Preferential origin with Pan-Euro-Mediterranean countries

On 24 August 2020, the European Commission adopted a package of proposals that aims to increase trade between the European Union and neighbouring countries in the Pan-Euro-Mediterranean (PEM) region.

The objective is to modernise the EU's preferential trade agreements with 20 PEM trading partners by making the relevant ‘rules of origin' in those agreements more flexible and business friendly. The 20 Contracting Parties to the PEM Convention are Iceland, Liechtenstein, Norway, Switzerland, Faroe Islands, Turkey, Egypt, Israel, Jordan, Lebanon, Palestine (this designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue), Georgia, the Republic of Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia and Kosovo.

The major changes include the following:

• Simpler product-specific rules, such as the elimination of cumulative requirements, thresholds for local value added, adaptations to EU production needs, and new double transformation for textiles.
• Increased thresholds of tolerance for non-originating materials, from 10% to 15%.
• The introduction of “full” cumulation, under which the manufacturing operations needed to acquire origin for most products can be split among several countries.
• The current “direct transport” rule will be replaced with a more flexible “non-manipulation” rule.
• Issuing the proof of origin will be facilitated as it can be established that the exporters' statements of origin or the electronic issuance and presentation of origin proofs are accepted.
• The possibility of duty drawback (repayment of duties on imported components) for most products to help EU exporters compete.

It is important to note that the PEM Convention will remain in full application among all PEM Contracting Parties, as is currently the case. The Pan-Euro-Mediterranean Convention on rules of origin aims at establishing common rules of origin among the EU and the 24 countries in the PEM zone (EFTA, Turkey, Western Balkans, Eastern Partnership countries, and Mediterranean countries). However, businesses and industries will have the option to apply the new rules for the goods they trade rather than the current PEM ones whenever this suits them. Their use is therefore an additional possibility and not an obligation.

Our CAS Origin Management module will allow your trade management team to manage the preferential (as well as non-preferential) origin within one module that is linked to other CAS modules in use. Contact us now if you want to know more about how CAS Origin Management could help your business.