Notice to Exporters

REF : EIC EEC/11/12EIC EEC/11/1

9 July 1998

Dear Sirs,

Notice to Exporters

Series 2 (EU) No. 34 /98

Series 3 (Countries other than USA and EU) No. 44 /98

Export of Restrained Textiles to the European Union (EU) and Norway

Lifting of Certificate of Origin (CO) Requirements for the USA market :
Changes in Licensing Requirements for the EU and Norway Markets

Introduction

As announced in Notice to Exporters: Series 2 (EU) No. 33/98 cum Series 3 (Countries other than USA and EU) No. 42/98 dated 9 July 1998, the Department will streamline the existing licensing and certification requirements for export to restrained markets with effect from 18 August 1998. As a result, a number of associated changes in licensing and certification requirement will be applied to traders engaged in exports to the EU and Norway. This notice sets out the related changes in licensing requirements and procedures for exports of restrained textiles applicable to the European Union (EU) and Norway which will take effect from 18 August 1998. Traders may wish to read this notice in conjunction with Notice to Exporters: Series 2 (EU) No. 33/98 cum Series 3 (Countries other than USA and EU) No. 42/98, Certificate of Origin Circulars No. 8/98 on changes in Production Notification arrangements and No. 9/98 on changes in certification arrangements, all dated 9 July 1998.

Existing Requirement for Exports to the EU and Norway Markets

2. At present, a Certificate of Origin (CO) is required for export of restrained textile products to the EU and Norway. This requirement will continue to apply as CO is a Customs clearance document for restrained textiles entering the EU and Norway. In fact, the current linkage between the three trade documents i.e. Export Licence (EL), CO and Production Notification (PN) remains unchanged. PN will continue to be required to support CO applications covering cut-and-sewn garments. CO and EL will continue to be required to cover the exports of all restrained textiles to the EU and Norway.

Changes to Licensing Requirements

3. Although the CO requirement for the EU and Norway will remain unchanged, the Department will introduce a series of changes to the licensing requirements to tie in with the removal of CO requirement for the USA market with effect from 18 August 1998. The changes which are applicable to export of restrained textiles to the EU and Norway markets are highlighted in the following paragraphs.

4. Changes to EL applications requirements are as follows:

1. Factory Registration (FR) Requirement

All manufacturers appearing on EL applications are required to possess a valid Factory Registration (FR) number. The FR numbers of the manufacturers must be provided on the licence applications. Licence applications submitted by manufacturers who have not properly registered for certification purposes under the Factory Registration Scheme will be deferred or rejected.

2. Information on Outward Processing Arrangement (OPA)

For EDI licence application, the declared manufacturer is required to state whether any of the subsidiary or minor finishing processes of the goods covered by the licence application has been subcontracted outside Hong Kong under the Outward Processing Arrangement (OPA) operated by the Department. Please refer to Appendix for details of making the OPA declaration in EDI licence. Similar information on OPA is not required on paper licence.

3. Amendment of OPA Declaration

Where amendment of OPA declaration is required after the approval of export licence, such amendment should be made before actual shipment of the goods. Traders may provide the correct declaration by means of a standard OPA declaration amendment form which will be made available free of charge at the Customer Service Centre of Europe (Textiles Controls) Branch at M/F, Trade Department Tower. Alternatively, they may submit an EDI message to cancel the original licence and re-submit a new application containing the correct declaration.

5. Changes to CO applications are as follows:

(a) New Production Notification (PN)

A new and improved PN will be introduced. The existing PN forms validated by the Department will continue to be accepted for the purpose of CO applications until expiry of their validity period as indicated on the PN or cancellation of the PN, whichever is the earlier. The new PN will include a subcontractor declaration box. For cut-and-sewn garments, the subcontractor is required to make a declaration by signing on the new PN. Manufacturers registered with Trade Department producing cut-and-sewn garments for exports to restrained markets including the EU and Norway should lodge the PN within 3 working days before commencement of the major assembly work in Hong Kong.

(b) Exemption of Production Notification for CO Application

Although CO is not required to support application of a sample licence for export to the EU and Norway, traders may wish to note that in case they apply for CO to cover small consignments of bona fide samples, they are exempted from the PN requirement subject to the fulfilment of certain conditions. Traders may refer to Certificate of Origin Circular No 8/98 for details.

