Declaring the nationality of goods is a mandatory requirement on import customs declarations, and it is often known as the “economic nationality of the goods”. 

Step 1

Taking the UK Customs (Origin of Chargeable Goods) (EU Exit) Regulations 2020, which adopts the EU Union Customs Code regulations on establishing the origin of imported goods, as a guide, the first Step is to determine if the item wholly originates or is wholly obtained from one country. If yes, this is the origin of the goods. If not ….

Step 2

For this Step, we need to know what process has occurred for the goods. If we have imported the goods and repacked them, for example, this is a minimal process and does not change the origin of the goods that are now sitting in different boxes, perhaps with various labels. Countries’ origin rules state minimal/ insufficient processes, and we must ensure we are doing more than these processes to change the origin.

In Article 9 of the UK Customs (Origin of Chargeable Goods) (EU Exit) Regulations, the following are deemed to be insufficient to change the origin

• Operations to ensure the preservation of products in good condition during transport and storage
• Simple operations consisting of removals of dust, sifting or screening, etc
• Changes of packing or placing in bags
• Putting up goods in sets or ensembles or putting them up for sale
• Affixing of marks, labels or other distinguishing signs on products or their packaging
• Simple assembly of parts of products to constitute a complete product
• Disassembly or change of use
• Combination of the above

Step 3

This Step can be more complicated. Some products, such as foodstuffs, textiles, clothing, footwear, and pharmaceuticals, must undergo a specifically defined process to establish their origin. These specific process rules are listed against the Tariff Heading of the goods within the customs regulations, such as the table within the UK Regulation or Annex 22.01 of the EU UCC Delegated Acts. If we don’t have a specific process rule to follow, we need to check the next Step.

Step 4

Where the goods do not wholly originate or come under a processing rule to establish the origin, we look at the country where the last substantial process or work occurred. A quick guide to whether this changes the origin of imported items is to check if any of the imported goods have the same commodity code as the goods we’ve produced. The change of tariff heading for all materials is a crucial indicator that the origin has also changed. For example, if we import wood and create a table, the commodity codes are different, and so is the origin of the table. If some goods have the same commodity code as the finished item, we could still have undertaken a sufficient manufacturing process, but we need to check further.

Step 5

If we still haven’t established where the goods are made, we need to understand in more detail what process the goods have gone through. This is where the decision can seem arbitrary as the legal phrase is that the goods shall be considered to have undergone their last substantial, economically justified processing in the country where the majority portion of the materials originated as determined based on substantial transport or the highest value of materials if a substantial process cannot be determined.

Step 6

If the origin still needs clarification, we must review any legal guidance. We may be better advised to seek an Advanced Origin Ruling (AOR—GB) or Binding Origin Information (BOI) ruling (NI/EU) for Customs. But do ensure they understand it is a ruling on non-preference origin you want, or they may give you a ruling on preference origin, which is very different.

Errors may happen when establishing the origin of goods. However, you can also have the case when a company is aware that by stating the export country (Country When Consigned – CWC) instead of the actual country of origin (COO), they will be avoiding restrictive measures, e.g., EU anti-dumping on ceramics made in China as Sri Lankan origin because they were shipped from Sri Lanka. The jargon phrase sometimes used to describe the intentional misdeclaration of the origin of goods when they travel through another country is “submarining” – though the real name is origin fraud.

While you are here, you may be interested in some Strong & Herd LLP training courses related to this topic: