Advance rulings on customs issues are those official and binding decisions issued by a competent authority, in writing and prior to an import or export operation, which grants the applicant a tariff classification, an assessment, recognition of the right to a preference or the evaluation of the origin agreed to a certain merchandise.
According to the United Nations Conference on Trade and Development (UNCTAD), advance rulings must protect the confidential information provided by the merchant, can be revoked if a change of circumstances occurs and give the applicant a right of appeal.
The guidelines of the World Customs Organization (WCO) related to advance rulings, as established in standard 9.9 of the Revised Tokyo Convention, define the term as follows:
The expression «binding resolution» (or «advance ruling») generally designates the option of customs to issue a decision, at the request of the economic operator planning a foreign trade operation related to the regulations in force. The main benefit for the beneficiary is the legal guarantee that the decision will be applied.
Advance rulings are binding decisions made by Customs at the request of the person interested in certain specific details related to the goods, in particular, regarding their classification and origin, in preparation for import or export.
According to the United Nations Economic Commission for Europe (UNECE), advance rulings facilitate the declaration and, therefore, the clearance process, since with these, the classification of goods is determined in advance and such resolution is mandatory for all customs offices for a specified period of time, for example three months or one year.
Importers and exporters often face inconsistent classification and origin decisions depending on, for example, the customs office where the import or export takes place, or the rotation assigned to the officials in charge of the assessment.
This causes uncertainty throughout the entire commercial transaction since these different decisions have an impact on the amount of the rights that must be paid and, ultimately, on the final price of the product. This uncertainty can lead to supply chains moving to countries and places where there is greater certainty, predictability and reliability, which will therefore affect the development of trade.
In accordance with Standard 9.8 of the Revised Kyoto Convention (CKR) and the WCO Recommendation on binding classification information prior to entry, requests for early termination must be submitted in writing.
Likewise, it is pointed out that the Customs must issue the advance resolution in writing, including the indication of the right of appeal. The written request must include a complete description of the goods, brochures or samples to facilitate proper classification.
Ideally, Customs should establish a specialized unit at the regional and central level that ensures a uniform and consistent operation of the early resolution system.
In a recent study on the impact of trade facilitation measures on trade costs, the OECD identified that the advance ruling system was the trade facilitation measure that had the greatest impact at the individual level,
The OECD identified 12 trade facilitation indicators, which, when applied in their entirety, could potentially lead to a total 10% reduction in trade costs. In the exclusive case of advance rulings, its effect on trade costs was estimated to be a reduction of about 5.4 percent.