(c) Subcontractor's Declaration

There is no change to the existing CO and EL arrangements for exports of restrained textiles to the EU and Norway. Nevertheless, following the inclusion of the Subcontractor's Declaration in the new PN form, there is no need to make the declaration by the subcontractor on the CO application covering cut-and-sewn garments a second time if a Subcontractor's Declaration is already available in the supporting PN. For CO applications covering cut-and-sewn garments supported by the old version PN where there is not a Subcontractor's Declaration, the local subcontractor is still required to make a declaration on the CO application as in the present case. Please note that regardless of whether or not the subcontractor's declaration is made on the CO application, the relevant information of the subcontractor must be provided on the CO application.

(d) OPA Declaration

The OPA declaration is not required on the CO application for the EU and Norway markets. Traders should provide the OPA information on EL instead (please refer to paragraphs 4 (b) and (c) above).

Licence Applications Submitted through Electronic Data Interchange (EDI)

6. For the licensing requirements and application procedures for EDI licences resulting from the streamlining of documentation requirement and modification to the EDI programme, traders may refer to Appendix for details.

New Customer Software

7. An upgraded customer software (SilkNet Standard Version 2.0) for the EDI RTEL application will be introduced by Tradelink in line with the new requirement for including a subcontractor's declaration in RTEL application with effect from 18 August 1998. Traders who wish to include a subcontractor's declaration in the EDI RTEL application from the effective date onwards must make use of the upgraded customer software. In addition, other enhancements and improved features will be offered in the upgraded customer software. To obtain further information on the upgraded customer software, please refer to the relevant Tradelink's Newsfax or contact Tradelink's Customer Service Hotline at telephone number 2917 8888.

Transitional Arrangement

8. From 18 August 1998 to 31 December 1998, EDI RTEL applications may either be submitted via the existing version or the upgraded version of the customer software. After 31 December 1998, all RTEL messages sending through the existing version of the customer software will not be accepted for processing. Traders are encouraged to arrange with Tradelink to install the upgraded customer software early and to ensure that the upgraded version is installed before the existing version becomes invalid.

9. Traders' attention is particularly drawn to the technical limitation that messages from different licensing parties related to the same application (i.e. with the same Unique Application Reference (UAR)) must either be using the upgraded customer software or the existing customer software alike. Messages from different parties sent through different versions of software may not be accepted for processing. Traders are advised to ensure that the same version of customer software is being used by the different licensing parties for the same application during the transition period to avoid unnecessary delay in having their RTEL application processed and approved. Traders are reminded that the upgraded customer software must be used for RTEL applications whereby subcontractor's declaration is required. In such cases, when any of the licensing parties concerned (i.e. either the exporter, manufacturer or subcontractor) have/has not yet installed the upgraded customer software, the RTEL application would have to be submitted under paper mode or via Tradelink's Service Centres.

10. Furthermore, traders are also requested to note that once the RTEL application is submitted through the upgraded customer software, all subsequent transactions related to the application (including re-submission, amendment and cancellation requests) must also be made through the upgraded customer software otherwise the messages will not be accepted for processing

Warning

11. The Department works closely with the Customs and Excise Department, through checks and inspections, to ensure compliance with the provisions of the textiles export control system and failure to comply with licensing and other requirements specified by the Director-General of Trade including those requirements promulgated by the Department through notices and circulars from time to time may result in prosecution under the Import and Export Ordinance. Furthermore, in addition to deferment, rejection or cancellation of licence and other types of applications concerned, administrative actions may be taken. The administrative actions which maybe taken include suspension and cancellation of registrations, suspension of licensing and quota facilities, permanent surrender of quota, discount of shipment performance and any other actions which the Director-General of Trade deems fit.

12. Traders are also reminded that physical and documentation checks by the Customs and Excise Department are conducted as and when necessary to verify the accuracy of the particulars declared on the licence and other applications. Traders are required to produce the commercial and manufacturing records for checking by Customs officers and be prepared to make available the goods for physical inspection before export. Failure to comply with such requirements may also result in legal and/or administrative actions.

Enquiry

13. Should you require further information, please contact the following units/officers :

Yours faithfully,

(Miss Amy Yu)

for Director-General of Trade

Note : The Chinese text of this Notice to Exporters is for reference only. In case of discrepancies between the English and Chinese texts, the English text shall for all purposes be conclusive.