The Bribery Act 2010 outlines the legislation and regulations relevant to bribery within every sector of business. ‘Bribery’ includes many types of behaviour, for example, the offering or demanding of any undue advantage. This ‘undue advantage’ can come from a public or government official or any private-sector employees, directors or officers. Facilitation payments are covered in the Bribery Act 2010 and they involve small bribes designed to ‘facilitate’ specific routines or procedures. What’s interesting about facilitation payments is that the payer is usually entitled to the outcome of the process anyway, so the payment is purely offered to speed up the procedure.

An example of a facilitation payment might be a business paying a customs official to release held goods. These held goods will generally be released anyway after the completion of all relevant procedures, but if the company wants them quickly, they may resort to offering a facilitation payment. Another example includes paying for faster approval for an export licence. This would be unfair, as it slows down the process for other companies that have already been waiting a long time.

How to look out for facilitation payments

It’s important to be vigilant about facilitation payments. If your company are found guilty of failing to comply with the Bribery Act 2010, anyone involved might be fined or even face time in prison. If you’re worried about facilitation payments, you can monitor your business’ payment activities. For example, if a payment is requested to speed up a service to which there is a legal entitlement, it’s likely a bribe. Facilitation payments can be difficult to spot, so you should keep an eye on whether payments are higher than or over and above the standard fee for a service.

How to prevent facilitation payments

The first step in avoiding any kind of unlawful behaviour in the workplace is to do your research. Finding out about anti-fraud and bribery regulations is important, as it can help you make informed decisions about your company’s procedures. This research should tell you whether you need any official payment documentation, authorisations or permits. This is especially important if you’re concerned about facilitation payments when trading internationally or travelling overseas.

You should also make sure that you keep complete and accurate records of all payments. These records should include details about the steps that were taken to resist payment. If an individual has requested a payment you’re unsure about, you should report the problem immediately.

Why are facilitation payments important?

It’s widely recognised that bribery is a form of corruption. Not only do forms of bribery including facilitation payments hinder economic development and thwart national and international trade, but there’s also an inherent abuse of entrusted power for private gain. If a business is found guilty of committing this crime, they risk losing the confidence of investors, suppliers and customers. The reputations of many sectors have been tarnished by their affiliation with poor business ethics and scandals, which hugely compromises their financial stability.

In some cases, bribery can also undermine environmental and health and safety standards. For example, if a business illegally obtains an export licence for dangerous goods, the transportation of their products might pose serious risks to human health. Many procedures, including those associated with customs control, may seem lengthy and unnecessary. However, they are implemented to keep the environment and economy safe, and therefore it’s important to follow them exactly. Think about how annoying it is when someone jumps in front of you in the bus queue and you have to stand for the whole journey!

The export and import of goods is a lengthy process. This is because goods need to cross borders to reach the destination. Customs declaration is an essential part of export activity and the Certificate of Origin (CO) plays an important part in this process. These documents help customs to know what goods are being shipped, whether there are any import quotas, customs or excise taxes, other tariffs or duties to be paid and whether any goods are banned from entry. Goods cannot be exported without an export declaration.

A CO confirms where the goods and their components have been obtained, produced, manufactured or processed. Components may have been produced in different countries and it’s important to know their origin in order to impose the correct taxes or duties are paid and any sanctions. Generally, a CO includes the basic details about the product’s shipment, a tariff code, the exporter and importer, and the country of origin. The CO is usually prepared by the exporter of the goods as they know about the specific requirements of border control at the importing country. Before the CO is submitted with the shipment, the details must get notarised (certified through a notary public) by a chamber of commerce. A chamber of commerce is made up of business owners in towns and cities, who advocate on behalf of their local business community.

Preferential and non-preferential

There are two types of certificate of origin: preferential and non-preferential.

• Preferential certificates of origin concern goods that meet criteria to qualify for preferential treatment. Goods may benefit from tax exemptions or Free Trade Agreement reductions. For goods with an origin from one or more countries, the origin is confirmed according to where the last major part of the manufacturing process took place.
• Non-preferential certificates of origin are the most common. They concern goods that do not benefit from preferential treatment but help to determine whether goods are subject to quotas, anti-dumping, embargoes and other restrictions.

How do you get a certificate of origin?

Your local chamber of commerce acts as the third-party responsible for verifying the shipper’s declaration. They charge a fee and notarise the document to certify it. The shipper can then email it through to the importer and it can be used in the customs clearance process. The document must be available before the shipment arrives into the country of import to avoid any problems or delays with the customs clearance process.

Obtaining an electronic certificate of origin (eCO) is relatively easy. The first step is submitting the required documentation online. A chamber of commerce will stamp the document online, or provide an expedited paper certificate. This is quite an efficient process – sometimes documents are available for collection the same day. Chambers of commerce will generally only certify a certificate of commerce if it is verifiable.

Fees vary depending on the Embassy for legalised documents. For example, the London Chamber of Origin charges £52.20 for a blank certificate of origin for non-members. Chamber of commerce members benefit from monthly payment terms; however, non-members are usually asked to make payment via credit card, bank transfer or by company cheques. Cheques should be made payable to ‘Chamber Management Services’.

Why is the purpose of them?

It’s important to have the correct information relating to goods shipments at customers because:

• The correct taxes/duty can be applied
• To know what goods are being shipped
• To impose any necessary sanctions

As components may have been produced in different countries, the taxes or duties might be different. For example, goods from Switzerland would not incur any tax charge within the EU, however, if any of the components were to come from a country such as China, then additional taxes would apply.

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Customs Clearance Procedure is upheld by the customs duty office. This system is designed to prevent illegal and prohibited items from entering the country, as well as to determine the number of duties to be paid when importing foods that are subjected to taxation under the local law. There are many documents required for customs clearance. The type of goods you have will determine the types of documents you need for importing and exporting them. Documentation may also vary depending on the country of origin or destination. Here are some examples of the documents you might need for customs clearance:

Commercial Invoice

This is a record of the transaction between the exporter and the importer. A commercial invoice is an official statement of the value of the goods and contains the basic information on the transaction. As a minimum, a commercial invoice must include the following details:

• Name and address of the exporter and importer
• Date of issue
• Invoice number
• Description of goods – This must be quite specific, so you should avoid general terms such as ‘clothes’ and describe the clothes exactly; for example, ‘1 x white t-shirt’
• Unit of measure
• Quantity of goods
• Total item value
• Total invoice value and currency of payment – You should also include the equivalent amount in a currency freely convertible to Euro or another legal tender in the importing Member state
• The terms of payment – This means the method and date of the payment, including any discounts
• The terms of delivery according to the appropriate incoterm
• Means of transport

There is no specific form for the commercial invoice, therefore they’re generally prepared by the exporter according to their business’ standard practice. You should keep the original and send a few copies with your shipment.

Import and Export Licences

There are import and export controls on many goods, which means you might need a licence. There are controls on exports of:

• Military or paramilitary goods
• Technology
• Artworks
• Plants and animals
• Medicines and chemicals

There are also controls on imports including:

• Firearms
• Plants and animals
• Foods
• Medicines
• Textiles
• Chemicals

The potential use of the item and where you’re exporting it to/importing it from determining the licence requirements.

Customs Value Declaration

If the value of the goods you’re importing exceeds 20,000 euros (which is about £17, 952), you must have a Customs Value Declaration. This document is required to assess the value of the transaction in order to fix the customs value to apply tariff duties. The customs value is the total value of the goods including all the costs incurred until the first point of entry in the European Union. For example, the customs value considers commercial price, transport and insurance. You can use the transaction value to work out the customs value.

Freight Documents (Transport Documentation)

These documents vary depending on the transport used. The documents include:

• Bill of Landing – This is a document issued to the operating shipper by the shipping company, acknowledging that the goods have been received on board. The Bill of Landing serves as proof of receipt of the goods by the carrier, meaning that they’re obliged to deliver the goods to the consignee. Details of the goods, the vessel and the port of destination must be included.
• FIATA Bill of Landing – This document was designed as a combined transport document with negotiable status. It was developed by the International Federation of Freight Forwarders Associations (FIATA).
• Road Waybill (CIM) – This document contains details regarding the international transportation of goods by road, set out by the Convention for the Contract of the International Carriage of Goods by Road 1956. The purpose of this document is to allow the consignor to have the goods at his disposal during transportation.
• Air Waybill (AWB) – This serves as proof of the transport contract between the consignor and the carrier’s company. You can use a single air waybill for multiple shipments of goods.
• Rail Waybill (CIM) – This document relates to the transportation of goods by rail and is considered the rail transport contract.
• ATA Carnet – These are international customs documents issued by the chambers of commerce. They are designed to allow the temporary importation of goods, free of customs duties and taxes. ATA carnets can be issued for commercial samples, professional equipment and goods for presentation or use at trade fairs, shows and exhibitions.
• TIR Carnet – These are customs transit documents used for the international transport of goods if part of it has been made by road. The TIR procedure requires the goods to travel in secure vehicles or containers. All the duties and taxes at risk throughout the journey must be covered by an internationally valid guarantee and the goods should be accompanied by a TIR carnet. It is also important that customs control measures in the country of departure are accepted by the countries of transit and destination.

Freight Insurance

Insurance is very important in the transport of goods because of how high the risks are. There’s significant potential for things to go wrong during the handling, storing, loading and transporting of goods. There are also other risks to consider, such as riots, strikes and terrorism. You only need the insurance invoice for customs clearance when the relevant data isn’t already in the commercial invoice.

Packing List

This is a commercial document that must accompany the commercial invoice and the transport documents. The purpose of a packing list is to provide information on the imported items and the packaging details of each shipment. Packaging details include weight, dimensions and handling issues. You usually need to include the following information:

• Information about the exporter, the importer and the transport company
• Date of issue
• Number of the freight invoice
• Type of packaging
• Number of packages
• Content of each package
• Marks and numbers
• Net weight, gross weight and measurement of the packages

Like the commercial invoice, there is no specific form to fill in and the packing list can be prepared according to your standard business practice.

Why are these documents important?

It is incredibly important to complete customs clearance documents properly in order to avoid delays in customs clearance. Exporting and importing goods is an integral part of maintaining a seamless supply chain between countries. We need customs clearance to be as efficient as possible, to ensure the transactions are legal and ethical. It’s important to ensure that you complete all relevant documentation accurately, as failure to do so can have significant consequences for both you and the customs clearance process. For example, improper completion of documents can result in delays at customs, or in some cases, the goods being sent back to the sender. You could also be suspected of deliberately withholding important information, which can lead to fines or a criminal investigation.

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If you’re travelling to the UK from the EU, you can bring an unlimited amount of most goods without paying any tax or duty. When you arrive at the UK border, you must declare anything that’s banned or restricted in the UK. It’s important that any goods you bring back are for your personal use. If a customs officer has reason to believe you might be bringing goods into the UK to sell, they may stop you to make checks. If this happens, you should be prepared to explain why you brought the goods, how you paid for them and how often you travel. Whilst there are no limits on the amount of alcohol and tobacco you can bring to the UK from countries in Europe, a customs officer is likely to approach you for questioning if you have over 800 cigarettes, 110 litres of beer, 90 litres of wine or 10 litres of spirits.
There will be no change to the rights and status of EU citizens currently living in the UK until 30^th June 2021, or 31^st December 2020 if the UK leaves the EU without a deal.

Travelling from outside the EU to the UK

When you travel to the UK from outside the EU, you can bring a certain amount of duty and tax-free goods for your personal use. This is known as your allowance and applies to alcohol, tobacco, perfume, souvenirs and other goods.
The allowance includes:

• Up to one litre of spirits or strong liquors (over 22%) or 2 litres of fortified wine, sparkling wine or any other alcoholic beverage of less than 22%. These allowances can be combined as long as you don’t exceed the total alcohol allowance. You may also bring back 16 litres of beer and 4 litres of still wine.
• 200 cigarettes or 100 cigarillos or 50 cigars or 250g of tobacco. Again, these allowances can be combined as long as you don’t exceed the allowance. You cannot combine alcohol and tobacco allowances.
• A maximum of £390 worth of perfume and souvenirs (this is about 1.5 bottles of Dolce & Gabbana perfume, or 390 fridge magnets). If you go over the allowance you may have to pay tax or duty.

There are no duty-free allowances for tobacco or alcohol if you’re under 17. If it’s for your personal use, you can bring alcohol and tobacco to the UK, however, you will need to pay duty or tax on them at customs. From most countries outside the EU, you are also prohibited from bringing any meat, honey or dairy products as they can carry diseases. Most fruits, vegetables, seeds and bulbs are subject to restrictions.
You must make a declaration to customs if:

• You exceed your allowances. If this happens, you will have to pay Customs Duty. The rate is 2.5% for goods up to £630. If the goods are worth more than £630, the rate varies. You can check by calling the VAT, Customs and Excise Helpline.
• The goods are for commercial use.
• You have 10,000 euros or more (equivalent) in cash. To declare cash, you will need to complete a cash declaration form at the UK airport.
• You think you might have banned or restricted goods.

Businesses transporting goods

International trade is even more heavily regulated for businesses. You may suffer significant penalties if you don’t have the necessary documentation when transporting goods, and they might even be seized by HM Revenue and Customs (HMRC).
You don’t need to declare goods that are of no statistical interest or not restricted. You also don’t usually have to complete an export declaration for goods acquired or dispatched within the EU. However, there are exceptions, such as sales to international organisations which are treated as exports, and exports to special EU territories.

Customs Declaration Services

The declaration of goods arriving by land, air and sea is recorded by the Customs Handling of Import and Export Freight (CHIEF) system. Importers, exporters and freight forwarders can complete customs information electronically, and the system automatically checks for entry errors. The CHIEF connects with Community System Providers, which are independent trade systems. The movement of goods within ports and airports is tracked and recorded, which streamlines the declaration process and makes everything much more efficient when transporting goods.
To make declarations using the CHIEF or Customer Declaration Services (CDS), you’ll need to have an Economic Operator Registration and Identification (EORI) number and a Government Gateway user ID and password. In the UK, an importer or exporter receives their EORI number from HMRC. This EORI number is used to identify you and your shipments across all EU countries. Businesses can submit import, export, transit or pre-arrival declarations by a variety of methods including:

• Community System Providers
• Excise Movement Control System
• Import Control System – this system is provided for goods that require safety and security checks
• New Community Transit System – this is a relatively basic and free to use service, suitable for low volume NCTS users
• National Export System – this system is for traders to submit Export Declarations to the CHIEF system
• Hard copy declarations – You can submit manually completed customs declarations to HMRC

The Integrated Tariff of the UK (the Tariff) is the official HMRC guide to importing and exporting taxes and duty. The Tariff contains the codes and customs requirements you need. You can also set up an email alert from the EU’s TARIC database to say up to date with any changes regarding the Tariff or customs declaration system. You can also input your item’s commodity code into the UK Trade Tariff to quickly identify the relevant licences and certificates that are necessary for your goods.

Customs Declaration Forms

A customs declaration form lists the details of goods that are being imported or exported when a citizen or visitor enters a country’s borders. Common customs declaration forms include an export declaration and certificate of origin. These documents help customs to know what goods are being shipped, whether there are any import quotas, customs or excise taxes, other tariffs or duties to be paid and whether any goods are banned from entry. Goods cannot be exported without an export declaration.

Why are custom declarations important?

As goods can affect a country’s economy, security and environment, declaration forms were implemented to help customs control what is imported into the country. The export and import of goods can seem like a lengthy process, but the various procedures are important in keeping people safe. Customs declaration forms are also important to help traders identify any taxes they need to pay, as well as check whether any of their exports are banned. Therefore, by being thorough throughout the entire customs declarations process, you can avoid any extra taxes or fines.

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Trade Controls are restrictions imposed on the transfer of items from one country to another by any individual, company, government or public body. These controls can help to prevent certain goods and technologies from falling into the wrong hands. These ‘wrong’ hands may often be countries with embargoes imposed. This means that specific types of goods cannot be imported or exported in order to protect a nation’s security, economic interests and foreign policies.
The main aim of all UN sanctions and embargoes to maintain or restore international peace and security. The most frequently applied measures are:

• Arms Embargoes: These cover regulations on exporting or supplying arms and associated technical assistance, training and financing
• Bans: There are certain bans put in place on exporting equipment that might be used for internal repression and imports of raw materials or goods from the sanctions target.
• Financial sanctions: These apply to individuals in government, government bodies and associated companies, or terrorist groups and individuals associated with those groups

Who and what do they apply to?

