Trade Talks

In the ever-evolving landscape of global trade, businesses must navigate a complex web of regulations and procedures. One critical aspect of this framework is the Economic Operators Registration and Identification (EORI) system. This article aims to demystify EORI, explaining its purpose, benefits, and the process of obtaining and using it effectively. What is EORI? The Economic Operators Registration and Identification (EORI) system is a mechanism implemented by the European Union (EU) to streamline and standardize the identification of economic operators involved in international trade. An economic operator is any business entity or individual that engages in activities related to the import or export of goods. The EORI number is a unique identifier assigned to these operators , facilitating smoother interactions with customs authorities across EU member states. Purpose of EORI The primary purpose of the EORI system is to simplify customs procedures by ensuring that each ...

Introduction On July 8, 2024, Indian Prime Minister Narendra Modi is set to embark on a three-day visit to Russia. This visit holds significance as it marks his first bilateral engagement since taking office for a rare third consecutive term as India's prime minister. Traditionally, Modi has chosen neighboring countries for his initial foreign visits, emphasizing India's neighborhood as a foreign policy priority. However, this time, the choice of Russia and Austria may seem unconventional. Let's delve into the reasons behind this decision and explore the trade implications of Modi's visit to Russia. Background: India-Russia Relations India and Russia share a longstanding relationship that dates back to the Indo-Soviet Treaty of Peace, Friendship, and Cooperation signed in 1971. Despite the collapse of the Soviet Union in 1991, their ties have endured, with annual India-Russia summits playing a crucial role in anchoring this partnership. Defense and energy cooperation ha...

The GRI is a set of six rules that guide the  classification  of goods within the Harmonized System (HS) Nomenclature. These rules ensure consistency and accuracy in determining the appropriate HS code for a product. Let’s explore each rule further: Legal Basis: The titles of Sections, Chapters, and sub-Chapters in the HS serve as reference points. However, for legal purposes,  classification  relies on the terms of the headings and relevant Section or Chapter Notes. This ensures uniform interpretation across different countries and customs authorities. Inclusion of Articles: When a heading refers to an article, it encompasses both incomplete/unfinished articles (with essential character) and complete/finished articles (even if unassembled or disassembled). For example, a car engine (incomplete) and a fully assembled car engine fall under the same heading. Materials and Substances: References to materials or substances include mixtures or combinations. Goods composed...

Introduction In an increasingly interconnected global economy, efficient and secure cross-border trade is essential. Customs administrations play a pivotal role in ensuring the smooth flow of goods while safeguarding national security. The concept of Mutual Recognition Arrangements (MRAs) has gained prominence as a strategic approach to achieving these twin objectives. Understanding MRAs 1. Definition and Purpose An MRA is a formal agreement between two or more Customs administrations. Its primary purpose is to recognize and accept the Authorized Economic Operator (AEO) programs of partner countries. AEO s are businesses that meet specific security and compliance criteria, allowing them to enjoy streamlined customs procedures and other benefits. 2. Key Elements a. Recognition Process The MRA outlines the process for recognizing  AEO  authorizations granted by one Customs administration in another country. It includes: Evaluation: Assessing the compatibility of foreign  A...

In recent years, the landscape of international trade has undergone significant transformations. Political shifts, economic priorities, and geopolitical tensions have shaped trade policies worldwide. Let’s delve into the key aspects of these trade policy shifts and their implications. 1. The Populist Era and Protectionism Since January 2017, the rise of populism has influenced trade policies across nations. Governments have grappled with balancing national interests, economic growth, and protectionist measures. Here are some notable trends: A. Protectionist Measures Tariffs and Targeted Trade Distortions: The U.S.-China trade war dominated headlines, but its impact extended beyond the two giants. Worldwide, governments introduced 6,755 changes in policies related to international trade, cross-border investment, data flows, and labor migration. These changes included both trade reforms and protectionist steps. Shift Away from Open Trade: The total number of new policies that harmed fore...

The Import Control System 2 (ICS2) signifies a monumental leap forward in customs security processes for the European Union (EU) and its associated territories. This automated entry system, inaugurated on June 3, 2024, is poised to safeguard the EU's single market and its populace by fortifying border security measures. What exactly is ICS2, and how does it operate? At its core, ICS2 is an IT framework meticulously engineered to gather comprehensive data regarding all incoming cargo destined for the EU. Its fundamental objective revolves around bolstering security protocols at the EU's external borders. Here are some pivotal aspects of ICS2: Data Collection: ICS2 meticulously gathers a wealth of information pertaining to incoming cargo, encompassing details about the goods themselves, the modes of transportation employed (including sea, inland waterways, road, and rail), and the various economic entities involved in the shipment process. Security Measures: Leveraging the collec...

