade regimes is placed on the website of the Ministry of Economy of the Republic of Moldova.
The rules regarding the confirmation of origin of goods is determined by Regulation (EEC) No. 2454/93 of 2 July 1993.
The procedures regarding issue of certificates of origin can be found here.
2. HOW TAXES, QUOTAS, EXCISE DUTY, VAT ARE ESTABLISHED
TARIC (The Integrated Tariff of the European Communities) - is the Integrated Tariff of the European Communities. It comprises all customs duty rates and certain EU requirements applicable to the EU's external trade. TARIC has its legal basis the Regulation (EEC) nr.2658 / 87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff.
Therefore TARIC is a database intended to indicate the legal Community provisions applicable (tariff and non-tariff measures) for a given product when it is imported into the customs territory of the EU or, where appropriate, when it is exported to third countries.
TARIC is based on the Combined Nomenclature (CN - code 8 digits) which constitutes the basic nomenclature for the Common Customs Tariff used in the process of customs clearance of goods as well as the in compiling the trade statistics with third countries Community (EXTRASTAT) and trade statistics between the EU (Intrastat). The TARIC database is used by customs administrations of the EU for the processing of customs declarations of import / export from / to third countries however, it is a useful information tool for economic operators.
TARIC contains provisions relating to customs matters contained in specific Community legislation concerning:
- The Harmonized Commodity Description and Coding System (HS);
- Combined Nomenclature (N.C.);
- Customs duties applicable;
- Suspension of customs duties;
- Preferential tariff regime (including on the basis of preferential tariff quotas);
- Generalized System of Preferences (GSP) applicable to developing countries;
- Anti-dumping duties or compensation (subsidy);
- Import and export prohibitions;
- Import and export restrictions;
- Additional codes;
- Export subsidies;
- References to the Community regulations have introduced a measure tariff or non-tariff;
- Other tariff and non tariff measures applicable in the process of customs clearance of goods.
The TARIC supports goods customs clearance by the EU countries. It also provides means of collecting, exchanging and publishing data on EU external trade statistics. TARIC incorporates all EU measures as well as the trade measures applied to goods imported into the EU, and exported outside the EU. This is managed by the Commission, which publishes a daily updated version on the official website of TARIC.
A tariff quota represents a volume of goods expressed in quantity or value that can be released for free circulation duty reduction or exemption.
The allocation request is a request for the application of the reduction or exemption of customs duties under a quota tariff and consists of submitting a customs declaration duly completed and accepted by the customs.
The tariff quotas are valid for a certain period of time. After the expiry of this period the goods cannot benefit from reduction or exemption of customs duties. If during this period of time the original volume is exhausted, the goods may be imported only with the basic customs duties. In this respect the partners should carefully monitor this issue.
2.3. Excise duties
Excise duties are taxes on consumption and they only apply to certain goods and services which are bought on the market. EU practices the harmonized excise for the following product categories:
- General regime of excise duties - Directive 2008/118 / EC of 16 December 2008 on general regime for excise duty and repealing Directive 92/12 / CEE;
- Energy products used for heating - Directive 95/60 / EC of 27 November 1995 on fiscal marking of gas and kerosene;
- Electricity - Directive 2003/96 / EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity;
The rates, set by the EU are minimal. Member States may set a higher tax rate, according to their needs.
The EU's role is to ensure that national fiscal regulations on tax rates (on profit companies, income, savings and capital gains):
For some taxes, such as the value added tax (VAT) and excise duties on petrol, tobacco and alcohol, all 28 national governments agreed to set minimum levels to avoid distortion of competition within the EU.
The value added tax (VAT) is critical for the proper functioning of the single market and to ensure fair competition in the EU.
Therefore, the EU has established:
- European rules on the application of VAT
- a minimum rate of VAT.
However, since the maximum ceiling for the rate of VAT is not established, there are still significant differences between VAT rates applied by Member States. Although the general rule is that for the marketing of products and services a single standard rate it is applied, governments can approve the reduction of VAT to certain products and services, and in some countries it is applied a temporary exemptions from the VAT.
