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Rules of Origin: Renew Your Long-Term Supplier Declarations (LTSD)! As the year ends, trade professionals face the annual challenge of renewing LTSDs. Stay compliant, cut costs, and streamline the process with proactive strategies.

These essential documents verify the preferential origin of goods and allow businesses to take advantage of reduced or zero tariffs under Free Trade Agreements (FTAs). Yet obtaining LTSDs often resembles a yearly cat-and-mouse game filled with follow-ups, reminders, and last-minute adjustments.

Despite the frustrations, LTSDs are crucial for maintaining compliance, reducing costs, and ensuring supply chain transparency. Let’s examine why LTSDs are essential, the common challenges in renewing them, and best practices to streamline the process.

What is an LTSD?

A supplier’s declaration for goods with preferential originating status is a statement regarding the preferential origin of goods. This declaration is typically a document used within the European Union. It serves as evidence when applying for or issuing a preferential proof of origin and can also be used to request a certificate of origin (such as EUR.1). Unlike an individual supplier’s declaration, a long-term supplier’s declaration can be valid for multiple deliveries over a period of up to 24 months.

Why LTSDs Are a Big Deal

LTSDs are essential for businesses involved in international trade because they:

• Secure Preferential Tariff Advantages: Without valid LTSDs, companies cannot benefit from reduced or zero duties under FTAs, which may result in substantial cost increases.
• Avoid Penalties for Non-Compliance: Regulatory bodies require LTSDs to confirm origin claims. Incomplete or incorrect declarations can lead to fines or audits, which can threaten business operations.
• Ensure Supply Chain Transparency: LTSDs provide essential insights into the origin of goods and components, allowing businesses to manage the complexities of global trade with greater assurance.

Renewing these declarations annually is crucial to maintaining compliance, achieving cost savings, and preventing disruptions in the supply chain.

Why is a long-term supplier’s declaration required?

Due to the European Union’s preferential agreements with numerous countries, customs duties are often significantly reduced or completely waived. However, this requires proof of the goods’ preferential origin.

So what is the purpose of the supplier declaration?

You have established the fundamental basis if you can demonstrate this through a single supplier’s declaration or a long-term supplier’s declaration. This allows you to make statements regarding preferences for the products you have produced or the merchandise. The only remaining step is proving that your product meets the rules of origin.

The Challenges of LTSD Renewals

Renewing LTSDs may feel like “Groundhog Day” for many professionals—year after year, the same challenges arise:

1. Non-Responsive Suppliers
   Suppliers often reprioritise LTSD requests, leaving trade professionals to send multiple reminders and follow-ups.
2. Errors and Incomplete Submissions
   Even when declarations are submitted, they frequently require corrections, adding to the workload and delaying compliance.
3. Recurring Issues
   For many professionals, LTSD renewals feel like a never-ending cycle, with minimal improvement despite annual efforts.
4. Limited Supplier Resources
   Smaller suppliers may lack the systems, knowledge, or expertise to produce accurate and timely LTSDs, further complicating the process.

Best Practices for Streamlining LTSD Renewals

While challenges persist, there are proven strategies to make LTSD renewals more efficient and less stressful:

1. Start Early and Stay Organised
   Preparing early helps avoid last-minute chaos. Create a detailed timeline with milestones for outreach, follow-ups, and final submission. Beginning several months ahead provides time to handle corrections or additional requests.
2. Educate Your Suppliers
   Many suppliers delay submissions due to a lack of understanding of LTSDs’ importance or how to complete them. Provide comprehensive instructions, templates, and examples. Consider hosting training sessions to clarify expectations and benefits. For instance, you could offer the on-demand Rules of Origin training we provide.
3. Standardise the Process
   Consistency reduces errors and simplifies the process for suppliers. Use a standardised LTSD template with pre-filled information where possible. Clearly mark mandatory fields such as product descriptions, origin determination, and validity dates.
4. Leverage Digital Tools
   Automation reduces manual tracking and minimises human error. Invest in trade compliance software to manage LTSD requests, send automated reminders, and centralise documentation.
5. Build Supplier Accountability
   Motivating suppliers to prioritize LTSD requests enhances their responsiveness. Develop a supplier scorecard that monitors the timeliness, accuracy, and responsiveness of submissions. Share the results to encourage improved performance.
6. Offer Support Where Needed
   Some suppliers struggle with origin determination or document preparation. Provide one-on-one assistance or connect suppliers with compliance experts to help them submit accurate and timely declarations.
7. Include LTSDs in Contracts
   Contractual obligations ensure suppliers prioritise LTSDs. Add LTSD requirements to supplier agreements, including deadlines, penalties for non-compliance, and incentives for timely submissions.
8. Communicate Regularly
   Building strong relationships with suppliers enhances trust and collaboration. Conduct regular check-ins with suppliers during the year to emphasise the significance of LTSDs and tackle any issues promptly.

Moving Forward with Confidence

Renewing LTSDs may never be the easiest part of trade compliance, but it can become a manageable and streamlined process with the right strategies and tools. By starting early, leveraging automation, and building strong supplier relationships, you can transform this annual challenge into an opportunity for operational improvement.

Published by Customs Manager Limited

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