New rules of origin for Pan-Euro-Med

New Pan-Euro-Mediterranean Rules of Origin

Alternative rules of origin between countries within the PEM zone

Last year 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, thereby contributing to the economic recovery following the coronavirus outbreak.

New rules

As of September 1, 2021, these new alternative rules will come into effect. The new rules are more flexible and business-friendly than the already existing ‘PEM’ origin rules. In a general sense, products are more likely to be subject to ‘preferential origin’.

After the conclusion of this Regional Convention last year, all the relevant parties negotiated further about the flexibility and simplification of these rules of origin. However, not all countries could agree with the final negotiation result, so it was decided to let the ‘revised PEM rules’ enter into force on a bilateral basis between the parties that already want to.

This means that for countries that already have included these alternative rules of origin in their bilateral agreements, the preferential origin can be determined on the basis of the alternative rules as well as on the basis of the existing PEM rules. Which of the two systems is used will have to be decided depending on the relevant proof of origin.

Background

This package contains several new rules that will provide more user-friendly rules of origin in the EU’s trade agreements with most of its neighbouring countries. In 2019, trade with these countries accounted for €677 billion, which was almost half of the EU’s preferential trade. These provisions will make it easier for products to benefit from trade preferences, such as:

  • Regional cumulation of origin made more flexible (introduction of “full” cumulation for most products)
  • Possibility of duty-drawback for most products
  • More flexible and simpler product rules, for instance elimination of cumulative requirements, lower thresholds of local value added, new double transformation for textiles (more finishing operations confer origin), multiple choice rule for chemicals (chemical reactions confer origin)
  • Tolerance (thresholds of non-originating materials) increased, from 10% to 15% – Replacement of the “direct transport” rule with a “non-manipulation” rule
  • More flexible accounting segregation rules
  • Possibility – in the future and providing the Applying Contracting Parties agree – to replace origin certificates with origin statements by registered exporters, and to issue electronic origin certificates.

(source: European Commission)

More information

You can read ‘Mededeling 13 in het Handboek Douane’ on douane.nl (Dutch). This contains specific information about the rules of origin that apply within the transition rules.

More information about the PEM system, the Regional Convention and the revision of the rules of origin can also be found on the website of the European Commission.