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Country Commercial Guides FY 2000: Luxembourg Report prepared by U.S. Embassy Luxembourg, released July 1999 Note*

CHAPTER VI. TRADE REGULATIONS AND STANDARDS

Since most of the trade regulations and standards for Luxembourg are issued as a result of Luxembourg's membership in the European Union, please refer to the Country Commercial Guide for the European Union. You can find it on the Showcase Europe website located at http://www.sce.doc.gov or on the State Department website at http://1997-2001.state.gov/about-state/business/com_guides.

TRADE BARRIERS

Luxembourg maintains an excellent and open trading climate for American companies, with government leaders at all levels being very supportive of free trade. Luxembourg's business is traditionally heavily oriented to the markets of neighboring countries, and exports account for some 80% of the country's production. This economic integration explains why many industrial and commercial groups have, over recent years, been established in Luxembourg with a view to developing into the European market.

As a member-state of the European Union, Luxembourg applies the European Community's Common Customs Tariff and all Community regulations affecting Customs legislation as well as the Common Agricultural Policy.

Effects of the single market
Luxembourg is a member of the EU single market, comprising some 370 million consumers and, as a consequence, participates in the process of developing or implementing harmonized product standards applicable in all 15 member-nations. There is also a single duty among all EU members on products coming from non-EU countries. Value Added Taxes (VAT) rates are still in the process of being harmonized among the fifteen members. The EU became borderless as of January 1, 1993, allowing for the free movement of goods and services but not, as yet, labor between member-nations. American companies should consider these developments (harmonized standards, duties, VAT, etc.) as features that facilitate their access into the EU Single Market and will ease the process of doing business in a regional market.

Nonetheless, the EU continues to consist of fifteen different and unique markets. For example, the Single Market will not eliminate language and cultural differences between national markets. It will also not eliminate differences in consumer buying patterns or distribution channels. Few distributors have the capability to effectively distribute a product or service in all fifteen member states. This problem is compounded by the legal differences in treatment of agents and distributors between the EU members.

Most American firms should therefore consider maintaining a number of distributors in Europe. It is also vital to obtain sound legal advice in each country. This need to support multiple strategic and marketing programs will certainly limit the benefits, which a company would hope would accrue from the EU single market.

Government procurement of goods and services
The EU has adopted several Directives covering public supplies and public works. These include the sectors of energy, water, telecommunications, and transport (the so-called "utilities" or "excluded sectors" Directive). Although the objective of EU Directives has been to open government procurement to foreign companies, in practice, it is still advisable to work with a locally established company, which has the appropriate contacts and local markets expertise. Purchases by government or local entities of over 5 million LUF ($160,000) are subject to procurement by tender. In addition, current EU Directives require that tenders for purchases of over $20 million must be published in the EU Bulletin and are subject to procurement procedures established by the EU for all member states.

Environmental regulations
The installation and operation of equipment and/or a site for waste disposal are subject to authorization by the Ministry for the Environment. Authorization will be granted only if the proposed activity is shown to offer adequate protection of public health and the environment. Authorization may be subject to conditions governing in particular the technical equipment at the disposal of the applicant and/or operator.

In order to implement the law of July 27, 1993, which involves economic development and diversification, there have been a number of support schemes created as incentives. One addresses the need for improved protection of the natural and human environment, and another addresses the need for more rational use of energy resources. The support scheme for environmental protection and the rational use of energy addresses the following operations:

* specific investments whose aim to prevent, reduce or eliminate emissions into the atmosphere, water and the soil, or to prevent, reduce or eliminate pollution by noise, odor, vibration or radiation;
* specific investments whose aim is to prevent, reduce, recycle or eliminate waste produced by manufacturing or development, or aimed at the rational management of waste produced by manufacturing or exploitation activities;
* specific investments aimed at implementing a rational use of energy or of renewable sources of energy.

A subsidy may be granted of up to 25% of the expenditure arising from the investment. The law was amended in 1999 to simplify application procedures for industrial trade licenses.

Cattle growth hormone ban
The EU bans imports of U.S. hormone-treated beef and all high-value products containing hormone-treated meat. This has led to the decrease in U.S. agricultural sales in member states of the EU, including Luxembourg.

CUSTOMS REGULATIONS

As a member of the European Union, Luxembourg applies the EU common external tariff to goods imported from non-EU countries. For goods imported into Luxembourg from other EU countries, no customs duties apply unless the goods contain components imported from outside the EU upon which customs duties have not been paid in another EU country.