Trade controls apply to military and dual use goods or any goods that have an intended use for weapons of mass destruction. It’s sometimes hard to identify dual use items, as they can be used for everyday civilian purposes. However, they can also be materials, components or complete systems used in the production or development of military goods. Some examples include parachutes, software, uranium, anti-riot shields and smart card readers.
Dual use goods are categorised into ten internationally recognised groups, which are then further divided into five product groups. These categorisations help with the export and import process. They can help you to determine whether the goods you intend to export or import will be subject to trade controls. You can refer to country-specific lists such as the U.K. Strategic Export Control List or the Commerce Control List (CCL) for more detail.

The categories are:

• Category 0 – Nuclear materials, facilities and equipment
• Category 1 – Materials, chemicals, microorganisms and toxins
• Category 2 – Materials Processing
• Category 3 – Electronics
• Category 4 – Computers
• Category 5 – Telecommunications and information security
• Category 6 – Sensors and lasers
• Category 7 – Navigation and avionics
• Category 8 – Marine
• Category 9 – Aerospace and Propulsion

The five product group categories are:

• Systems, Equipment and Components
• Test, Inspection and Product Equipment
• Material
• Software
• Technology

If you’re exporting any of these items, you may need an export licence. After you’ve received a licence, you may also need to check the destination you’re exporting to doesn’t have an arms embargo. You can do this by checking country-specific legislation relating to embargoes and sanctions.

Why are trade controls important to businesses?

International trade controls are relevant to every organisation involved with the exportation of goods, for example, shippers, carriers, freight forwarders, customs authorities. This means that failure to comply with any of the regulations affects many companies and individuals. Penalties for non-compliance range from fines, delayed shipments, missed deadlines, the wrath of disgruntled customers (potentially worse than hefty fines), to imprisonment for individuals found guilty of deliberate evasion.
Senior managers and employers have the responsibility to ensure that adequate training and procedures are implemented to ensure employees adhere to the necessary trade controls. Employees are also obligated to follow these instructions and familiarise themselves with the regulations and terminology.

Why are trade controls important?

Complying with trade controls isn’t just necessary to protect your company’s reputation. Controlling importation and exportation is also an important part of keeping the country safe. By monitoring what enters and exits the UK, we can control concerns about internal repression, regional instability or other human rights violations. The focus on dual use items also means we can manage the anxieties about the development of weapons of mass destruction. Trade controls are not unique to the UK. Every country has some form of control policy, legislation and enforcement mechanisms.

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Dangerous goods are materials or items with physical and chemical properties which, if not properly controlled, present a potential hazard to human health and safety and/or infrastructure. Dangerous goods are separated into categories through a classification system is outlined by the UN Model Regulations. Each dangerous substance or article is assigned to a class.
There are 9 classes of dangerous goods and the class is determined by the nature of the danger they present:

• Class 1: Explosives
• Class 2: Gases
• Class 3: Flammable liquids
• Class 4: Flammable solids
• Class 5:Oxidising agents & organic peroxides
• Class 6: Toxins and infectious substances
• Class 7: Radioactive material
• Class 8: Corrosives
• Class 9: Miscellaneous dangerous goods

Class 1: Explosives

Class 1 goods are explosives – products that possess the ability to alight or detonate during a chemical reaction. Explosives are dangerous because they have molecules designed to rapidly change their state, which is usually a solid state into a very hot gas. There are 6 sub-divisions of explosives, which relate to the product’s behaviour when initiated.

• 1.1: Substances and articles which have a mass explosion hazard
• 1.2: Substances and articles which have a projection hazard but not a mass explosion hazard
• 1.3: Substances and articles which have a fire hazard and either a minor blast hazard or a minor projection hazard or both
• 1.4: Substances and articles which present no significant hazard; only a small hazard in the event of ignition during transport with any effects largely confined to the package
• 1.5: Very insensitive substances which have a mass explosion hazard
• 1.6: Extremely insensitive articles which do not have a mass explosion hazard

Examples of explosives include fireworks, flares, and ignitors.

Class 2: Gases

Class 2 consists of compressed gases, gases in their liquefied form, refrigerated gases, mixtures of gases with other vapours and products charged with gases or aerosols. These sorts of gases are often flammable and can be toxic or corrosive. They’re also hazardous because they can chemically react with oxygen. They are split into three sub-divisions:

• Division 2.1: Flammable gases
• Division 2.2: Non-flammable, non-toxic gases
• Division 2.3: Toxic gases

Examples of gases include aerosols and fire extinguishers.

Class 3: Flammable liquids

A flammable liquid is defined as a liquid, a mixture of liquids, or liquids containing solids that require a much lower temperature than others to ignite. These temperatures are so low that there is a high risk of the liquids igniting during transportation. This makes flammable liquids very dangerous to handle and transport, as they are very volatile and combustible. Flammable liquids are usually used as fuels in internal combustion engines for motor vehicles and aircraft. This means they make up the largest tonnage of dangerous goods moved by surface transport. Many household products also contain flammable liquids, including perfumery products and acetone (which is used in nail polish remover).

