REX Number, Explained: What Is It For & How Is It Used?

If your business operates in the complex and often confusing terrain of international trade – especially as a UK-based trader – you’ve likely encountered the term REX number.

To the uninitiated, it looks like simply just another code; in fact, a REX number is a key to export preferences and origins.

In this clearBorder blog, we’re here to shed light on the REX number – what it is, its significance, and how it weaves into the fabric of your trading endeavours. Let’s get started.

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A Closer Look At The Registered Exporter System

REX, short for Registered Exporter, is not some meaningless legislative moniker. It’s an entire trade system and framework, that supports the world of preferential trade arrangements.

The REX system, established by the European Union, serves as a cornerstone for determining the origin of goods. Essentially, it’s the way the competent authorities register exporters as legitimate operators; avoiding a situation where a registered exporter commits fraud, for example.

• Origin, in the context of international trade, is a crucial determinant of the preferential treatment a product receives under various trade arrangements.

In other words, the REX number is an identifier; a unique mark that signifies the status of an exporter within the REX system.

A REX number is granted to exporters who meet the criteria laid out by the EU. It testifies to an operator’s (GSP beneficiary countries) eligibility for enjoying preferences under the Generalised System of Preferences (GSP) and any other preferential trade arrangement.

What Does That Mean In Practice?

Ok, so why does the REX number matter?

In short, it’s a gateway code to a world of trade preferences. Working within the registered exporter system with a valid REX number, you can issue statements on the origin of your goods directly on the commercial documents accompanying your shipments. This empowers you to declare the origin of your products without the need for a certificate of origin.

In the wake of the UK’s exit from the EU, understanding the intricacies of the REX system takes on new importance for UK traders.

As you engage with trading agreements, preferences, and customs procedures, having a solid grasp of your REX number and how to wield it can make the difference between smooth transactions and unnecessary complexities.

What Do We Mean By ‘Preferential Trade Agreements’?

Preferential Trade Agreements (PTAs) are pivotal instruments shaping the landscape of commerce between nations.

These agreements can, in theory, be established anywhere in the world: from eastern and southern Africa to regions of Asia, the European Union, developing regions of the world, or among Commonwealth nations, for instance. They are forged to foster mutually beneficial trade relations, and offer preferential treatment to goods originating from member countries.

Types of Preferential Trade Agreements

PTAs are treaties between two or more countries that facilitate the exchange of goods by providing special treatment, often in the form of reduced tariffs or other trade barriers. The primary aim is to stimulate economic collaboration, enhance market access, and promote smoother trade flows among member nations.

1. Free Trade Agreements (FTAs): FTAs eliminate, or substantially reduce, tariffs and quotas on goods traded between member countries. This encourages a more liberal flow of goods, promoting economic integration.
   • Example: The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico.
2. Customs Unions: In addition to removing trade barriers, customs unions harmonise trade policies and tariffs against non-member countries. Members treat each other as a single trading entity concerning external trade.
   • Example: The European Union, where member countries share a common external tariff.
3. Common Markets: Going a step further than customs unions, common markets allow for the free movement of goods, services, and factors of production (like labour and capital) among member countries.
   • Example: The MERCOSUR, which includes South American countries like Brazil and Argentina.
4. Economic Integration: This is the highest level of integration, involving a common market along with coordination of economic policies, and even a common currency in some instances.
   • Example: The Eurozone, where certain European Union countries share the Euro as their currency.

The Role of the REX Number in PTAs

• The REX number comes into play when an exporter seeks to claim preferential origin status for their goods.
• Under many PTAs, only goods genuinely originating from a member country are eligible for preferential treatment.
• The REX system provides a mechanism for exporters to self-declare the origin of their goods, streamlining the process and eliminating the need for a certificate of origin.

How a REX Number Affects UK Businesses

Until the end of 2021, claiming a preferential (0%) rate of duty for goods imported into the UK from the EU didn’t necessitate a statement of origin. HMRC had granted an easement, simplifying the process. However, this era of leniency has concluded.

Since January 1, 2022, all export invoices of goods with EU origin to the UK must now bear a statement of origin for the preferential rate of duty to be claimed, and EU suppliers must be able to show a valid REX number. This is crucial evidence of the origin of goods and instrumental in determining the applicable tariff rates.

1. Consignment Value: €6,000 / £5,400 or Less:
   • In this scenario, any exporter can make the statement of origin.
2. Consignment Value: €6,000 / £5,400 or More:
   • Here’s where the REX number comes into play. The EU exporter MUST have a Registered Exporter (REX) number, and it must be included in the statement of origin.

If you’re importing goods into the UK, and your supplier’s invoice lacks a valid statement of origin, customs duty will be due upon import.

How To Apply For – and Use – a REX Number

Before you embark on the application process, ensure that you have all the necessary details about your business. This includes your business name, address, registration number, and any other pertinent information.

1. Access the REX System:To initiate the application, access the REX system. This can be done through the official EU portal.
2. Complete the Application Form:The application form will prompt you to input essential details about your business and its operations. Pay meticulous attention to accuracy, as any discrepancies may hinder the approval process.
3. Submit Relevant Documents:Depending on your business type and the goods you handle, you may be required to submit supporting documents. These could include commercial invoices, business registration certificates, or other documents substantiating the origin of your products.
4. Wait for Approval:Once you’ve submitted your application, be patient while the authorities review your request. The timeframe for approval can vary, so it’s advisable to check the expected processing time.
5. Receive Your REX Number:Upon successful approval, you’ll be assigned a unique REX number. This identifier should now become an integral part of your business transactions, appearing in the statement on origin accompanying your exported goods.
6. Integrate REX into Your Processes:With your REX number in hand, it’s time to integrate it into your business processes. Ensure that it’s accurately reflected in all relevant documentation, especially in statements of origin for consignments exceeding €6,000 / £5,400.

If Your Business Is Established In Northern Ireland

Note: You cannot apply to become a registered exporter if your business is established in Great Britain.

If your business is rooted in Northern Ireland, and you’re engaged in the import of goods under an EU preference, the REX system is your key to ensuring smooth transactions.

• If you import goods under an EU preference that aren’t released for free circulation but are supplied to an EU country, the REX system could be a valuable asset.
• To initiate the process, send an email to rexbelfast.rex@hmrc.gov.uk. In this email, include details such as your business name, contact email address, EORI number, and the address.
• You can expect a response from HMRC within 5 days detailing your username, a password, and detailed instructions on accessing the EU Trader Portal.

If Your Business Is Established In Great Britain

For businesses established in Great Britain, recent developments necessitate a shift in approach.

Your REX number must now make way for your EORI number if:

• Your business previously relied on the REX number
• The UK has a continuity trade agreement mandating the use of a REX number
• You’re exporting goods to countries covered by the UK’s Generalised Scheme of Preferences, and these goods will be reimported under bilateral cumulation arrangements

As the business landscape evolves, staying informed is your greatest asset. Regularly check for updates from relevant authorities or enlist customs compliance consulting to ensure that your practices align with the latest guidelines.

Final Thoughts on the REX System

For GB operators, adapting to these changes is integral. The shift from REX to EORI numbers marks a significant adjustment, underscoring the need for businesses to stay agile and well-informed.

In these dynamic times, the success of your trade operations hinges on your ability to navigate changes with clarity and precision. Regularly updating your knowledge base, maintaining cultural intelligence, staying connected with relevant authorities, and integrating these adjustments seamlessly into your processes will be key to ensuring continued compliance and operational efficiency.

At clearBorder, we understand the challenges posed by evolving trade dynamics, and we’re here to support your business in staying ahead.

For further insights, guidance, and expert advice on adapting to these changes, feel free to reach out and contact us now.