At EU level, decisions in the tax area cannot be taken without the agreement of all Member States. In other words, the structure of VAT in all Member States is harmonized. The European legislative framework regulating the VAT is the Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax.
The following operations are subject to VAT:
- Delivery of goods for consideration within the territory of a Member State by a taxable person acting as such;
- Intra-Community acquisition of goods for consideration within the territory of a Member State;
- Provision of services for consideration within the territory of a Member State by a taxable person acting as such;
- Import of goods.
The structure and level of VAT rates:
- Standard rate - Member States apply a standard rate of VAT, which is fixed by each
- Member State as a percentage of the taxable amount and is the same for the supply of goods and rendering of services. From 1 January 2011 to 31 December 2015, the standard rate cannot be less than 15%.
- Reduced rates - Member States may apply either one or two reduced rates. Reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III of Directive 2006/112 / EC. The reduced rates do not apply to electronically supplied services.
When applying reduced rates to certain categories of goods, Member States may use the Combined Nomenclature to establish the precise coverage of the concerned category. Reduced rates shall be fixed as a percentage from the tax base, which may not be less than 5%. Each reduced rate is arranged so the VAT amount resulting from applying the rate would normally allow full deduction of the VAT.
Annex III of the Directive 2006/112 / EC allows Member States to apply reduced rates for the following categories:
- Medical devices;
- Transporting passengers and baggage related.
4. COMMERCIAL MEASURES: ANTI-DUMPING, ANTI-SUBSIDY, SAFEGUARD
The trade measures are called trade restrictions that may be imposed in circumstances (conditions) for protection against imports, in addition to the protection provided by the customs duties (taxes).
Anti-dumping - duties to offset unfair competition from foreign exporters, which applies only undertakings engaged in dumping.
Anti-Subsidy - export duties to offset subsidies provided by the government of the exporting country.
Safeguards - tariffs or quotas to compensate fair competition with imports that bring harm of local industry.
Although the general tendency nowadays is to remove obstacles to trade, the international trading system allows countries to introduce restrictive measures to deal with very specific situations. These measures are called trade defense measures or trade defense instruments and are permitted only under strict conditions.
There are three trade defense instruments anti-dumping instrument, tool-subsidy and safeguard instrument. While the first two instruments act against unfair trade practices in cases where imports are made under conditions that may be actionable under international trade rules, the aim of the latter is to give the industry of the importing country time to adjust to the significant growth of imports.
In case your competitors from the foreign markets claim that your exports are dumped on market, whether your exports are subsidized, or that they have to face a significant increase in imports, which is harmful for their business they may require national authorities to introduce trade defense measures to address the situation. This may in turn have an impact on your situation as you may be subject to a lengthy investigation conducted by the national authorities of the importing country and will eventually have to face the action (in the form of additional duties or quotas) on your future exports to that country.
What is dumping?
A company is practicing dumping when it exports a product at a lower price than its normal value. The normal value of a product is considered to be the price of the product when it is sold on the domestic market or its cost of production. An anti-dumping measure - usually in the form of a duty - is applied to counteract the harmful effects of dumped imports and restore fair competition. The measure is based on the dumping margin, which consists of a comparison between the export price and normal value. This comparison is made for identical or comparable product types.
This can be adjusted to take into account the differences affecting price comparability, such as differences in conditions and terms of sale, trade levels, physical characteristics etc. to provide a fair comparison.
What should I do, if I don’t practice dumping?
Anti-dumping measures are established at national level, i.e. they affect all exports of the product under investigation in one or more countries. Therefore, even if your company does not export at dumped prices, it must cooperate in the proceeding to prove the case. In this case, the might be exonerated.
What is a subsidy?
The subsidy is a financial contribution by a government or a public body which confers a benefit recipient. A financial contribution may take various forms, such as loans grants, tax credits goods or services supplied by the Government. A benefit is conferred if any of these contributions are provided on terms more favorable than those available on the market. For example, if a government provides electricity below market price or buys a product at a price above its market value.
An anti- subsidy measure (also called countervailing measure) - usually in the form of a duty - is applied to counteract the harmful effects of subsidized imports and restore fair competition. It should thus correspond to the difference between a subsidized export price and a non-subsidized export price.
What is a safeguard measure?
