Changes in customs and global trade in 2023
New in 2023

Changes in customs and global trade in 2023

COVID19, Ukraine war, and supply shortages came as a surprise, but you can prepare for announced changes. These customs topics are coming your way in 2023.

Author: Kerstin Ullrich
Kerstin Ullrich
12.01.2023

New Commodity Codes in 2023
ICS2 – Phase two starts from March
Global corporate tax is introduced in the EU
Free trade: Changes in agreements with the EU
CBAM: EU adopts compensation mechanism for carbon dioxide
Switzerland: Passar 1.0
Europe: Due diligence in supply chains
UK: Further postponement of labeling obligations

New commodity codes in 2023

In 2022, the World Customs Organization (WCO) revised the Harmonized System of six-digit commodity codes. As a result, there were extensive changes at the beginning of 2022. There are fewer changes to the Combined Nomenclature in 2023, but the conversions require diligence and care. Therefore, check in particular changes without a clear assignment or newly added commodity codes. This includes numerous machine parts from headings 8505 and 8504.

UK: UK Goods Classification 2023
Note from AEB: Currently, the tariff data reflecting the 2023 nomenclature is still being updated and will become available under this link in due time.

NL: International Trade in Goods (with code list and table of changes)

DE: Index of commodities for foreign trade statistics 2023

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ICS2 – Phase two starts from March

On March 1, 2023, the electronic pre-declaration of imports via the Import Control System 2 (ICS2) will start with phase 2. With this phase of ICS2, the movement of goods into the customs territory via air freight is monitored and subjected to a risk analysis. In this step, an entry summary declaration, arrival notification, and presentation notification are implemented for all air freight consignments. Generally, it is the obligation of the transporter to submit the entry summary declaration. ICS2 phase 2 adds the option of multiple filing – allowing multiple operators to each provide some of the data needed to complete an entry summary declaration.

ICS 2 – Release 2

Global corporate tax is introduced in the EU

As late as December 14, the Council of the EU approved a draft directive from the EU Commission which provides for a minimum tax rate of 15% for multinational corporations. With this, the EU is implementing the decision taken at the G20 summit in October 2021. 136 OECD countries had previously voted in favor of a two-pillar model for redesigning corporate taxation.

Pillar two includes a global minimum tax to counter the formation of tax havens. Known tax loopholes such as the location of subsidiary groups in low-tax countries, from which the group as a whole then profits, should thus be a thing of the past. In the future, the country in which the group's headquarters is registered would have the right to post-tax corporate profits of subsidiaries if they have paid less than the minimum tax rate. This is intended to make obsolete the tax-saving model of minimizing profits by enterprise-wide cross-billing of license fees, for example. Member States are invited to transpose the new directive into national law by December 31, 2023.

Free trade: Changes in agreements with the EU

Following an adjustment to the EU-Singapore free trade agreement, a registration as an exporter in the EU's REX database is required for preferential exports from the EU worth more than EUR 6,000 since January 1. A transition period is in place until March 31.

As of January 1, 2023, only the trade agreement between the EU and Vietnam is applicable to the trade of goods between the EU and Vietnam. With the elimination of the applicability of the Generalized System of Preferences (GSP), the associated proofs of origin are also eliminated.

Since December 20, amendments to the Union Customs Code (UCC) have created more permeability in the application of the transitional preference rules. According to Articles 61 and 62 of the EUCC-IA and the related annexes on supplier's declarations, you may also issue preference documents (declarations of origin and EUR.1) confirming origin according to the transitional rules on the basis of supplier's declarations confirming the traditional rules of the regional convention on Pan-Euro-Mediterranean preferential rules of origin.

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CBAM: EU adopts compensation mechanism for carbon dioxide

As late as the end of December, the Council of the EU and the European Parliament provisionally agreed on the introduction of levies for the import of certain goods that cause particularly high carbon emissions during production. According to a press release of the Council of the EUimporters of these goods are expected to initially document their imports from October 2023. With the phasing out of previously free allowances in the EU Emissions Trading Fund (ETF), paid CBAM certificates will become a requirement. The transition period until the final implementation of the new system is expected to last until 2025/26. Initially affected are commodity groups such as iron, steel, aluminum, cement, fertilizers, hydrogen, or electricity.

Switzerland: Passar 1.0

As of June 1, 2023, the Swiss Federal Office for Customs and Border Security (BAZG) will launch the new “Passar” system for the movement of goods in Switzerland. This will gradually replace the system known as NCTS for transits and the e-dec system for exports, and will initially operate in parallel with the existing systems. The current NCTS system will then be deactivated at the end of 2023. NCTS phase 5 will be implemented by the BAZG in Passar only.

AEB is part of the “Software development” working group and the accompanying "Economy" group of the BAZG.

Europe: Due diligence in supply chains

On January 1, 2023, the German law for corporate due diligence in the supply chain has come into force. Until the end of 2023, this will initially apply to companies with more than 3,000 employees, whose registered office is in Germany, and to foreign companies with a branch or subsidiary in Germany.

As early as July 1, 2022, the Norwegian Supply Chain Act became effective. The Child Labor Due Diligence Law has been in effect in the Netherlands since 2019, the Loi de vigilance to protect human rights has been in effect in France since February 2017, and the United Kingdom passed the Modern Slavery Act back in 2015.

As a result, Commissioner for Justice Didier Reynders announced a European draft as early as 2020. On February 23, 2022, the European Commission finally presented the draft directive regulating corporate due diligence in the supply chain (“EU Supply Chain Act”). After ratification and transposition into national law, it is then to be implemented in all European countries.

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UK: Further postponement of labeling obligations

With the UK's exit from the EU's single market, changes to product labels took effect. In November 2022, the UK government announced further postponements for a mandatory UKCA label. This means that a European CE marking will continue to be valid in 2023 and can still be used until December 31, 2024 if the product regulations are identical.

Further equalization has also been achieved in the area of medical devices. Medical devices with a CE marking may continue to be marketed in the UK until at least June 30, 2024. Changes in food labeling were similarly pushed far into the future. It is only from 2024 that UK contact details or “UK” or “non-UK” origin labeling is now envisaged for food products. The British government provides comprehensive information.

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