International Trade Compliance Update | 21 September 2020

EFTA-Ecuador FTA enters into force 1 November 2020

by Stuart P. Seidel

On 21 September 2020, the Federal Customs Administration announced that the EFTA-Ecuador Free Trade Agreement will enter into force on 1 November 2020. Some points:

• The EFTA-Ecuador Agreement provides for the cumulation of originating products between EFTA countries and Ecuador. Cumulation with input materials from Colombia and Peru is also permitted. These input materials must be originating products under the relevant agreement which are processed or incorporated into a product in EFTA countries or Ecuador; it is not possible to transfer the origin of unaltered (neither processed nor incorporated into a product) goods forwarded from Colombia and Peru. The list rules do not have to be the same as in the EFTA-Ecuador Agreement. Cumulation with input materials of other countries is not permitted.
• This agreement provides for the “non-alteration” rule, i.e. the imported originating products must be the same as those exported from the contracting party. They must not have undergone any illicit working or processing in transit and must have been permanently under customs control (see Article 14 of Annex I). However, the splitting-up of consignments in third countries is permitted.
• For most products of chapters 25 to 97, tariff dismantling is asymmetric. While EFTA countries will abolish their duties in one step upon entry into force, Ecuador will gradually apply duty reductions/exemptions. Tariff dismantling can be seen in detail at the following link: Ecuador Schedule of Tariff Commitments.
• If no valid proof of origin exists at the time of the customs declaration, the person subject to the declaration obligation can request a provisional import assessment for goods that are covered by the agreement. According to established administrative practice, the proof of origin has to be submitted within two months (period of validity of provisional assessment; moreover, the person subject to the declaration obligation can submit a written and substantiated request for an extension of the deadline before this period of validity expires). If a provisional assessment was not requested, the customs declaration can be reclaimed at the preferential rate only if all of the prerequisites in accordance with Article 34 of the Customs Act are met in full. This means – inter alia – that the proof of origin (even if issued retrospectively) must have existed at the time of the original customs declaration and that the person subject to the declaration obligation made a request to the competent customs office within the set timeframe (within 30 days after leaving customs supervision).