Implementation Procedures for the GCC Customs Union

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Implementation Procedures for the GCC Customs Union



The Supreme Council, in its 23rd Session held in Qatar ( 21 - 22 December 2002), approved the launch of the customs union of the GCC States as of 1st January 2003. It also approved the procedures and steps recommended by the Financial and Economic Cooperation Committee ( The GCC Ministers of Finance and Economy) for the establishment of the customs union of the GCC States.

These procedures and steps comprise the following:

I. The date of setting up the customs union of the GCC States:

The GCC customs union shall be implemented effective 1st January 2003.

II. Principles and Concept of the Customs Union of the GCC States:

1. Customs Union is the territory wherein customs duties "taxes" as well as the regulations and procedures restricting trade among the member States are abolished and wherein unified customs duties "taxes" and trade and customs regulations for trade with the non-member States are implemented.

2. The GCC customs union is based on the following principles:

A Common External Customs Tariff for products imported from outside of the GCC customs union
A Common Customs Law .
Unified customs regulations and rules applicable in all member States.
Unification of the internal customs, financial and administrative regulations and procedures relating to importation, exportation and re-exportation in the GCC States.
The free movement of goods among the GCC States without customs or non-customs restrictions, while taking into consideration the implementation of the veterinary and agricultural quarantine regulations and the prohibited and restricted goods.
Treatment of the goods produced in any of the GCC States as national products.
III. Single Point of Entry into the GCC States:

The Single Point of Entry is one of the most important principles for the formation of the customs union of any economic community. The following are the most important requirements of the single point of entry into the GCC States:

Any land, sea or air customs port of the GCC States that has connection with the external world shall be deemed as a point of entry of the foreign goods into any member State.
The first customs port of the GCC States vis-à-vis the external world shall conduct the inspection of the goods imported to any member State, verify their conformity to the required documents, ensure that they do not contain any prohibited commodities and collect the applicable customs duties.
Unification of the restrictions imposed on the goods permitted to be imported subject to the fulfillment of certain conditions in all the GCC States.
The adoption of unified rules for importation and movement of the government imports and of exemptions from customs duties.
The goods whose importation is prohibited in certain member States while permitted in other member States shall be directly imported through the importing State or through another member State that permits entry of such goods provided that such goods shall not transit the territories of the member States that prohibit importation of these goods.
The foreign goods imported into the GCC States from the free zones shall be subject to the customs duties when exiting these zones and shall be treated during movement to the other member States the same as other foreign goods.
IV. Unification of the Customs Tariff of the GCC Customs Union toward the external world:

The common customs tariff of the GCC Customs Union shall be 5% on all foreign goods imported from outside of the Customs union with effect from 1st January 2003.
The attached list (Appendix No. 1) incorporating 417 commodities (subheadings) shall be exempted from all customs duties "taxes", in addition to the exemptions provided for in the Unified Customs Regulation "Law" of the GCC States.
Ad valorem or specific customs duties "taxes" imposed on tobacco and products thereof in the member States of the Customs union shall be 100% (Products of chapter 24 of the H.S.- based Unified Customs Nomenclature for the Commodity Description and Coding of the GCC States). The max. limit of the specific duty or weight in the GCC Unified Customs Tariff shall be adopted. The customs revenues levied on tobacco and products thereof shall be considered the same as the revenues from any other commodity whose customs duties are collected within the common customs revenues of the CU member States.
V. Common Customs Law of the GCC States:

All customs administrations of the member States shall implement the Common Customs Law of the GCC States, its Rules of Implementation and Explanatory Notes.

VI. Collection of the customs revenues in the GCC customs union:

Customs duties are collected at the first customs point of entry of the GCC States with the external world as of 1st January 2003. The shares of the member States of the customs proceeds shall be distributed according to the final destination of the goods for the first three years following the establishment of the GCC customs union (Transitional Period) according to the following mechanism.