Class 4: Flammable solids

Class 4 dangerous goods are classified as products that are easily combustible and likely to contribute to fires during transportation. Some goods are self-reactive and some are liable to spontaneously heating up. There are 3 sub-divisions for Class 4 dangerous goods:

• Class 4.1 Flammable solids: These will burn easily than normal combustible materials. The burning of flammable solids is also fierce and rapid; they are also incredibly dangerous because they can decompose explosively, burn vigorously, or produce toxic gases.
• Class 4.2 Spontaneously combustible: These can be either solids or liquids. They ignite spontaneously when in contact with oxygen.
• Class 4.3 Dangerous when wet: These goods react with water to generate flammable gas that can be ignited by the heat of the reaction.

Examples of flammable solids include metal powders, sodium batteries and seed cake (oil-bearing seeds).

Class 5: Oxidising Agents and Organic peroxides

Class 5 dangerous goods are subdivided into ‘oxidising agents’ and ‘organic peroxides’. These are often extremely reactive because of their high oxygen content. They react readily with other flammable or combustible materials, which means fires may break out and continue in confined spaces. These materials are also incredibly difficult to extinguish, which makes them even more dangerous.

• Class 5.1 Oxidising Agents: Also known as oxidisers, these substances that can cause or contribute to combustion as a product of chemical reactions. Oxidisers aren’t necessarily combustible on their own, but the oxygen they produce can cause combustion with other materials.
• Class 5.2 Organic peroxides: The molecular structure of these materials makes them extremely liable to ignition. This means they’re liable to combust individually. They are designed to be reactive for industrial purposes, so they are unstable and can be explosive.

Examples include hydrogen peroxide and lead nitrate.

Class 6: Toxins and Infectious substances

• Class 6.1 Toxins: Toxic substances are liable to cause death because they’re, as the name suggests, toxic. They can cause serious injury or harm to human health if they enter the body through swallowing, breathing in, or absorption through the skin. Some toxics will kill in minutes, however, some might only injure if the dose isn’t excessive.
• Class 6.2 Infectious substances: These are goods that contain micro-organisms that cause infectious diseases in humans or animals, otherwise known as pathogens.

Examples include medical waste, clinical waste, and acids.

Class 7: Radioactive material

Radioactive materials contain unstable atoms that change their structure spontaneously in a random fashion. They contain ‘radionuclides’, which are atoms with an unstable nucleus. It’s this unstable nucleus that releases radioactive energy. When an atom changes, they emit ionising radiation, which could cause chemical or biological change. This type of radiation can be dangerous to the human body. Examples include smoke detectors and yellowcake.

Class 8: Corrosives

Corrosives are highly reactive materials that produce positive chemical effects.. Due to their reactivity, corrosive substances cause chemical reactions that degrade other materials when they encounter each other. If these encountered materials happen to be living tissue, they can cause severe injury. Examples include batteries, chlorides and flux.

Class 9: Miscellaneous dangerous goods

This category covers substances that present a danger not covered in the other classes. Examples include dry ice, GMO’s, motor engines, seat belt pretensioner, marine pollutants, asbestos, airbag modules and magnetised material.

Hazardous goods vs prohibited goods

Dangerous goods are classified based on their immediate physical or chemical effects, including fires or explosions. Hazardous substances differ because they’re classified based only on health effects. Dangerous goods and hazardous substances are covered by separate legislation, however, there is some overlap. The regulations for hazardous substances focus on controlling the different risks associated with them.
Prohibited goods are goods that will be seized at customs. You cannot import or export prohibited goods because they’ve been banned for reasons linked to health, environment, security and legislation. Examples include illegal drugs, rough diamonds and offensive weapons. In contrast, you can ship dangerous goods, but you need to adhere to the UN Model Dangerous Goods Regulations and obtain a licence.

How do you know if the goods you’re shipping are dangerous?

The transportation of dangerous goods is regulated internationally by European agreements, directives and regulations. If you’re involved in any part of the carriage of dangerous goods process (this includes processing and packing), you will need to classify them according to the UN classification system.
You can find out whether your shipments are dangerous goods by referring to the UN Dangerous Goods List, or by checking to see if they have a Material Data Safety Sheet. You can also refer to transport-specific regulations set out by bodies such as the International Air Transport Association (IATA), and the ADR (concerning European road transport), International Carriage of Dangerous Goods by Rail, and the International Maritime Organisation (IMO). They can all advise on how to handle and transport your dangerous goods.
The UN Model Dangerous Goods Regulations can also advise on how to pack dangerous goods. When packing shipments, you should consider the packing group, writing the shipment name in upper case letters, hazard class labels UN identification number, UN certification mark, and an orientation label (for liquids). Packages must contain either a Dangerous Goods Note or a Declaration for Dangerous Goods, be able to withstand open weather exposure and all labels must be displayed on contrasting colour background. A Dangerous Goods Note is usually completed by a consignor with qualified personnel within the company. These notes give the receiving authority accurate information about the goods so that they can be handled safely and legally.

Dangerous Goods Note and Declaration for Dangerous Goods

The shipper is responsible for the safe transportation of dangerous goods to their destination. All goods should be correctly declared, packed and labelled with the correct documentation for the countries of origin, transit and destination. Dangerous goods shipments must have either a Dangerous Goods Note (DGN) or a Declaration for Dangerous Goods (for air transport) completed. This will include information about the nature, quantity of goods and other handling information.

What does the Dangerous Goods Note do?