In today’s interconnected world, cross-border commerce has become a critical driver of economic growth. As businesses expand their reach beyond national borders, digital transformation plays a pivotal role in shaping their success. In this 1000-word article, we’ll explore the impact of digital transformation on cross-border e-commerce and discuss strategies for thriving in this dynamic landscape. 1. Understanding Cross-Border E-Commerce Cross-border e-commerce refers to the exchange of goods and services between entities located in different countries using digital platforms. It encompasses logistics, marketing, payment processing, and other activities related to import and export trade. As the global economy evolves, cross-border e-commerce has transitioned from its initial stages to a more mature phase. 2. The Role of Digital Platforms Digital platforms serve as the backbone of cross-border e-commerce. These platforms facilitate transactions, connect buyers and sellers, and streamlin...

Overview The Indian government has been pushing to boost the country's plastic exports through Special Economic Zones (SEZs) and incentives. The SEZ scheme was introduced in India on April 1, 2000, to enhance foreign investment and provide an internationally competitive and hassle-free environment for exports. The SEZ policy has been successful in promoting private investment in industrial activity, infrastructure investment, employment, and exports since its introduction. According to the Ministry of Commerce and Industry, SEZ exports increased by 3.3% between 2005-06 and 2020-21, from INR228.40 billion to INR7595.24 billion, and investment in SEZs increased by 15.3% during the same period, from INR40.355 billion to INR6174.99 billion. The government's push to boost India's plastic exports via SEZs and incentives is expected to further increase the country's exports and attract foreign investment. The SEZs offer incentives to resident businesses, such as competitiv...

Overview The India-ASEAN Trade Agreement is a significant trade pact between India and the Association of Southeast Asian Nations (ASEAN). It aims to promote economic cooperation and reduce trade barriers between the two regions. Recently, there have been some noteworthy developments regarding the review of this agreement. India and ASEAN are expected to formally launch the review exercise for the free trade agreement (FTA) in November. The review process will focus on eliminating barriers and addressing concerns about the misuse of the trade pact. The negotiations are expected to be concluded by 2025. This review is crucial as it aims to enhance and diversify trade while addressing the current irregularity in bilateral trade. India’s trade deficit with ASEAN has been a matter of concern, and this review aims to address this issue. The widening trade deficit between India and ASEAN has raised questions about the effectiveness of the existing trade agreement. The review will also ...

Introduction The United Kingdom's recent introduction of the Developing Countries Trading System (DCTS) marks a significant shift in its trade policies. The move aims to revamp the country's trading relationship with developing nations, including India. However, because of this change, Indian goods worth $960 million are set to lose their concessional duty access to the UK market. This article delves into the implications of the DCTS on Indian exporters, analyzing the challenges they face and the potential strategies they can adopt to mitigate the impact. Understanding the Developing Countries Trading System (DCTS) The DCTS is a novel trade preference scheme introduced by the UK after its departure from the European Union. As part of its independent trade policy, the UK seeks to reconfigure its relationships with developing nations by implementing this new system. The DCTS aims to provide preferential market access to a carefully selected group of countries with the greates...

If you are directly or indirectly connected with the global supply chain, then you must have heard the buzzword ‘AEO.’ It is an accreditation awarded by the Indian Customs not just to the importer-exporters but also to the Logistics Operators, Customs House Agents (CHAs), Freight Forwarders, Terminal Operators, etc. Assuming that you are well informed about the AEO status and its importance, in this article we will see how AEO status is significant in actual practice, and what the positives and negatives are if you are thinking to apply for the AEO status. In past years, I had an opportunity to hand-hold to the importer-exporters to get the AEO accreditation. I have summarized the facts in a Q&A format. But before that let us investigate India’s current AEO accreditation scenario. Who can apply for AEO status? Any business entity that is part of the international supply chain; involved in the cross-border movement of goods and required to fulfill obligations under the Customs law i...