This mechanism shall be adopted for the movement of goods among the member States of the GCC Customs Union based on the final destination of the goods for the distribution (allotment) of the customs revenues during the transitional period of the GCC Customs union (that has been previously determined at max. three years ):

If the source of the goods is the First point of Entry:

a. Whole consignments:

All customs procedures (i.e. lodgment of the unified customs declaration, inspection of the goods, collection of customs duties) shall be conducted on the goods imported into the GCC States at the first customs point of the GCC States with the external world.
The whole consignments imported from outside of the GCC States shall leave the first point of entry , after completion of the customs procedures and collection of the applicable customs duties, to their final destination either directly or through one member State or more after affixing the customs seals and under a copy of the import declaration stating their value and the payable customs duties in favour of the country of final destination.
The copy of the import declaration shall be endorsed to indicate exit of the goods and passage through the member States.
b. Partial Consignments:

If the goods to be transported among the GCC States constitute a part of a consignment whose customs procedures have been completed at the point of entry and the importer wants to transport a part of it to another GCC State or through its territory prior to leaving the customs office for its final destination, the goods in this case shall be transported under the GCC approved statistical customs declaration along with a copy of the original customs declaration after affixing the customs seals.
Intra- GCC customs offices shall endorse the statistical customs declaration indicating the entry or exit of the goods. Copies of the goods documents shall be maintained for the purpose of clearing among the member States.
c. If the source of the goods is local markets:

Foreign goods purchased from the local markets of the member States and destined for a member State, either directly or through another member State, shall be treated during the transitional period as follows:

The goods that have been imported into the GCC States before 1/1/2003, and the source of which is the local markets the GCC States, shall have their customs duties collected at the customs office of the final destination of the goods.
The goods that were imported into the GCC States after 1/1/2003 and whose owners have submitted customs certificates issued by the first point of entry proving the payment of the applicable customs duties after formation of the customs union shall not be subject to any more customs duties.
The goods that have been imported into the GCC States after 1/1/2003 and whose owners have not submitted evidence proving payment of the applicable customs duties after formation of the customs union, shall have their customs duties collected at the point of entry of the country of final destination.
Goods that are imported into any of the GCC States and are exempted from customs duties under free trade agreements with another country shall have their customs duties collected at the border point of the country into which they will be re-entered.
The customs declaration approved within the framework of the GCC States shall be used for the purposes of redistributing and clearing the customs revenues among member States.
The customs declaration for statistical purposes shall be completed by the owner of the goods or his representative and shall be approved by the exit customs office, to be accompanied by the local invoices indicating the actual value of the goods and their country of origin.
The Entry/Exit customs office which the goods pass through shall endorse the customs declaration indicating the entry/exit of the goods.
The customs declaration for statistical purposes shall be computerized depending on the technical potentials available in each member State to facilitate the task of the customs offices of monitoring the intra-GCC trade and providing the accurate data for the clearing authority.
The decision of the Financial and Economic Cooperation Committee taken in its 58th meeting "that in the event of movement of the foreign goods from the local markets, the value t the first point of entry shall be adopted irrespective of the period that has elapsed since the entry of the goods into the first point of entry, subject to facilitation of procedures and the required forms" shall be adopted for clearing purposes.
VII. Customs functions of the intra-GCC customs offices after formation of the Customs Union:

Customs functions of the intra- GCC customs offices after formation of the Customs Union shall be defined according to the following phases:

First phase:

This phase commences with the formation of the customs union according to the timetable (First of January, 2003, and lasts for one year ending on December 31, 2003). The functions of the intra-GCC customs offices focus on completion of the customs procedures relating to the formation of the customs union as follows:

