Drawback (duty refund)
Mechanism for reimbursement of customs duties paid on goods imported then re-exported after processing.
Drawback (duty refund)
Drawback is a mechanism which makes it possible to obtain total or partial reimbursement of customs duties paid when importing goods which are then re-exported, as is or after processing.
Developments in the EU
Since the UCC (2016), drawback as such has been abolished in the EU and replaced by the inward processing regime as a refund system. However, the concept remains widely used in other countries and regions (United States, Asia, Africa).
Active improvement — reimbursement system
In the EU, the operator imports the goods in free circulation, pays the duties, processes the goods and then requests a refund of the duties upon re-export of the finished products.
Drawback outside EU
Many countries maintain classic drawback regimes: United States (Duty Drawback under the Trade Facilitation and Trade Enforcement Act), China, India, African countries. The mechanism varies but the principle remains the same.
Important restriction
Under certain free trade agreements, a “no-drawback” clause prevents the reimbursement of import duties from being combined with the benefit of a preferential export rate.