Customs and trade compliance requirements

The basis for the origin legislation is the ‘Rules of Origin’. In addition, various countries or regions maintain agreements with other countries or groups of countries and often these are so-called Free Trade Agreements. Correct proof of the goods’ origin is therefore crucial in international trade. The necessity of complete proof of origin information and documentation thus is a consequence of the most diverse customer requirements.

Regarding the European Union, if goods are manufactured in and sourced from the EU or any other country where the EU maintains a trade agreement with, Wärtsilä prefers these to have the preferential origin status, as this will also serve our customers globally once they have to import the products involved.

Due to the global distribution of the materials, Wärtsilä requires the official ISO country code of the material involved. This means a miscellaneous or unspecified code such as: EU, QQ, QR, QS, QU, QV, QW, QX, QY, QZ cannot be accepted.

We request suppliers to always include customs & trade compliance related data on origin and commodity code (and where relevant e.g. also ECN/ECCN for dual use products) on the invoices at each material item line specified.

PROCESS FOR EUROPEAN UNION BASED VENDORS:

European Union is giving general guidelines on supplier’s declarations. Long-term declaration is valid for all deliveries for mentioned materials during stated validity date.

Single consignment declaration is recommended when the origin of the product changes from delivery to delivery.

Single consignment declarations may also be included directly on the related invoice and/or other commercial document for that specific delivery, like delivery note or packing list.

It is preferred that preferential and non-preferential status materials are separated, so that they are not put on 1 declaration and the relevant document template is used.

PROCESS FOR NON-EUROPEAN UNION BASED VENDORS:

As indicated above, origin information should be included on commercial documents, such as invoices.

1. In situation that the country of departure has a trade agreement with the EU, such as Free Trade Agreement, (Stabilization &) Association Agreement;

If a trade agreement exists between the exporting country and the EU and also the origin qualifies for preferential treatment, then indicate the preferential (or where valid, the non-preferential) statement on the documents, and whether the exporter qualifies as Registered Exporter or Approved Exporter. In such cases the customs authorization number should also be included in the statement.

2. In situation that the country of departure has no trade agreement with the EU;

If no trade agreement exists then at least we require the relevant customs and trade compliance related data (e.g. country of origin, HS code, ECN/ECCN, etc) to be included on the invoice and/or other commercial documents, such as delivery note, packing list.

General

All products are classified under a commodity code that carries information on:

• duty rates and other levies on imports and exports
• any applicable protective measures (e.g. anti-dumping)
• trade statistics / trade negotiations
• import and export formalities and other requirements like restrictions
• shared product description with all similar products classified under specific code based on the classification rules

Correct classification is the key for smooth customs clearance processes across the world, being compliant by paying correct amount of import VAT and duties.

Harmonized System nomenclature

• The Harmonized System nomenclature (HS) is an internationally standardized system of names and numbers to classify traded products maintained by World Customs Organization's.
• There are specified HS classification rules for every commercial product.
• Like in many coding systems there is a description for each code. HS-code works as a common language between countries and customs territories. This is done by encrypting the goods description in a number format to be red by using the local language at destination.

Example of product classification:

Wärtsilä is committed to complying with all mandatory domestic and applicable international export laws and regulations. Wärtsilä supports the efforts of the international community to prevent the manufacture and proliferation of chemical, biological and nuclear weapons and their delivery mechanisms as well as to combat international terrorism.

Export control is an internationally used legal instrument focusing on cross-border exchange of goods and services (so called controlled items) relevant from a security policy point of view. By export control, a country’s or economic area’s foreign trade may be subjected to legal restrictions.

Sanctions are political instruments of national and international organisations, including but not limited to the United Nations and the European Union. Wärtsilä and its employees are to comply with all national and international export control and sanctions’ legislation applicable to the Wärtsilä Business operation in question.

It is important that Wärtsilä introduces control measures to check itself and its business partners. For protection against negative press and other sanctions, Wärtsilä must comply with requirements of foreign trade law and applicable rules for export control and sanctions. Non-compliance with these regulations can lead to both administrative and criminal consequences like penalties, licence withdrawal, “blacklisting”, prosecution, fines and even imprisonment.

Export control and sanctions cover following actions and procedures:

• Check of controlled items (dual-use / military items, technology and technical data)
• U.S. (re)-export and transfer
• Sanctioned party list screenings

Dual use check

The main Dual-Use Regulations of e.g US, EU define a uniform list of items for all with the according annexes, permit requirements and processes for exporting and shipping dual-use items.

ECN (EU) or ECCN (US) specifically identify items that are subject to export control regulations. They target only to a limited number of items, generally referred to as dual-use items, meaning they can be used for both commercial and military purposes. Goods that are traded at high volumes world-wide are generally not controlled.

Individual products must be checked according to the criteria stated by the EC Dual-Use Regulation, for US origin and US controlled products according to the US Export Administration Regulations (EAR) and applicable export licensing and approval procedures need to be followed

Military items, technology and technical data

Exports concerning military items always require an export license from the national authority.

U.S. (re)-export and transfer

Goods originating in the United States of America are subject to special regulations. These goods may still be subject to U.S. export controls when being re-exported from the EU since the U.S. export control regime bears an extraterritorial nature. Noncompliance with U.S. export regulations may lead to suspension from trading with U.S. companies, severe penalties and/or an entry on the blacklist of the U.S. government.

All export control related information is to be provided to Wärtsilä by our suppliers (or manufacturers of the goods).

Sanctioned party list screenings

Wärtsilä shall assess any offer, contract or export having a nexus to a country and/or party subject to sanctions before proceeding with it.