Paper import under Free Trade Agreement route now requires ‘rules of Origin’

Paper import under Free Trade Agreement route now requires ‘rules of Origin’

New Delhi | 24th August 2020 | The Pulp and Paper Times:

The Government has notified the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, which will come into force from 21st September 2020. These Rules (CAROTAR 2020) will apply to imports into India of goods at preferential rates of basic customs duty under free trade and other trade agreements and seek to curb the misuse of the Rules of Origin under the FTAs by requiring the importer to submit detailed information about the imported goods while importing under the claim of a preferential rate of duty.

This rule will also benefit the Indian Paper industry in curbing the import of paper. The new norms have been framed with a view to checking inbound shipments of low-quality products and dumping of goods by a third country routed through an FTA partner country.

"The 'Rules of Orgins will stop the malpractices in paper import also under the Free Trade Agreement (FTAs). Now the paper of origin needs to be shown to authorities in order to get custom clarification. We will see a reduction in paper import once this rule implements," a paper trader said. 

“These new norms will help check third country exports (non-FTA members) to India at preferential / nil import duty using the FTA route as Rules of Origin are expected to be more strictly enforced as compared to earlier. It should help all industries to the extent that the misuse of FTAs to route exports to India at preferential / nil duty will be reduced. Only goods produced in FTA members which meet the Rules of Origin and Value Addition Norms will be allowed into India at preferential / nil import duty,” said Mr. Rohit Pandit, Secretary-General, IPMA (Indian Paper Manufacturers Association)

These rules "shall apply to import of goods into India where the importer makes a claim of a preferential rate of duty in terms of a trade agreement," it said.

Previously reported by The Pulp and Paper Times that the Government is all set to fine-tune the import duty structure as well to have a quick review of all ‘Free Trade Agreement’ (FTA). China and Indonesia are using this opportunity to push their excess inventory to India at very low prices, AS Mehta, president, Ipma, told FE. “We have urged the Centre to hike basic customs duty on paper import to 25%. Again, the paper should be placed in the Negative List for all existing and future FTAs (free trade agreements),” he says.

Taking advantage of low import duty rates countries like China and Indonesia diverting their inventory, rendered excess by a levy of anti-dumping and anti-subsidy tariffs by their traditional markets of USA and EU, to India.

The ''rules of origin'' provision prescribes for the minimal processing that should happen in the FTA country so that the final manufactured product may be called originating goods in that country.

According to the notification, to claim preferential rate of duty under a trade agreement, the importer or his agent, at the time of filing bill of entry, has to make a declaration in the bill that the imported products qualify as originating goods for a preferential rate of duty under that agreement; and produce the certificate of origin. The claim of a preferential rate of duty may be denied by the proper officer without verification if the certificate of origin is incomplete or has any alteration not authenticated by the issuing authority or the certificate is produced after its validity period has expired, it said.

The importer, it said, also has to possess all relevant information related to the country of origin criteria, including the regional value content, and submit the same to the proper officer on request.

It is also said that an officer may, during the course of customs clearance or thereafter, request for verification of certificate of origin from verification authority where there is a doubt regarding genuineness or authenticity of the certificate for reasons such as mismatch of signatures or seal when compared with specimens of seals and signatures received from the exporting country.

Finance Minister Nirmala Sitharaman in her Budget speech had stated that the government would review 'rules of origin' requirements, particularly for certain sensitive items, "so as to ensure that FTAs are aligned to the conscious direction of our policy".

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