Updated: Nov 6
If you're an international trader or simply curious about the European Union's trade certification system and its impact on trade between the EU and the United Kingdom, this article is here to help.
Let's explore REX numbers together – what they are, why they're important, and how they influence international trade.
REX, which stands for the Registered Exporters System, is a pivotal component in the European Union for certifying the origin of goods based on self-certification principles. Developed by the European Commission, this system plays a crucial role in trade relations, especially in the context of the EU and the United Kingdom.
The REX system is primarily designed to identify suppliers making origin statements on goods entering the EU under the Generalized Scheme of Preferences (GSP) and for EU exporters under select Free Trade Agreements (FTAs). Understanding the intricacies of the REX number and its implications is vital for businesses engaged in international trade.
To delve into the world of REX numbers, we'll start by understanding the fundamentals. A trade agreement that requires the use of a REX number entails the exporter declaring the preference origin on a commercial document. Typically, this declaration is included in the export invoice. However, to have the authority to make such a statement, the exporter must first be registered in a database maintained by the competent authorities. This registration grants them the coveted title of a "registered exporter."
The need for a system like REX arose due to certain challenges in international trade. In the EU, some commodity brokerages, distinct from the actual manufacturers of the goods, were erroneously including origin declarations in their commercial documents. To mitigate this, the REX system clarified that only registered exporters, i.e., the manufacturers themselves, could make these declarations. This dual requirement, comprising the broker's invoice and the manufacturer's declaration, aimed to ensure the provision of accurate origin information and eliminate inaccuracies in the process.
However, as the UK's departure from the EU unfolded, trade dynamics evolved. The GSP system continued in the UK until June 19, 2023, when it was replaced by the Developing Countries Trading Scheme (DCTS). Under this new scheme, the UK no longer accepted a commercial document origin statement supported by a REX number. Instead, importers were required to use a Trader Identification Number, or they could use a GSP Form A to claim preferences. An interesting feature was that UK Customs accepted copies of the GSP Form A, adding a layer of flexibility to the process.
On the other side of the spectrum, the UK-EU Trade and Cooperation Agreement (TCA) ushered in a new era. To claim preferences under this agreement, EU exporters were mandated to include a supplier declaration of origin on a commercial document. To make this declaration, EU exporters needed a REX number, which had to be quoted within the document. Exceptions were made for low-value consignments, defined as those under €6000. The REX number, therefore, emerged as a pivotal element in the declaration process, ultimately determining whether UK importers could benefit from the TCA.
However, the introduction of the REX number within the EU-UK agreement also brought a degree of confusion. This confusion stemmed from the existence of the Approved Exporter Status, which applies to certain FTAs. This status is fundamentally different from the REX number and cannot be used to validate the preference statements of EU exporters on imports into the UK. Therefore, it became critical for EU suppliers to correctly quote their REX numbers on commercial documents while specifying the EU origin of the goods.
In stark contrast, the UK does not operate a REX system. Instead, it relies on the Approved Exporter Status, which holds relevance for many UK FTAs. When exporting from the UK to the EU, GB (Great Britain) producers include their Economic Operator Registration and Identification (EORI) number in the statement of origin. This allows their EU customers to claim preference on imports without requiring a REX number. However, this divergence led to confusion, with EU exporters inadvertently using their EORI numbers in declarations, while UK exporters sought REX numbers, only to discover they were ineligible.
In summary, the REX system is a fundamental registration scheme for businesses within the EU, but not for the UK. To claim preference on imports from the EU, EU suppliers must include their REX numbers in the commercial document. This number must be authorized and linked to the exporting company. REX numbers also play a vital role in other EU trade agreements, such as those with Canada, Japan, Vietnam, Singapore, and the interim Economic Partnership Agreement (EPA) with Eastern and Southern Africa (ESA). However, these agreements have replaced the REX requirement in the UK versions.
Understanding the intricate concepts of origin and preferential origin is essential for businesses engaged in international trade. The REX number serves as a linchpin in this complex landscape, facilitating smoother trade between the EU and the UK. As trade agreements and customs regulations continue to evolve, businesses must gain a deep understanding of these concepts to navigate international trade successfully.
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Have you ever wondered how international trade agreements work, or what goes into certifying the origin of goods? Are you familiar with the term 'REX number' and how it impacts the world of trade? Do you grasp the intricacies of "Rules of Origin" when it comes to claiming preferences on your imports?
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