The Dangerous Goods Note (DGN) is a transport document that gives details about the contents of a consignment to carriers, receiving authorities and forwarders. It’s an essential part of shipping dangerous goods because it explains how they should be handled and packaged safely. The same standard document can be completed for all consignments of dangerous goods, even if they’re going to different ports or Inland Container Depots (ICD). A Dangerous Goods Note is used when you transport goods using any form of transport except air freight. For air freight transport, the IATA Declaration of Dangerous Goods is used instead.
It’s very important to use a Dangerous Goods Note, as the receiving authority need complete and accurate information about the dangerous goods in order to handle them safely and legally. Using a DGN means that everyone who encounters your goods has enough information at each movement stage. It’s a criminal offence to ignore legislation, but more importantly, improper control over dangerous goods can cause significant and devastating damage to human health and infrastructure.

What legislation is there around dangerous goods?

The Petroleum Act 1879 was the first legislation to address the need for control over dangerous goods. The Health and Safety at Work Act 1974 initiated proposals for a set of regulations that addressed issues such as the classification and packaging and labelling of dangerous substances. Many regulations and legislation have been revoked and replaced over the years, but it’s important to understand the most up to date laws.
Other significant legislation includes:

• ADR Carriage of Dangerous Goods by Road: This applies to all road transport journeys. These regulations are enforced by several different authorities, including the Health and Safety Executive (HSE), the Office for Nuclear Regulation (ONR). The Department for Transport (DfT) also works alongside the police and the Driver and Vehicle Standards Agency (DVSA) to manage these rules.
• RID Carriage of Dangerous Goods by Rail: This applies to all rail transport journeys. The Office of Rail Regulation (ORR), the HSE, the ONR and the DfT take responsibility for enforcing regulations involving rail transport.
• IMDG Carriage of Dangerous Goods by Sea: This includes domestic and international journeys. Nationally, the Maritime Coastguard Agency (MCA) is responsible for any matters related to compliance for goods moving by sea.
• IATA Carriage of Dangerous Goods by Air: This includes all shipments by air, domestic and international. The compliance for goods offered to airlines for carriage by air is monitored by the Civil Aviation Authority (CAA).
• Tunnel Regulations: For Road and Rail. These are now included in the ADR and RID.

Import and Export Licences

Customs Clearance Procedure is upheld by the customs duty office. This system is designed to prevent illegal and prohibited items entering the country, as well as to determine the number of duties to be paid when importing foods that are subjected to taxation under the local law. Due to these regulations, you need an import or export licence when transporting dangerous goods. The potential use of the item and where you’re exporting it to/importing it from determining the licence requirements. There are different licences depending on the nature of the dangerous goods.
It can be difficult to determine whether the goods you’re exporting require a licence. You can check online through the UK Strategic Export Control Lists, which lists all the items that require a licence. You can submit a licence application electronically via the online system SPIRE. When you make your application, you’ll need the technical specifications and End User Undertakings of your goods.

Types of Licences

There are a variety of different types of licences that you may be able to use to export your goods. For example:

• Open General Export Licences (OGELs): These licences are available for less restricted exports to less restricted destinations. OGELs are pre-published licences with set terms and conditions which you must adhere to. There are currently over 40 OGELs available which cover a wide range of circumstances. For example, some are for military goods and others are for dual-use goods. If you regularly export restricted items, being an OGEL holder is incredibly advantageous, as it can potentially benefit your business by saving you time and money.
• Standard Individual Export Licences (SIELs): If your goods, technology, software, destination or situation is not covered by an OGEL, you will need to apply for a Standard Individual Export Licence (SIEL).
• Open Individual Export Licences (OIELs): This type of licence is designed to cover long-term contracts, projects and repeat business.

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Our Incoterms Courses

Incoterms were developed and published by the International Chambers of Commerce (ICC) in 2009. Incoterms are the internationally identifiable acronyms used to establish the precise nature of the relationship between seller and buyer in any commercial transaction. These phrases are an efficient way of communicating the specific responsibilities assigned to each party wherever a transaction involves the transportation of goods. For example, incoterms outline who is obliged to cover the cost of each part of the international journey, who is responsible for the shipment at each part of the international journey, and who must ensure the goods are insured. Incoterms also determine what documentation is required for the transaction.

What are the types of incoterms?

Currently, there are 11 different incoterms. Each type is divided into four groups: E, F, C and D. These categories are determined by the delivery location and who is responsible for covering the cost of each part of the journey. The groups are then split into sub-categories which refer to various scenarios. When choosing an incoterm, buyers and sellers should thoroughly review each incoterm and decide which set of terms best suit them and their shipment.

Incoterms Group E – EXW (Ex Works)

Ex Works places most of the responsibility onto the buyer. The seller ensures the goods are at the seller’s premises or another named location where the buyer loads and clears the goods for export.

Incoterms Group F

In this group, the seller is responsible for delivering the goods to the buyer’s pre-agreed method of transportation. After this, the buyer takes responsibility for all the costs and risks. There are a couple of sub-groups in the F category of incoterms, including:

• Free Carrier (FCA): This is similar to Ex Works. The seller delivers goods either to the carrier, a nominated person at the seller’s premises, or another named location. The point at which any risks are passed onto the buyer must be clearly stated.
• Free Alongside Ship (FAS): FAS is when the seller delivers goods alongside a vessel nominated by the buyer. The responsibility lies with the buyer once the goods are alongside the vessel.
• Free on Board (FOB): FOB is when the seller delivers goods on-board a vessel nominated by the buyer. The responsibility lies with the buyer once the goods are on-board the vessel. Both FAS and FOB are incoterms used for waterway shipments.