Procedures of exportation, re-exportation and transit shall be abolished at the intra-GCC customs offices.
Import documents of the foreign goods imported from outside the GCC region are appropriately matched with goods to ensure that customs duties have been collected and that the goods do not contain any goods prohibited in the transit country or the final destination country.
Ensuring that the non-customs procedures applicable to the importation of certain goods have been completed according to the regulations in force in the importing country based on the documents accompanying the good.
The above mentioned procedures shall apply to the foreign goods directly transported from the customs border points of the GCC States with the external world to the other member States and to the goods transported from the local markets of one member State to the other member States. Local invoices and the documents agreed upon within the framework of the Council pertaining to foreign goods shall be sufficient for customs purposes.
National products shall be allowed to move freely among the member States accompanied by their local invoices and statistical declaration.
Periodic reports on the results attained from the application of these procedures in this phase shall be submitted to the committee assigned to monitor implementation of the customs union of the GCC States.
Second phase:

This phase commences with the beginning of January 2004 and lasts for one year (ending by December 2004). Functions of the intra- GCC customs offices shall focus on strengthening the GCC customs union and the enhancing its credibility and benefiting from the positive results of the first phase, as follows:

Import documents shall continue to be matched with the foreign goods imported from outside of the GCC States to ensure that applicable customs duties have been collected and that the goods contain no goods prohibited in the transit or final destination country.
Procedures of verification that non-customs procedures specific to the import of certain goods have been completed according to the regulations applicable in the importing country based on the documents accompanying the goods shall be abolished, with the exception of the procedures set forth in Article (1) of the GCC Economic Agreement.
Intra-GCC customs offices shall allow passage of the foreign goods transported from the markets of one member state to the other member States against presentation of the local invoices and the statistical declaration relating to such goods.
Periodic reports on the results attained from the application of these procedures shall be submitted to the committee assigned to monitor implementation of the customs union of the GCC States.
Third phase:

This phase commences with the beginning of January 2005 wherein the customs functions of the intra-GCC border offices shall be abolished in the light of the results attained in the previous phases based on the periodic reports of the committee assigned to monitor implementation of the customs union of the GCC States, taking into account the provision of paragraph. (d) of Article (1) of the Economic Agreement of the GCC States.

These transitional periods shall give the customs administrations of the member States sufficient time to accommodate to the new situation and overcome any difficulties, if any, that hinder implementation of these phases as agreed upon leading to the final status of the customs union of the GCC States.


VIII. Allowing the customs brokers to get engaged in the customs clearance in the GCC States:

Nationals of the GCC States shall be allowed to engage in the business of customs clearance in the GCC States pursuant to Article (109) of the GCC Common Customs Law entitling GCC nationals to engage in the business of customs clearance in the member States.

IX. Internal Regulations of the Member States governing importation, exportation, Re-exportation and Transit:

Matters closely related to the process of goods transportation in the GCC Customs Union member States and the principle of the Single Point of Entry shall be dealt with as follows:

1. Government Exemptions, Special Exemptions and Diplomatic Exemptions:

Government Exemptions, Special Exemptions and Diplomatic Exemptions shall be limited to the provisions of the Common Customs Law of the GCC States approved by the Supreme Council. Any other exceptions shall be cancelled unless jointly agreed upon.

2. Exemptions under International Agreements:

When discussing such agreements, the GCC States shall take into account that these agreements are in line with the requirements and plan of the GCC Customs Union and the provisions of the GCC Economic Agreement.

3. Availability of information relating to Commercial Registration in the Customs Offices at the implementation of the GCC Customs union:

The importance of the availability of the following key information about the commercial Registration at the Single Point of Entry of the GCC customs border ports with the external world for purposes of customs clearance according to the following mechanism approved by the Council:

Name of establishment.
Owner of the commercial registration (CR).
CR No. and place of issue.
Date and validity of CR.
4. Temporary Admission/Exportation:

The subject of temporary admission and exportation under the customs union and the principle of the single point of entry of the GCC States shall be dealt with in the light of the provisions of the GCC Common Customs Law.

5. Import licenses:

The prerequisite of obtaining an import license for importing any commodity into any of the GCC States shall be abolished because it goes into conflict with the requirements of the formation of the GCC customs union and the principle of the single point of entry.

