Advance+ruling

**Definition/Scope**
Advance rulings are binding decisions by Customs at the request of the person concerned on specific particulars relating to goods, in particular the classification and origin of the goods in preparation for importation or exportation. Advance rulings facilitate the declaration and consequently the release and clearance process, as the classification of the goods has already been determined in the advance ruling and is binding to all Customs offices for a specific period of time, e.g. 3 months or 1 year.

**Problem Statement**
Importers and exporters are often confronted with inconsistent classification and origin decisions depending on, for example, the Customs office of import or export or the rotating allocation of appraisal officers. This leads to uncertainty in the entire trade transaction as these different decisions have an impact on the amount of duties to be paid and ultimately on the end price of the product. This uncertainty can lead to supply chains moving to countries and locations of higher certainty, predictability and reliability, hence affecting trade development.

**Implementation guidance**
According to Standard 9.8 of the Revised Kyoto Convention (RKC) and the WCO Recommendation on binding pre-entry classification information requests for advance rulings need to be made in writing. Also Customs is required to issue the advance ruling in writing, including providing a right of appeal. The written request has to include a full description of the goods, brochures or samples to allow the proper classification. Ideally, Customs should establish a specialized unit at the regional or central level to ensure uniform and consistent operation of the advance ruling system.

Advance rulings on classification and origin will help importers and exporters to get, prior to import and export of goods, a decision from Customs on the classification or origin of the goods, which will be binding to the entire Customs administration for a specified period of time, e.g. 1 year. Regardless of which Customs office the import or export takes place, every Customs officer is bound by the advance ruling. According to Standard 9.9 of the Revised Kyoto Convention (RKC), binding rulings are obligatory for contracting parties.

In a recent study on the impact of trade facilitation measures on trade costs, the OECD identified that the advance rulings system was the most impactful single trade facilitation measure. The OECD had identified 12 trade facilitation indicators, which, when applied in total, could potentially lead to a total reduction of trade costs of 10%. For advance rulings alone, the impact on trade cost was estimated to be a reduction of around 5,4%.

**Additional information (references, examples, etc.)**
The ICC Customs Guidelines # 40 to 43 contain relevant business perspectives on this very important trade facilitation measure.