Incoterms Group C

In this group, the seller bears responsibility for all costs to the destination port. Once the goods are loaded onto the transport, the risks are transferred to the buyer. Group C incoterms include:

• Cost and Freight (CFR): CFR is similar to FOB. The difference is that the seller must pay for the costs and freight to deliver goods to their destination.
• Cost, Insurance and Freight (CIF): CIF is similar to CFR. The difference is that the seller arranges insurance cover against the buyer’s risk of loss or damage. Both of these terms relate to waterway shipments.
• Carriage Paid To (CPT): In this case, the seller is responsible for arranging the transportation of the goods to a named destination, but not for insuring them.
• Carriage and Insurance Paid To (CIP): This is similar to CPT, except the seller is also responsible for insuring the goods.

Incoterms Group D

These terms relate to the destination of goods:

• Delivered at Terminal (DAT): DAT is when the seller delivers the goods to a named place of destination, once the goods have been unloaded. The seller has full responsibility for the goods up until the named place of destination.
• Delivered at Place (DAP): DAP is when the seller delivers the goods ready for unloading at the named place of destination. The seller has full responsibility for the goods up to the named place of destination.
• Delivered Duty Paid (DDP): This is for when the seller is responsible for all costs and risks relating to the delivery of goods to the buyer’s named place of destination. This includes clearing goods for export and import, paying any duty and carrying out customs formalities.

Which incoterm should you choose?

Free Carrier (FCA) and Delivered at Place (DAP) incoterms are popular incoterms as they can be used for both domestic and international shipments and for any mode of transport. The seller is responsible for export customs and the buyer is responsible for import customs. In contrast, using Ex Works (EXW) places full responsibility onto the buyer, which poses the risk of the buyer not being able to carry out all of these responsibilities.

You can carry out a cost/benefit analysis to help you decide which incoterm to use. This might enable you to identify any tax or other financial benefits available for the transaction. It’s also worth checking there are no legal issues that could cause problems with a shipment reaching its destination. For example, there might be country-specific restrictions on your goods if they’re prohibited. It’s incredibly important to ensure you have all the necessary documentation, including licences or permits.

Shipments can face problems without the correct incoterm so it’s really important to think carefully about which one is appropriate. Failure to understand incoterm definitions leads to problems throughout the supply chain. For example, logistics costs could increase, the terms may not match the requirements of the buyer or seller or the buyer or seller may not be able to comply with the incoterm.

How will incoterms change?

As the current set of incoterms are over ten years old, they’re due to be updated on January 2020. There is much speculation surrounding the extent to which the terms will be removed or revised, or if any new incoterms will be introduced. It’s been suggested that some incoterms, such as DDP and FCA, will be split into separate terms. The new publication should also make the incoterms easier to understand, which will hopefully reduce the risk of misinterpretation.

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Export Controls are restrictions imposed on the transfer of items from one country to another by any individual, company, government or public body. These controls are imposed to control the risks associated with exporting certain goods to certain countries. By managing trade in this way, we can help to prevent certain goods and technologies from falling into countries with embargoes imposed. An ’embargo’ is an order imposed by the government that restricts trade with specific countries. They’re usually created following unfavourable political or economic circumstances between nations.

Why do we have export controls?

The government developed export controls in order to address concerns about internal repression, regional instability and other human rights violations. By controlling the exportation of certain items, these measures also control risks associated with the development of weapons of mass destruction. Every country should have some form of export control policy and legislation.

Embargoes and export licences are examples of export controls for dual use items. Dual use items are goods, software or technology which can be used for both civil and military applications. If such items were accidentally transferred to a country with an embargo imposed, they may be used to develop weapons of mass destruction. Companies wishing to export dual-use items are banned from transferring them to countries with embargoes imposed, and they must obtain an export licence to ship them to any other country.

Do you need an export licence?

It’s important that exporters consider their responsibilities towards taking effective export control measures. You need to ensure that you implement and endorse solid export control systems. This involves providing adequate training for employees and keep full and accurate records. It’s also your responsibility to check whether you need an export licence to trade lawfully and safely.

There are various factors to consider that will help you to determine whether you need an export licence for your goods. For example, by evaluating the nature of your goods, you’ll be able to assess whether an export licence is necessary. If any of your items have been specifically designed or modified for military use, it’s likely that you will need a licence. If you’re unsure about the nature of your goods, it’s worth checking the UK Strategic Export Control Lists, which outline the items that require a licence from the Export Control Joint Unit (ECJU).

Whether or not you need a licence is also determined by where you’re planning to export your items to. Less sensitive items don’t require a licence if you’re exporting to countries in the European Union (EU). If your goods are on the UK Military List or are within the more sensitive categories on the EU Dual Use List, then a licence is required for exportations to all counties. It’s also vital that you check whether the country has any embargoes imposed.

Even if your items aren’t listed on the UK Strategic Export Control Lists, they may require a licence because of their end-use. If an item has the potential to be used in the development of weapons of mass destruction, you will need an export licence.

Types of export licences

There are different types of licences for exportation. For less restricted exports to less restricted destinations, you can apply for an Open General Export Licence (OGEL). These are pre-published licences with set terms and conditions and there are currently over 40 of them available for different types of dual use items. However, OGELs don’t cover every type of goods, technology or software, or every destination. You may need to apply for a Standard Individual Export Licence (SIEL), which are company-specific for a specific set quantity or value of goods. There are also Open Individual Export Licences (OIEL), which cover long term contracts, projects and repeat business. These licences are company-specific and there’s no set quantity of value of goods.

When applying for any type of licence, you can refer to the UK Strategic Export Control Lists to find your item’s classification, which will help you with your application. You can apply for an export licence electronically using the ECJU’s online system, SPIRE. It’s important to bear in mind that the ECJU only covers strategic items. There are different licences required for other restricted goods such as arts, antiques or medicines.