6. The goods whose documents are received through the banks at the implementation of the customs union and the single point of entry:

The goods whose documents are received through the banks at the implementation of the customs union and the single point of entry shall be dealt with according to the provisions of the GCC Common Customs Law.

7. Treatment of the customs duties "taxes" collected under deposit on the foreign goods at the implementation of the customs union and the single point of entry:

The customs duties "taxes" collected under deposit on the foreign goods in the GCC customs union shall be refunded according to the mechanism approved by the Council.

8. Controls of Drawback (Refund of customs duties "taxes" on the foreign goods re-exported to outside the GCC States):

Refund of customs duties "taxes" collected on the foreign goods re-exported to outside of the GCC States shall be in accordance with the provision of Article (16) of the Rules of Implementation of the GCC Common Customs Law.

9. Mechanism of treatment of the in-transit goods under the GCC Customs Union:

In-transit goods in the GCC Customs union shall be dealt with as follows:

The GCC States in the customs union are deemed as a single economic community and shall apply the provisions of the international transit agreements in force when dealing with non-member States.
Abolishment of the transit of goods among the member States after implementation of the customs union.
Application of the technical conditions and procedures provided for in the Arab Transit Agreement signed by the member States when dealing with transit with the external world.
The transit procedure for the goods imported into the GCC States shall be finalized at the first customs port (sea, land or air customs port) and normal customs procedures ( i.e. inspection, collection of customs duties ) shall be completed the same as other goods.
Transit for the goods exported or re-exported from any GCC State shall commence from the last customs port (sea, land or air port).
Goods that have been originally imported into the GCC States under the transit procedure shall be transported to any of the other GCC States upon finalization of their customs procedures the same as the other goods without any obstacles.
The goods that are subject to restrictions at their importation into any of the GCC States according to the list of the restricted commodities to be agreed upon by the GCC States the shall be transported from one member State to another member State(s) under the approved mechanism for the movement of such goods within the GCC States which ensures their arrival to the importing country if their nature so requires.
10. Mechanism for facilitation of the flow of the vegetable and animal products and the live animals imported into the GCC States:

The mechanism for facilitation of the flow of the vegetable and animal products and the live animals imported into the GCC States shall be implemented according to the controls agreed upon by the GCC States.

11. Treatment of the duties of the goods of special nature within the GCC Customs Union:

Goods whose importation is prohibited in some of the member States and permitted in the other member States are to be directly imported to the importing country or through a member State that permits their entry provided that such goods shall not pass across the territories of the member States that prohibit the importation of such goods and that the customs duties "taxes" applicable to such goods shall be collected by the importing country. These revenues "customs duties" shall be the right of the importing country and shall be excluded from the common customs proceeds of the customs union. The member States that import such goods shall unify the customs duties "taxes" levied on such goods.

12. Controls for exempting the industry imports from customs duties "taxes" :

Imports of the industrial installations in the GCC States (i.e. machinery, equipment, spare parts, raw materials, semi-manufactured materials and packing materials directly required for the industrial production) are granted exemption from customs duties "taxes" according to the controls agreed upon by the Council, provided that the customs office in any of the GCC States through which the goods have been imported shall facilitate the entry of imports whose certificate has been issued by the competent authority in any of the GCC States.

13. Treatment of the prohibited and restricted commodities in the member States under the GCC Customs Union:

A consolidated list of the prohibited imports and another list of the restricted imports are to be agreed upon by all the member States. Each member State shall have its own list of the prohibited and restricted commodities which shall be observed by the other member States during the movement of such commodities among the constituent states of the GCC customs union.

14. Restrictions and controls of the importation and release of medicaments and pharmaceuticals:

A maximum period of twenty-four months shall be granted for the application of the unified GCC procedures for the importation and release of medicaments and pharmaceuticals in the single point of entry at the commencement of the GCC customs union provided that the Drug Registration Committee shall develop a unified mechanism for the customs release of the medicaments and pharmaceuticals including the unified drug registration under the GCC customs union.

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