As part of the establishment of the single market, the EU member states have also begun to harmonize their Value Added Tax (VAT) into a narrow range of approximately 15 percent. While the VAT applies equally to domestically produced goods, for imports it is applied after all customs duties are added to the price of the goods.

Tariff Rates
Goods imported into Luxembourg or made in Luxembourg are normally subject to a Value Added Tax (VAT) payable upon importation if Luxembourg is the destination of the goods being shipped into the EU. The standard rate of VAT in Luxembourg is 15%.

The EU is currently considering a change in its method of calculating customs values of imported goods. Current customs valuation rules provide that, where there is a "chain of sales" leading to the importation of goods into the EU, the price paid in any of these sales can be used as the basis for establishing the customs value of the goods in question. The proposal under discussion would require that the customs value be based on the final sale price only. If adopted, many U.S. multinationals exporting to the EU through a "chain of sales" would find that EU customs officials assign their products a higher customs value, and would thus levy higher tariffs than is now the case. American companies should follow this development carefully through their customs broker since its implementation would necessitate considerable adjustments in operations for major U.S. exporters to Europe.

Import License Requirements
If your company wants to be the importer of record rather than your sales representative, most products may be imported or exported without prior license. However, certain listed products and products from certain countries are subject to an import license. For further information contact:

Ministry of Economic Affairs
19-21, Boulevard Royal
L-2449 Luxembourg
Tel: +35/2 478-1
Fax: +35/2 46-04-48

Export Controls
The Bureau of Export Administration (BXA) is responsible for licensing of exports out of the United States. There is no longer a distinction between validated licenses and general licenses-either you need a license or you do not need a license (NLR: No License Required). An export license would be required for reasons of national security, foreign policy, and short supply. You can submit form 748P, obtained at your local Department of Commerce office, to the BXA to determine your license requirements. For more information on the Bureau of Export Administration, visit the website at www.bxa.doc.gov.

As a member of the European Union and the former COCOM (Coordinating Committee for Multilateral Export Controls), Luxembourg follows the common regime, and applies the proscribed lists generated by both organizations. As the COCOM regime is replaced by the Wassenaar Arrangements on Export Controls for Conventional Arms and Dual-Use Goods and Technologies and as new lists develop, Luxembourg will utilize those lists to apply the export control procedures outlined above.

IMPORT/EXPORT DOCUMENTATION

European Community Ministers agreed in 1991 to abolish virtually all customs documentation on goods moving between EU countries by January 1, 1993. However, countries outside the EU are still required to obtain proper customs documentation. The following is a summary of the documentation needed for U.S. exporters of goods to Luxembourg, which is, however, subject to rapid change without notice. U.S. exporters should always consult a reputable freight forwarder regarding recent changes in customs documentation and import/export regulations.

Shipping Documents
Mail and parcel post shipments require postal documentation in place of bills of landing. Air cargo shipments require airway bills (in place of bills of lading) with the number of copies issued based on the requirements of the importer and the airline used. Follow IATA and/or ICAO (International Civil Aviation Organization) in addition to all other applicable national and/or international regulations governing labeling and packing of dangerous and restricted goods, as well as issuance of the special shipper's certificate required under IATA rules for such items (airlines will supply this form). ICAO rules may also require documents covering such shipments (airlines will supply information and forms, if so required). U.S. exporters must also follow U.S. government requirements regarding export control documents, including the shipper's export declaration.

Consular/customs invoice
Neither document is required in Luxembourg.

Commercial invoice
The commercial invoice must be produced in triplicate. There are no requirements in form but must contain the following: date and place of shipment, name/firm; address of seller and buyer; mode of transport; number; kind and markings of the packages and their numerical order; and an exact description of goods (a customary commercial description according to kind, quality, grade, and weight, both gross and net, in metric units. Special emphasis should be placed on any factors which increase or decrease the value of the goods; agreed price of goods-unit cost, total cost F.O.B. factory plus shipping, insurance and other charges; delivery and payment terms; country of origin of goods; and the signature of the exporting firm. It is useful if the commercial invoice contains the HTS code (Harmonized Tariff Schedule/Schedule B). This is not mandatory, but helps customs authorities recognize the commodity and properly classify it for customs purposes. The first four digits of the eight-digit code are harmonized worldwide. Additional information may be requested by the importer, under terms of a letter of credit, or due to the nature of a particular trade.

Pro-forma invoice
A pro-forma invoice is acceptable in lieu of a commercial invoice. It should include a complete description and the value of the goods shipped. It is mostly used in cases where no actual invoicing between the shipper and the consignee exists.

Bills of lading (B/L)
Generally, "to order" bills are acceptable. Bills of lading should bear the name of the party to be notified. The consignee needs the original bill of lading to take possession of the goods. Express bills of lading are also acceptable. These B/L's help speed up the process in cases where bank financing is not necessary. With an express bill of lading, goods are automatically transferred to the designated consignee without presentation of the original B/L. This is ideal for internal company shipments of goods sold on open account.

Packing list
This is not a mandatory document. However, including a packing list facilitates customs' clearance of goods.

Certificate of origin
A certificate of origin is generally not required under Luxembourg regulations for imports from the U.S., except when the certificate is specifically demanded in the import license. The importer, bank, or a clause in the letter of credit may request a certificate of origin. There are no regulations concerning the form and preparation of the certificate, but the Chamber of Commerce must certify the data and will often require an additional notarized copy for its files. Under EU regulations, certificates of origin may be required for stipulated goods, including goods subject to surveillance and/or quota requirements. Goods covered by either of the systems usually require certificates of origin irrespective of the actual origin of the goods. Importers will instruct their suppliers when certificates of origin need to be issued.

Insurance certificate
Normal commercial practices apply. Follow the instructions of the importer and the insurance company.

TEMPORARY ENTRY

Luxembourg is a member of the worldwide ATA Carnet System, which can serve as your "Merchandise Passport." An ATA Carnet is an international Customs document that simplifies Customs procedures for the temporary importation of commercial samples, professional equipment, and goods for exhibitions and fairs. The Carnet facilitates international business by avoiding extensive Customs procedures, eliminating payment of duties and value-added taxes (minimum 20% in Europe), and eliminating the purchase of temporary import bonds. ATA Carnets save time, effort, and money. For more information contact the United States Council for International Business:

USCIB ATA Carnet Customer Service Department
(212) 354-4480
Email: atacarnet@uscib.org
http://www.uscib.org/carnet/carnet.htm

LABELING REQUIREMENTS

Until recently, each EU country individually regulated its domestic industries for packaging and labeling. As a part of the EU's 1992 Single Market program, the EU is now attempting to remove technical barriers by harmonizing existing European legislation and establishing new rules, where necessary, so that goods sold in one EU country can be marketed easily in any other EU country. However, differences still exist from country to country. In addition, national requirements exist side by side with EU-wide requirements. The following is a review of packaging and labeling regulations in Luxembourg affecting U.S. exporters. The review covers both national and EU-wide aspects of packaging and labeling in Luxembourg.

What language to use
Luxembourgers are fluent in French and German, in addition to their own mother tongue of Luxembourgish (L‘tzebuergesch), and many have learned English as well. However, it is more appropriate to label in either French or German.

Labeling and other requirements
With only minor exceptions, there are no general labeling requirements for Luxembourg imports. Requirements for specific products should be obtained from the importer. Certain commodity imports, including numerous foodstuffs, are subject to special labeling regulations that require the label show the name of the manufacturer, composition, content (in metric units) and country of origin. These special, highly detailed, and diverse regulations relate largely to health and quality standards and are embodied in formal Luxembourg legislation and EU Directives. Given the complexity of this field, information should be requested from the importer prior to shipment.

An EU Directive was introduced which would prohibit labeling in both the English and metric systems. Originally planned to be implemented in 2000, this Directive has tentatively been pushed back to 2010.

PROHIBITED IMPORTS

Few products are prohibited for importation into Luxembourg. Among these limited items are endangered species, including those listed in the CITES convention. Also prohibited from importation are weapons such as swordsticks, daggers, bludgeons, rifles above 20 caliber, and antipersonnel mines. American-raised beef treated with hormones also may not be imported under EU regulations. Since the list of prohibited items is subject to change, for the latest information, please contact the American Embassy in Luxembourg.

STANDARDS

ISO 9000 (International Standards Organization) in Europe ISO 9000 (EN 29000 in Europe, ANSI/ASQC Q 90 System in the U.S.) defines the basic requirements for a manufacturing quality control system. It includes documentation controls, and worker training. Its aim is to ensure that a manufacturer's product will remain the same regardless of when it is taken off the production line. In other words, ISO 9000 is designed to ensure a consistent level of product quality. ISO 9000 standards are unlike engineering standards, which contain units of measurement, test methods, and specifications. Rather, ISO 9000 standards encompass certain generic management practices designed to benefit both the producer and end user.

