On November 27, 2023, the European Union and New Zealand opened a new chapter in their economic cooperation. The two partners have been negotiating the free trade agreement for a long time, and now the European Union has ratified it. The Council Decision (EU) 2024/244 highlights the mutual commitment to improving market access and promoting economic growth between the two regions.

Overview of the Agreement

The agreement marks a significant milestone in the relationship between the European Union and New Zealand. It is designed to simplify trade processes, reduce tariffs, and remove barriers to facilitate a smoother flow of goods, services, and investments. Beyond the economic benefits, this agreement also represents a strong political bond with the aim of strengthening relationships and promoting common values on a global level.

Economic Implications and Benefits

For EU companies, the agreement initially means a significant reduction in trade barriers. The elimination of tariffs and quotas will facilitate market access for a wide range of products and services. This can lead to an increase in trade volume between the EU and New Zealand and open up new markets for EU companies.

The agriculture and food industry of the EU could particularly benefit from the agreement. With simplified trade conditions, EU agricultural products and food can gain a larger market share in New Zealand. Conversely, EU consumers benefit from a greater choice of New Zealand products.

Furthermore, the agreement also includes provisions on services, investments, intellectual property, and sustainable development. Therefore, EU companies can expect improved legal frameworks and better protection of their rights in New Zealand. At the same time, EU companies need to adapt to the new trade conditions and reconsider their competitive strategies. Additionally, some sectors, such as the automotive industry, may face pressure from increased competition from New Zealand.

Future Prospects and Strategic Importance

The free trade agreement between the EU and New Zealand brings both opportunities and challenges. It is therefore important for companies to carefully analyze the impact of the agreement on their specific business areas and develop appropriate adjustment strategies. As always, the customs experts at Gerlach are here to assist you and provide support. Please contact us if you have any questions about the free trade agreement between the EU and New Zealand.

The implementation of the new system will take place in 2 phases. The first phase, beginning on 1 March 2024, will see the transition from paper T2L(F) documents to their digital counterparts within the PoUS system. The second phase will incorporate the customs goods manifest, expected to be implemented by the third quarter of 2025.

What does this mean for your company?

To continue issuing T2L(F) documents, your company will need to access the PoUS system via the EU Customs Trader Portal, which requires eRecognition level 3. Paper T2L(F) documents will be phased out and replaced by a Movement Reference Number (MRN) generated through the new system. This MRN must be presented to the customs authorities of the country where the goods arrive. We recommend that companies review their supply chains to identify any necessary adaptations to this new process.

Gerlach Customs is here to support you

To access the PoUS system, you must log into the EU Customs Trader Portal, which necessitates eRecognition level 3. If you have any questions about this process, we will be happy to assist you. Please do not hesitate to contact your local Gerlach office regarding the use of these documents or the new system.

Customs regulations in Germany

As in other EU countries, importers in Germany must present a number of documents before allowing foreign goods into the country. These include the commercial invoice, the packing list, the certificate of origin, the waybill for sea freight or the air waybill for air freight.

In addition, it is necessary to register for an EORI number. Only companies with such a number are authorized to import or export goods within and outside the EU. If you are importing goods from the USA to Germany, you should also consider the following aspects:

• Note any restrictions in relation to certain goods
• Apply for an export license if required
• Take into account the applicable customs regulations: Imported goods from the USA and non-EU countries must be declared. The amount of customs duties is regulated in the Customs Ordinance § 29.
• Know all the important requirements regarding the payment of taxes. The contact for this is the General Customs Service. As long as the customs duties and sales tax due on the imported goods are not paid, Customs will retain the goods.
• Disclose the freight price. If this is not apparent, the value of the imported goods is estimated to determine the customs duties.
• Provide transparent information about the payment of freight costs. The key here is who pays the freight charges. If the shipper from the U.S. pays them, it is important that they are listed as line items on the invoice. Otherwise, the importer may be billed twice for the import duty.

Although there are not many restrictions on importing into Germany, some products are subject to additional regulations. These include pharmaceuticals, chemicals, steel and iron products, clothing and textiles, and vegetables and fruits. More detailed information on these and other products can be found in the TARIC database.

In mid-2021, the EU abolished the threshold at which e-commerce transactions in the EU are subject to EU VAT and a customs declaration. This means that all imports to EU countries – regardless of the value of the goods – are now subject to VAT.

An electronic import one-stop-shop portal has been introduced through which non-EU businesses can register for EU VAT and the correct amount of VAT will be paid to the Member State to which it is due. This simplifies the process by allowing you to collect, declare and account for VAT and pay your invoice directly to the EU tax authorities via a periodic tax return (for goods up to a value of €150).

For your customers, this means more price transparency: when they buy from a non-EU seller registered in the One Stop Shop, the VAT is part of the price they pay to the seller.

However, the best tip is: Find a reliable and competent customs service provider like Gerlach. We will take care of all customs-related matters for you and ensure that everything runs smoothly, while you can concentrate on your core business!

Export to Europe – why?

Over 748 million people call Europe home. The continent’s 47 countries have a wide range of socioeconomic demographics, but there is one commonality that should be of interest to ambitious online entrepreneurs: the rapid growth of e-commerce.