Why are export controls important?

It’s very important to take export controls seriously and actively engage with implementing the appropriate measures and adhering to regulations. If dangerous goods such as dual use items fall into the wrong hands, they can be used to produce weapons of mass destruction. This compromises national security and safety. If your business is found guilty of failing to comply with the relevant export control regulations, you could be fined or even face significant prison sentences.

Dual use items are defined as goods, software or technology which can be used for both civil and military applications. Dual use items include materials, components or complete systems used in production or development of military goods and weapons of mass destruction. Some examples include night vision systems, parachutes, plant pathogens, bacteria and electronics components such as transistors.

How are dual use items categorised?

Dual use goods are categorised into ten internationally recognised groups. These categories are then further divided into five product groups. These classifications help with the export and import process. The categories are:

• Category 0 – Nuclear materials, facilities and equipment
• Category 1 – Materials, chemicals, microorganisms and toxins
• Category 2 – Materials Processing
• Category 3 – Electronics
• Category 4 – Computers
• Category 5 – Telecommunications and information security
• Category 6 – Sensors and lasers
• Category 7 – Navigation and avionics
• Category 8 – Marine
• Category 9 – Aerospace and Propulsion

The five product group categories are:

• Systems, Equipment and Components
• Test, Inspection and Product Equipment
• Material
• Software
• Technology

Trade Controls

These categories can help you to determine whether the goods you intend to export or import will be subject to trade controls. Trade Controls are restrictions imposed on the transfer of items from one country to another by any individual, company, government or public body. These controls were put in place in order to control the risk of certain goods and technologies falling into the wrong hands. Examples of trade controls include the requirement of a business to obtain an export licence before they can transport dual use items.

If you’re exporting items that might be classed as dual use, it’s your responsibility to check whether they’re subject to trade controls. You can use the UK Strategic Export Control List to determine whether any of the goods you wish are dual use items. If you identify one of your items in the Control List, you’ll need to apply for a licence from the Export Control Joint Unit (ECJU). However, even if you don’t recognise any of your products on the list, they may be subject to export controls due to their ‘end-use’. There is an online ‘Checker Tools’ database that you can use to clarify any uncertainties you might have. Licences should be applied for well in advance to avoid any delays or potential problems.

The EU Dual Use Regulation, also known as Council Regulation (EC) No 428/2009, is the main legal basis for export controls on dual use items. This legislation applies to all EU countries. The regulations are officially updated on an annual basis in order to reflect controls on new items. In some cases, the legislation must be updated in response to changes in international control regimes. It’s important to stay up to date with legislative and licencing updates, especially if your business regularly exports dual use items.

Why is it important to control the exportation of dual use items?

It’s very important that the exportations of dual use items are controlled and managed responsibly. If these goods are not properly monitored, they may end up in countries with embargoes imposed. An ’embargo’ is an order imposed by the government that restricts trade with specific countries. They’re usually created following unfavourable political or economic circumstances between nations. As dual use items have the potential to help develop weapons of mass destruction, it’s important to control their exportation sensibly. Some of the procedures involved with trade controls might seem unnecessarily lengthy, but they were implemented to protect a nation’s security, economic interests and foreign policies.

The export and import of goods is a lengthy process, mostly because goods need to cross borders to reach their destination. As part of the import-export activity, customer declarations must be completed. Requirements may differ from country to country, however, goods codes, usually known as commodity codes, need to be included on the form. For exports outside of the European Union (EU) or goods moving within the EU, the commodity code is an eight-digit number. For imports from outside the EU, the code is a ten-digit number.

Member states of the EU hold commodity codes in a database called the Integrated Tariff of the European Union (TARIC). This database is updated regularly, which means that importers and exporters can rely on the same standards and treatment throughout the EU. UK traders can also find commodity codes in the UK Trade Tariff database. This is published once a year and updated every ten months, which makes it less reliable than TARIC. However, the UK Trade Tariff contains UK-specific data on VAT, licensing, restrictions and excise duties. You can look for the applicable codes in Trade Tariff documents. It’s important to bear in mind, however, that if the UK leaves the EU with no deal, you may need to pay different rates of customs duty.

Why do we need commodity codes?

Commodity codes are used when completing paperwork for customs declarations. They help customs to determine how goods should be handled. Every item can be categorised with a commodity code and relates to their duty rating, as well as generating alerts for any import or export restrictions. The commodity code tells you:

• The duty and VAT ratings you’ll be charged for your goods
• If you can apply for a preferential duty rating – ‘preferential treatment’ means that your goods may benefit from tax exemptions or Free Trade Agreement reductions
• Whether your product requires an import licence – without a licence, the goods could be delayed at customs, or worse, they could be confiscated
• Whether anti-dumping duties apply – these are charged in addition to normal customs duty; they are designed to allow the EU to act against goods that are sold at less than their normal value

Commodity codes are important because they classify goods for import and export. If you classify your goods incorrectly, you could be asked to pay any outstanding duty or VAT on customs entry, and your goods might be delayed and/or seized.

Example

If Indiana Jones wanted to import his whip, he could search for the commodity code on the Trade Tariff database and find the appropriate details under ‘Section XII: Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof; prepared feathers and articles made therewith; artificial flowers; articles of human hair’. The commodity code for importing a ‘hand-made whip’ is 6602000010. Indiana Jones would also be able to see that his item is subject to the VAT standard rate of 20%, which he can probably afford.