The Concept of the Customs Union
Key Decision
- The Supreme Council, at its 23rd session (Qatar, December 2002), approved the establishment of the Customs Union of the Gulf Cooperation Council (GCC) States, effective from 1 January 2003.
- The Council adopted the measures and procedures submitted by the Financial and Economic Cooperation Committee.
Definition of the Customs Union
A customs union is a region in which customs duties and trade barriers between member states are abolished, while a common external tariff is applied to imports from non-member countries.
Date of Establishment of the Customs Union
The Customs Union officially commenced on 1 January 2003.
Main Principles
- A unified customs tariff.
- A unified customs system (law).
- Harmonised regulations and rules among the states.
- Standardisation of import, export, and re-export procedures.
- A single entry point for customs duty collection.
- Free movement of goods, subject to prohibited goods and agricultural and veterinary quarantine regulations.
- Goods produced in any member state are treated as national goods in all member states.
Single Entry Point
The Concept
The single entry point is considered one of the key requirements of a customs union.
Requirements
• Any entry point connected to the external world is regarded as a point of entry.
• The first entry point undertakes inspection, clearance, and the collection of duties.
• Harmonisation of restrictions on conditional goods among the states.
• Establishment of uniform controls for government imports and exemptions.
• Goods prohibited in one state but permitted in another must be imported directly into the permitting state without transiting through prohibiting states.
• Goods imported from free zones are subject to duty upon exit from those zones.
The Common Customs Tariff
Tariff Rate
5% on all foreign goods imported from outside the Union.
Exemptions
• Exemption of 417 goods in accordance with the approved schedule.
• Exemptions provided for under the Unified Customs Law.
Tobacco and its Derivatives
• A duty of 100% (ad valorem or specific) in accordance with the unified tariff schedule.
• It is accounted for as ordinary customs revenue within the clearing mechanism.
The Unified Customs Law
Implementation
All member states are committed to implementing the Unified Customs Law, its Executive Regulations, and the Explanatory Memorandum at all points of entry.
Collection of Customs Revenues
• Duties are collected at the first point of entry with effect from 1 January 2003.
• Revenues are distributed according to the final destination of the goods during the three-year transitional period.
Movement of Goods Between Member States
If the Origin of the Goods is The “First Point of Entry”
A. Full consignments
- Full clearance and payment of duties at the first point of entry.
- Direct movement, or via other states, with goods sealed and accompanied by a copy of the import declaration.
- Exit of the goods is endorsed at other points of entry/exit.
B. Partial consignments
- Movement under a statistical declaration, together with a copy of the original declaration and sealing.
- Intermediate customs centres retain copies for settlement (clearing mechanism).
If the Source of the Goods is the “Local Markets”
- Goods imported before 1/1/2003 are subject to duty in the country of final destination.
- Goods imported after 1/1/2003, for which customs duties are proven to have been paid at the first point of entry, are not re-assessed for duty.
- If payment of duties is not proven, duties are levied at the point of entry in the country of final destination.
- Goods exempted under free trade agreements are subject to duty upon re-entry at the border.
- A statistical declaration is used for clearing and recording the movement of goods.
Functions of Intermediate Customs Centres
Phase One
- Abolition of export, re-export, and transit procedures between member states.
- Verification of documents to ensure that duties have been paid and that goods are free of prohibited items.
- Application of non-customs measures in accordance with the importing state.
- Allowing the free movement of national goods.
- Submission of periodic reports to the Executive Committee.
Phase Two
- Continued verification of documents to ensure that duties have been paid.
- Abolition of verification of non-customs procedures, except as stipulated in the Economic Agreement.
- Reliance on local invoices and the statistical declaration only.
- Submission of periodic reports.
Phase Three
- Full abolition of customs functions at intermediate centres.
- Provision of a transitional period to adapt and address potential difficulties.
- Commitment to the Economic Agreement.
- Exercise of customs clearance.
- Allowing customs brokers who are nationals of GCC member states to practise the profession in accordance with Article (109) of the Unified Law.
Unified Standards and Protection of National Industry
Standards and Specifications
• Adoption of the principle of mutual recognition of national standards and specifications.
• Continuation of this approach until the completion of unified GCC standards for all goods.
Protective Duties
• States that applied protective duties prior to 2003 may continue to do so until the end of 2005.
• Preparation of a unified list of protected goods during 2003.
Collection Mechanism
• The first point of entry collects a 5% duty on non-protected goods.
• The country of destination collects the difference where protective measures apply.
• The 5% rate is subject to the clearing (settlement) mechanism.
Anti-dumping Measures
• Adoption of the Unified System for Anti-Dumping, Countervailing, and Safeguard Measures for an indicative period of three years.
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