A safeguard measures may be introduced when an industry is adversely affected by an unexpected increase, sharp and sudden of imports. The objective of safeguard measures is to provide a temporarily respite industry to reduce the pressure of imports, in order to operate the necessary adjustments.
Safeguard measures are always accompanied by a restructuring obligation. If anti-dumping and anti-subsidy measures are taken against certain countries (and exporters are required an individual duty depending on their own situation, as far as they cooperate), safeguard measures shall apply to imports of all countries. In other words, they apply to all imports regardless of their source and the same measure is applied to each exporter. Therefore, the safeguard procedure differs from anti-dumping and anti-subsidy proceedings in several respects.
What are the conditions for the imposition of these measures?
The first condition to impose measures is to determine whether the dumped imports (anti-dumping), if these are subsidized (anti-subsidy) or if there has been a sharp increase in imports (safeguards measures). There are however additional requirements: it must be established also if these imports had a negative impact on the economic situation of the domestic industry, i.e. whether there is a prejudice. In other words, the investigating authorities must demonstrate that there is a causal relationship between imports and prejudice.
Public interest test: countries may decide to apply measures only if it is shown that they will not be against the interest of the general public, i.e., that the measures will not produce greater damage for the overall economy than the benefit to the domestic industry suffering from imports.
What types of measures may be established?
Anti-dumping and anti-subsidy measures are normally established for a period of five years with the possibility of extension based on a review investigation for an additional period/period(s) of five years.
Anti-dumping and anti-subsidy provisional measures may be imposed no sooner than 60 days after the initiation of an investigation. Such provisional measures may be imposed for a maximum period of 4 months for anti-subsidy measures and 6 months for anti-dumping measures. The measures usually take the form of an ad valorem tax or a fee calculated on the value of the invoice, e.g. 15%, but it might also be a specific tax or a fee calculated based on another parameter than the value, such as weight, e.g. 15 euro per ton.
The fees are paid by the importer in the country which imposed the measures and are collected by national customs authorities. The exporters which cooperated properly with the investigating authority shall be imposed a duty rate that reflects their own situation. Non-cooperating exporters will incur a residual duty that is normally higher than that imposed to cooperating parties. It is therefore in the interest of exporters to cooperate.
Safeguard measures may be imposed for a period of 4 years with the possibility of extension up to a maximum of 8 years in total. In most cases, the measures are still required for a period of three years. These measures may be imposed as a result of a significant increase of imports and can take the form of fees or a limitation for the volume of imports. Volume restrictions can be either a quota or a tariff quota. In the case of a quota imports are not possible over a certain amount, while in the case of a tariff quota imports beyond this limit are still possible but subject to an additional fee. Provisional safeguard measures may be imposed simultaneously with the initiation of the investigation. These provisional measures can only take the form of a fee.
What is the international legal framework?
Each country using trade defense instruments has a specific law which provided details and conditions of application of the measures in its national law.
For WTO members, these laws shall at least comply with WTO requirements. National legislation may however go beyond WTO provisions, i.e., by setting a high bar even further than that provided for the measures at the level WTO.
WTO Members are required to notify national laws (and any changes thereto) to the relevant WTO authorities. These laws can be found through the WTO website.
Relevant WTO legislation is represented by the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-dumping Agreement of the WTO) Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguards. States that are not WTO members are not obliged to comply with WTO standards. However, normally their national law is inspired by WTO principles and often there are no major differences.
In addition, specific provisions on the use of trade defense instruments may be included in bilateral agreements between the EU and the country applying or intending to apply measures. These bilateral obligations should also be met.
Relevant European legislation
The application of anti-dumping measures in the EU is governed by Regulation (EC) 1225/2009 of 30 November 2009 on protection against dumped imports from countries which are not members of the European Community.
The application of anti-subsidy measures in the EU is governed by Regulation (EC) no. 597/2009 of 11 June 2009 on protection against subsidized imports from countries which are not members of the European Community.
The application of safeguard measures in the EU is governed by Regulation (EC) no. 260/2009 of 26 February 2009 on common rules for imports and Regulation (EC) no. 625/2009 of 7 July 2009 on common rules for imports from certain third countries.