On April 1st, 2023, the DGFT (Directorate General of Foreign Trade) announced a new Foreign Trade Policy, which came into force on the same date. The earlier Foreign Trade Policy 2015-20 was supposed to be valid up to March 31st, 2020. However, it extended up to March 31st, 2023 because of various scenarios like, the COVID-19 pandemic, etc. If we compare India’s merchandise export and service export in FY 2016 (at the beginning of Foreign Trade Policy 2025-20), it was USD 435 billion. It is expected that the export may grow up to USD 760 billion by the end of FY 2023, which is almost 75% growth. Here, being an exporter, you can judge that the export business has good potential in near future. Export has a direct relation to key economic factors like demand and supply. This means Indian goods and services have ample demand in the world market and the only question remains seizing the opportunity at right time. In short, companies that are in the export business have an opportunity to fl...

In last month’s Cross-border Trade Val-bytes, we understood Cross-border Trade Valuation for exported goods and for imported goods in a nutshell. I hope my previous article helps you to understand the significance of valuation in international trade. In this month’s article, we will focus on the valuation of exported goods in a more comprehensive manner. Determination of Export Value: The value of the export goods shall be based on the transaction value of goods of like kind and quality exported at or about the same time to other buyers in the same destination country of importation or in another destination country of importation adjusted. While determining the value of export goods several factors are taken into consideration like commercial levels, quality levels, differences in composition, quality, and design between the goods to be assessed and the goods with which they are being compared, differences in domestic freight, and insurance charges depending on the place of exportatio...

In last month’s Cross-border Trade Val-bytes, we saw an introduction to Cross-border Trade Valuation. I hope my previous introductory article helps you to understand the significance of valuation in international trade. In this month’s article, we will try to boil down the valuation in a more comprehensive manner. Valuation is broadly defined into two parts in the form of rules namely: Customs Valuation (Determination of Value of Exported Goods) Rules, 2007 The value of the export goods shall be based on the transaction value of goods of like kind and quality exported at or about the same time to other buyers in the same destination country of importation or in another destination country of importation adjusted. While determining the value of export goods several factors are taken into consideration like commercial levels, quality levels, differences in composition, quality, and design between the goods to be assessed and the goods with which they are being compared, differences in do...

Valuation is one of the key components of import-export activities. The word ‘Valuation’ is exclusively defined in the Customs Act, of 1962. According to the act, valuation means the transaction value of the imported goods and exported goods; the price actually paid or payable for the goods when sold for export to India for delivery at the time and place for importation. In terms of export, this can be exported from India for delivery at the time and place of exportation. To define the valuation at arm’s length basis, the buyer and the seller are not related and the price is the sole consideration for the sale subject to such other conditions. If we jot down the term ‘Valuation’, then it can be any amount paid or payable for costs and services, including commissions and brokerage, engineering and design work, royalties and license fees, costs of transportation to the place of importation or exportation, insurance, loading-unloading, and handling charges, etc. The Basic Customs Duty (BC...

As per point (i) of para 7.01 and para 7.02 of the Foreign Trade Policy (2015-20), Quote “7.01 Deemed Exports (i) “Deemed Exports” for the purpose of this FTP refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as specified in Paragraph 7.02 below shall be regarded as “Deemed Exports” provided goods are manufactured in India. 7.02 Categories of Supply Supply of goods under following categories (a) to (d) by a manufacturer and under categories (e) to (h) by main / sub-contractors shall be regarded as “Deemed Exports”: A. Supply by manufacturer: (a) Supply of goods against Advance Authorisation / Advance Authorisation for annual requirement / DFIA; (b) Supply of goods to EOU / STP / EHTP / BTP; (c) Supply of capital goods against EPCG Authorisation;” Unquote Further, para 7.03 of the Foreign Trade Policy (2015-20) says, Quote “7.03...

Depending on the design of a country’s tax system, application of the arm’s-length principle may be relevant in determining the taxable objects for one or more direct taxes (income tax, corporate tax, profits tax, etc.). Generally, most countries’ transfer pricing legislation has broad application across direct taxes. One notable exception being Ireland, where the transfer pricing legislation introduced in 2010 applies only to certain classes of income for direct tax purposes.  Countries with other specific types of direct taxes governing specific sectors or transactions types (such as a mining income tax) may need to consider application of transfer pricing legislation to them. Typically, this would be achieved through separate provisions being inserted in the relevant taxing acts. However, where a consolidated tax code has been adopted, a single set of legislation may be possible. Transfer pricing provisions may also be necessary for other types of taxes such as a resources royal...