4. You should be checking the Incoterms in your standard contracts. The Incoterms are a set of three-letter trade terms from the International Chamber of Commerce which are inserted in contracts to describe the various tasks, costs and risks involved in the delivery of goods from sellers to buyers. Maybe you will want to change some of your “D” terms such as DAT (Delivered at Terminal). Some experienced sellers are viewing the DAP (Delivered at Place) to be a value-add for buyers who would prefer that Seller clear customs.
5. You should have a plan for the movement of specialized tools. “You may also want to consider the movement of specialized tools (ramp supply, transport wheels etc.) as they likely can no longer be moved freely," advised Christian Frandsen, head of logistics for Denmark-based Agito. "They likely need to be moved on ATA Carnet (or temporary export).”
Failure to comply with these requirements may cause a company to pay full DUTY & VAT when engaged in transport.
6. You should consider if your hospital seller has become an exporter Some medical equipment buyers have long been purchasing directly from hospitals. This raises a further question as to whether the hospitals are registered as "exporters" and if not, how would the hospitals go about getting units out of the territory if they do not have a local entity from which to export?
7. You should be acquainted with, and have in place, supplier declarations to address “Rules of Origin”. As of January 2021, businesses will have to demonstrate the originating status of goods traded, in order for these goods to be entitled to zero tariff, zero quota status.
Can I demonstrate the "originating" status of the medical equipment I am selling in order to be eligible for preferential treatment under the EU-UK agreement? Equipment not meeting origin requirements may be liable for customs duties notwithstanding the zero tariffs and zero quotas.
Have I adapted my supplier declarations to reflect the rules of origin? Am I familiar with the expected procedures for demonstrating the originating status? It probably is worth a review of Chapter 2 of the Agreement entitled "Rules of Origin" (the core concepts are described in the first five pages) to analyze the possible impacts of this section. Though Article Orig. 2 makes clear that products "wholly obtained" or "produced" are viewed as satisfying the Rules of Origin, it’s not so clear with regard to some products incorporating non-originating materials. As noted therein, “accessories, spare parts, tools, and instructional or other information materials referred to … may be disregarded in determining the origin of the product except for purposes of calculating the value of non-originating materials if a product is subject to a maximum value of non-originating materials."
This is a well written article and should give medical device companies pause as they consider the potential for additional expenses and delays with these new rules. Unfortunately, most learn by failing and emptying their bank account. An economist several decades ago encapsulated the problem very well. He said, "Most organizations continue to implement solutions for problems they no longer have." In other words keep acting as if the EU hasn't changed and it will cost you dearly.
Wayne Webster
Good article. Skip at your own financial peril.
January 04, 2021 10:38
This is a well written article and should give medical device companies pause as they consider the potential for additional expenses and delays with these new rules. Unfortunately, most learn by failing and emptying their bank account. An economist several decades ago encapsulated the problem very well. He said, "Most organizations continue to implement solutions for problems they no longer have." In other words keep acting as if the EU hasn't changed and it will cost you dearly.
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