In today's marketplace, quality is a competitive advantage. According to recent statistics, some 50,000 EU companies now have some form of ISO 9000 registration. While voluntary, European manufacturers are increasingly requesting that their suppliers be ISO 9000 registered. In addition, more and more European importers are making the same request of their European and American suppliers. The ISO 9000 registration process is not cheap, and market demand for registration varies across product and service sectors. It is important to note that ISO 9000 registration does not guarantee quality, since it is more concerned with product consistency than product quality. It also does not ensure that a U.S. product will meet the various standards incorporated into EU Directives covering a host of products.

Product and technical standards
There are a number of EU-wide and member-state standards governing various product categories, as well as health and safety standards, which cut across product categories. When considering the Luxembourg and broader European market, an American company needs to consider which mandatory product standards may apply to its products or services. An importer is one source for acquiring this information, at least in the initial inquiry stages.

Recycling, packaging, and waste management
An EU proposal published in the Official Journal (c 263; Oct. 12, 1992) and adopted in early 1995 has two objectives. The first is to harmonize European packaging standards and symbols to facilitate the free flow of goods within the community. The second is to maximize the environmental benefits of various national waste management systems by increasing the level of coordination among them. To attain these objectives, the Directive establishes:

* recovery and recycling targets;
* requirements and conformity symbols for packaging; and
* broad criteria for national waste management systems.

The Directive is based on a prevention-first, recovery-second, and disposal-last approach. It mandates that, within 5 years after the passage of the Directive, the EU member states must recover (defined to include recycling, composting, and waste-to energy recovery) a minimum of 50 percent by weight of all packaging waste, with at least 25 percent recycled. More important, the Directive sets maximum targets for recovery of 65 percent and 45 percent for recycling.

The Directive includes a clause enabling member states to pursue higher targets, provided they comply with a number of conditions, and in particular that their policies should not hinder the introduction of similar policies in other member states. To allow for existing special circumstances, some countries are allowed additional time to attain the first stage targets.

Member states must take the necessary steps to set up return, collection, and recovery systems so as to attain the objectives of the Directive. In accordance with the principle of subsidiary, member states are free to develop their own management systems according to their national requirements and in accordance with the treaty.

While U.S. exporters do not need to be concerned with disposal methods, they should be aware of unfavorable legislation. The EU Directive specifies that "these systems shall ensure the coverage of imported products under non-discriminatory conditions and shall be designed in such a way that there are no barriers to trade or distortion of competition." Regarding the obligation to take the packaging back, the EU Directive puts the onus on the waste management system, not specifically on manufacturers as is currently the case in Germany. In that respect, the U.S. Department of Commerce has been assured repeatedly by EU officials that U.S. exporters would not be required to take the packaging waste back to the United States. This would be consistent with the EU's "proximity principle."

Electronic waste
The European Union has begun drafting legislation regarding electronic waste. As with waste legislation in other areas, notably packaging, the impetus for the commission's initiative has come from existing or proposed, member-state legislation. There are two types of legislation pending one regarding batteries, accumulators, and end of life vehicles, while the other deals with waste of electrical and electronic equipment (WEEE). For more information, please refer to the section regarding Trade Barriers in the European Union Commercial Guide.

Eco-labels
The Commission of the European Union has published the first ecological criteria for the award of the eco-label for washing machines, dishwashers, paper towels, toilet paper and soil improvers, as well as other. The eco-label scheme, which is voluntary, will remain voluntary as it is dealt with on an EU level. Council regulation number 880/92 on the community eco-label award scheme provides for the establishment of ecological criteria for specific product groups to enable verification of the reduced environmental impact of qualifying products. This is based on analysis of the life cycle for the product, from manufacturing (including choice of raw materials) through distribution, consumption and use, and finally, disposal after use. The regulations require member states to designate competent bodies to assess applications for the eco-label based on these criteria.

Manufacturers or importers in the community may apply for an eco-label based on these criteria. Manufacturers or importers in the community may apply for an eco-label only to the competent body or bodies designated by the member-state in which the product is manufactured or first marketed, or into which the product is imported from outside the EU. In the future, markings will have to be displayed to indicate the reusability or recyclability of the package, while manufacturers could use voluntary markings to indicate the nature and the percentage of recycled material of the packaging. While voluntary, eco-labels may become important marketing tools to consumers, as well as a "de minimis" requirement demanded by EU importers and end-users of American products. Products that may be expected to carry the eco-label include textiles, detergents, dish-washing agents, cleaning agents, paints and varnishes, batteries, shampoos, packaging, refrigerators and freezers, tiles, shoes, cat litter, light bulbs and hair sprays.