Driven by rising Internet penetration – and the pandemic, of course – 2021 was a milestone year for e-commerce in Europe, as the number of online shoppers passed the 500 million mark for the first time. And now the part that should really interest you: Cross-border e-commerce in Europe has grown to more than 25% of the region’s total online sales, as consumers increasingly look to foreign brands in search of new products and better prices.

In 2016, the Transatlantic Trade and Investment Partnership (TTIP), a proposed comprehensive trade agreement between the European Union (EU) and the United States to promote trade and economic growth, ended without an agreement. Nevertheless, the U.S. and the EU remain solid trading partners, accounting for one-third of global trade.

However, before you rush to draw a big circle around Europe on your map of sales targets, there are a few important things to keep in mind.

Choose the right markets for your business

The largest e-commerce markets in Europe are the United Kingdom, France, and especially Germany. Consumers in these markets are used to shopping online and feel comfortable buying from sellers abroad.

Perhaps you are already receiving inquiries from potential customers abroad. Look at your web analytics – is there traffic from new markets you haven’t tapped into yet?

Research your target country thoroughly. Is the demand for your products high enough to make shipping there a worthwhile investment? If there is already a lot of competition from domestic suppliers, how can you align your business to stand out from the competition?

Look at which European markets your U.S. competitors are selling to – because if they’re shipping to a particular country, there must be a healthy customer base there.

A good strategy for your European expansion is to focus on a few select markets first, like Germany. Then you can focus on the markets with the best visible results and expand there. But please note: Depending on your business model, you also need to consider tax aspects. For example, tax registration may be required in the respective country. It is best to seek comprehensive advice from competent experts with many years of customs experience.

Whatever your business, contact Gerlach Customs today! We help you reach new international markets with minimal effort and maximum profit.

Here we would like to briefly explain three essential aspects regarding the customs clearance of goods.

1) Third country: The USA is a third country for Germany. In terms of customs and foreign trade law, exports from Germany to the USA are therefore equivalent to any other export to a third country.

2) Tariff level: The tariff level is basically low. Exemption from customs duties is provided in the customs tariff for some products from the agricultural sector. In the commercial sector, many goods are also duty-free, for example in the areas of machinery and apparatus and electrical goods.

3) Responsible customs authority in the U.S.: Responsibilities for the regulation and monitoring of international trade in the U.S. are divided among several federal agencies. There may also be different ancillary costs depending on the state.

Conclusion:

Taking into account all the rules and regulations, it is therefore important to submit all the required documents correctly and in detail, as well as to comply with the requirements. To ensure a smooth and time-saving process, it is recommended to hire a good and experienced customs service provider like Gerlach.

Do you have any further questions? We at Gerlach will be happy to support you!

You can no longer delay the submission of import customs declarations, as was possible under the Staged Customs Controls that applied in 2021. Most customers will have to declare their goods and pay the corresponding duties at the time of import. (see link: https://www.gov.uk/government/news/less-than-a-month-until-full-customs-controls-are-introduced)

We can expect increased Customs Checks/controls at the border starting 1. January 2022

2. GVMS usage is mandatory starting 1.1.2022:

The goods vehicle movement service (GVMS) is a UK Government IT platform for moving goods into or out of Northern Ireland and Great Britain (England, Scotland and Wales).

From 1. January 2022, every transporter is obliged to register on this platform if they transports goods from the EU to the UK under the common transit procedure (= transit document) or in transit.

Without registration in the above (Goods Vehicle Movement Service) GVMS, a carrier will NOT be able to transit the goods via any port (incl. Folkestone) in the UK using this service from January 2022. Customs will reject the vehicle upon arrival in the UK at the latest.

All ports using GVMS for goods control will then require pre-deposited declarant references which will be merged into a single Goods Movement Reference (GMR). We already know a similar procedure today with the creation of the border pass.

Transporters who have not yet registered are urgently requested to do so immediately. For this a UK EORI number is required in advance. After registration  will be received a movement reference (under www.gov.uk the steps are explained). 

3. All products of animal origin (POAO) – for example meat, honey, milk or egg products will require an IPAFFS pre-notification.

These are three of many aspects that we think are important to consider. To understand all details and get the full picture of requirements please check the gov.uk Website. A document we highly recommend to look at is the The Border Operating Model.

We highly recommend trading companies to start the preparation, especially for transport companies being prepared on GVMS usage.

For more information around how to obtain a Government Gateway Account, get a GB EORI and register for GVMS please see:

GVMS Registrations Webinar available on YouTube Link here

GVMS Registration journey (specific for Non UK haulier) available on YouTube Link here.

However, there are now some important changes as of 1 January 2022, as reported by the Federal Statistical Office. Some of these changes have significant effects, so we ask you to prepare yourself sufficiently here.

We would like to draw your attention in particular to these two points:

1. for shipments to other EU Member States, the country of origin of the exported goods must be declared as of the reporting month January 2022.
2. for shipments to another member state of the European Union, the VAT identification number (VAT ID) of the recipient of the goods in the country of destination must also be declared in future.

For more information, visit the website of the Federal Statistical Office. Here you can find more information  on this topic.