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EU – JP Preference Agreement

This Blog tells you about how to implement preference processing between EU countries and Japan.

The EU-Japan Economic Partnership Agreement came into force on February 1, 2019. SAP Supports the following functions to enable use of JEFTA (Japan EU Free Trade Agreement) in SAP GTS Preference Management.

  1. Transaction Value method
  2. Tariff shift method
  3. Transaction value method RVC

SAP includes this functionality in SAP GTS 11.0 SP16 version. In order to implement this to the old version GTS system, go through SAP Notes : 2793346 – Japan-EU Free Trade Agreement (EPA) an implement all the OSS Notes mentioned in it. After implementing all the OSS Notes, kindly follow all the steps mentioned below.

Unlike the other EU agreements, Japan needs the following preference indicator as well along with the preference status, based on the product. Hence it will have it’s own Schema for Preference Indicators as shown below.

Pref. Indicator Description Internal Preference Statement
Not eligible 40
A Goods wholly obtained or produced entirely 66
B Goods entirely from originating materials 63
C1 Tariff shift 60
C12 Tariff shift, MaxNOM or RVC 60
C123 Tariff shift, MaxNOM or RVC, specific production process 60
C123E Tariff shift w. tolerance, MaxNOM or RVC, spec. prod. proc. 60
C12E Tariff shift with tolerance, MaxNOM or RVC 60
C13 Tariff shift, specific production process 60
C13E Tariff shift with tolerance, spec. production process 60
C1E Tariff shift with tolerance 60
C2 MaxNOM or RVC 60
C23 MaxNOM or RVC, specific production process 60
C3 Specific production process 60
C4 Application of provisions of section 3 of appendix 3-B-1 60
X Eligible, without specifying origin criteria 60

Steps to activate EU-JP Preference processing:

  • Define legal regulation for EU-JP Preference processing with Legal Code 06
  • Maintain all the preference indicators under EU-JP Scheme as shown in the above table and assign it to EU-JP Preference Agreement.
  • Run /SAPSLL/PRE_VDO_FILL_VDOWNVAL report in GTS. This report will add the entries with VALUE_TYPE ‘PREVAL’ in new table /SAPSLL/VDOWLVAL for all entries in /SAPSLL/VDOWL
  • As rules of origin data contains three methods for EU-JP Agreement, Assign price type to agreements for determination for all three methods shown below.
    1. 1 Transaction Value method
    2. 3 Tariff shift method
    3. 6 Transaction value method RVC

SPRO Path : SPRO -> Global Trade service -> Risk Management -> Preference Processing -> Assign price types to agreements for determination

  • Along with this, we need to Assign price type to agreements and Value base.

This is exclusive for EU-JP Preference agreement. After implementing all the OSS notes mentioned in 2793346 SAP Notes, we can assign it using /SAPSLL/V_TLBVAL View, which can be maintained in SM30

Make sure you Assigned proper values to all the 6 Value basis (Including the blank value)

  • After all the above setting in GTS, Go to Area Menu (/N/SAPSLL/MENU_LEGALR3) in feeder system, under master data tab, Execute Preference: Transfer Determination of Preference Agreements to FS. This will maintain all the legal regulations in feeder system in sync with the GTS System.
  • Finally, upload ROO for EU-JP Preference agreement and activate the legal regulation at Country/Country group level.
  • After all the prerequisite steps for preference, such as Master data, Transfer of Prices and procurement indicators to GTS etc., determine the preference for the products and you can see the preference indicator updated in the product master data.

Hence when we create export documents for EU countries with destination country as Japan, we can see the details of the preference indicator and preference status under preference tab in the customs document and same can be issued to the customer.

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