ConformitŽ EuropŽenne (CE) mark in the European Union The ConformitŽ EuropŽenne (CE) mark is a European proof of conformity with the essential health, safety, and environmental requirements of the harmonized EU product safety directives. The mark indicates that the manufacturer has satisfied all the assessment procedures specified by law for its products. The CE mark is not a quality mark and only signifies to surveillance authorities that the product is in compliance with the EU legislation. It is the accompanying declaration of conformity that provides the details of the Directive(s), to which the product complies and the standards that were relied upon in assuring compliance. The EU Directives deal with large families of products or horizontal risks such as those addressed in the Electromagnetic Compatibility Directive. The following directives (with reference between brackets) have been adopted and are now enforced:

Low Voltage [73/23/EEC]
Simple Pressure Vessels [87/404/EEC]
Safety of Toys [87/378/EEC]
Construction Products [89/106/EEC]
Electromagnetic Compatibility [98/336/EEC]
Machine Safety [89/392/EEC]
Personal Protection Equipment [89/686/EEC]
Non-automatic Weighing machines [90/384/EEC]
Active Implantable Medical Devices [90/385/EEC]
Gas Appliances [90/396/EEC]
Telecommunications Terminal Equipment [91/236/EEC]
New Hot-water Boilers [92/42/EEC]
Explosives for Civil Uses [93/15/EEC]
Medical Devices [93/42/EEC]
Equipment for Explosive Atmospheres [94/9/EEC]
Recreational Craft [94/25/EEC]
In vitro Diagnostic Devices [98/79/EEC]

Most of the Directives above are amended by Directive 93/68/EEC entitled "Rules for the Affixing and Use of the CE Conformity Marking."

For an explanation of the European Union and its governing European Directives, please refer to the European Union Commercial Guide.

FREE TRADE ZONES

Luxembourg has no free trade zones, but Cargolux provides bonded warehouse services at the Luxembourg airport.

MEMBERSHIP IN FREE TRADE ARRANGEMENTS

Incorporated into the charter of the European Union is a law modeled on its U.S. counterpart. Basically, any specific legislation not ratified by the EU will be left to the member countries to implement as they see fit. While recent EU legislation does not conflict with what is being brought into law in Luxembourg, it is important to be aware of impending EU regulations as they may override local Luxembourg laws.

For More Information
The following are key contacts in the United States and Luxembourg that you can use to find further information about Luxembourg, EU-wide packaging, labeling laws, standards, the CE Mark and EU Directives.

United States
Office of European Union and Regional Affairs (OEURA)
U.S. Department of Commerce
Contact: Bob Straetz
Tel: (202) 482-4104
Fax: (202) 482-2897

National Center for Standards and Certification
Contact: JoAnne Overman
Tel: (301) 975-4040
Fax: (301) 926-1559

U.S. Trade Representative for Europe and the Mediterranean
Contact: Catherine Novelli
Tel: (202) 395-3320
Fax: (202) 395-3974

U.S. Trade Representative, Technical Trade Barriers
Contact: Suzanne Troje
Tel: (202) 395-3063
Fax: (202) 395-5674

Europe
U.S. Embassy Luxembourg
Tel: +35/2 46-01-23
Fax: +35/2 22-64-57

U.S. Mission to the EU
Contacts: Kenneth Moorefield (Senior Commercial Officer)
Suzanne Sene (Standards Officer)
Tel: +32/2 508-2746 (Moorefield), +32/2 508-2674 (Sene)
Fax: +32/2 513-1228

Administration des Douanes et Accises (Customs and Excise Department)
26, place de la Gare
L-1616 Luxembourg
Tel: +35/2 29-01-91-1
Fax: +35/2 49-87-90
http://www.etat.lu/DO

Chambre de Commerce du Luxembourg
External Trade Department
Tel: +35/2 42-39-39-310
Fax: +35/2 43-83-26

Additional information can also be found online: European Union server home page
http://europa.eu.int
List of Open Information Interchange Initiative Standards and Specifications:
http://www2.echo.lu/oii/en/oiistand.html
American National Standards Institute homepage:
http://www.ansi.org
Chamber of Commerce of the Grand Duchy of Luxembourg
http://www.cc.lu
American Chamber of Commerce in Luxembourg
http://www.amcham.lu