Enterprise Strategy & Inward Investment Unit Guidelines and Procedures on Tariff Suspension

General Grounds for Tariff Suspension

Under Article 28 of the Treaty of Rome, temporary suspensions of duties under the CCT, on imports of raw materials, components or intermediate products for further processing, may be granted where it is established that industry within the EU is unable to obtain supplies of the product or suitable substitutes within the EU and where certain other conditions are satisfied. Once in operation, a temporary suspension of the CCT will apply in all Member States of the EU. The facility to suspend duty is intended as a benefit to industrial companies in the EU who require to import goods from a non-EU country on which tariff duty would normally be payable.

Period of Validity of a Suspension/Quota

The suspension of duty is an exceptional measure because it results in the setting aside of normal procedure where Customs Duty is collected at the point where a product enters the territory of the EU. Such a suspension allows the importation of the product into the EU at zero or partial duty rate. It is important to note that any duty suspension granted is temporary in nature.

The period of validity of a suspension is five years and quota is either 6 or 12 months, with provision for extension where it can be demonstrated that all the conditions which gave rise to the original suspension continue to apply. Duty revenues forfeited as a result of this are a loss to EU Revenue - not to that of any individual Member State. There is a specific purpose for this concession. It is intended as a stimulus to economic activity, a benefit to the industrial competitiveness of companies in the EU and ultimately a boost to EU consumers. In essence, to avail of the scheme, EU benefit has to be demonstrated in all cases.

Once granted the tariff suspension/quota can be availed of by any Member State industry. It is not restricted to the applicant company or Member State.

In the case of a tariff quota, the benefit can be availed of up to and including the quota quantity granted or a "first come first served" basis.

Grounds for Refusal of Tariff Suspension

Applications for suspension of duty will not be considered where there are already restrictions or preferences on imports already in force e.g. anti-dumping duties, tariff quotas, GSP (General System of Preference), etc.

Suspensions will not normally be granted where:

• identical, equivalent or substitute products are available within the EU;
• goods are finished products;
• goods are covered by an exclusive trading agreement;
• benefits of the suspension are unlikely to be passed on to the EU; and
• the aggregate duty savings by all Member States would be less than 20,000 ECU's (IR£16,000 approximately).

Processing Grant Proposals

In accordance with various provisions of the Industrial Development Acts, Government approval is required in cases where one of the industrial development agencies proposes to provide grant aid in respect of investment projects, in circumstances where the level of grant aid exceeds certain thresholds. In such a case, the Section drafts a Memorandum for Government, setting out full details of the proposal, consults other relevant Departments and submits the proposal for Government approval. If approved, the agency is permitted to provide the grant assistance, subject to specified conditions.

Applications by Irish Companies

The Department of Enterprise, Trade and Employment on receipt of applications carries out the following procedures to enable cases to be sent forward to the Commission:

• examination to ensure that application forms are fully and satisfactorily completed;
• examination to ensure that application will not be refused under the "refusal of tariff suspension" criteria listed above;
• thorough technical evaluation of each application: there will be a particular focus on the technical description to confirm its accuracy (where inaccuracies are identified the application will be returned to the company for correction);
• consultation with Revenue Commissioners to ensure that the customs classification given is correct;
• consultation with relevant industry representative bodies.

Applications forwarded to the Commission need to be considered and approved by the Tariff Suspensions Group, consisting of the Commission and representatives of all Member States. Ireland is represented at this Group by officials from the Department of Enterprise, Trade and Employment.

Applications by other Member States

Requests for duty suspensions from other Member States are assessed in the Department with input from the relevant industry organisations and where necessary individual Irish-based companies. A firm which manufactures items (or substitute or equivalent ones) which are the subject of a new application or an existing suspension and who wishes to object to the granting or continuation of that suspension should inform the Department as early as possible in proceedings and should supply all relevant documentation on contacts with the applicant firms plus confirmation of capability to produce the product (or equivalent or substitute ones). Where there are valid grounds for objections, these are pursued on behalf of Irish producers by the Department.

When/How to apply for a Suspension

The Department of Enterprise, Trade and Employment publishes twice yearly notices in various national newspapers concerning deadlines for applications under the Tariff Suspension Quota Scheme. The notices appear in May and November of each year. In general an application in response to such an advertisement is for a suspension period commencing some twelve months ahead. This lead-in time enables all the necessary investigations to be carried out to ensure that the criteria for granting tariff suspension in respect of each application are satisfied.

• Guidelines for completion of Tariff Suspension/Quota application

Changes to existing suspensions

Beneficiary companies who wish to be made aware of proposals for the withdrawal, termination or changes in an existing suspension or quota should inform the Department of those suspension cases which are of interest to them. Many companies only contact this Department when a suspension or quota has been withdrawn or amended in a manner which does not suit them. In order to protect Irish interests, this Department should be kept fully informed of all duty suspensions used by companies.

Prolongation review

A number of tariff suspensions are due to expire at the end of 2008. The European Commission have begun a review to determine whether they should be prolonged for a further five years.

Duty suspensions are no longer of unlimited duration and now only last for a five year period. At the end of the five year period, users have to make the case for renewal for a further five year period (prolongation review).

How will the review work?
The first review covers over 1,000 current duty suspensions. All applications must be received in the EU Commission by 15 April 2008.

Where necessary forward completed application(s) for prolongation/renewal of suspension(s) a.s.a.p. but no later then 31 March 2008 using the short form (pdf)addressed to:

Eoin O'Reilly,

Department of Enterprise, Trade & Employment,

Room 515 Sectoral Enterprise and eBusiness,

Kildare Street,

Dublin2.

What if you don’t make the €20,000 duty saving?
We are aware that there are duty suspensions where direct imports into Ireland are not sufficient to generate duty savings of €20,000 but when combined with imports into other EU Member States would generate the required duty savings. If you are in this situation, please contact us and we will organise a joint request with other Member States to ensure the continuation of the duty suspension you use.