Preferential origin

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Non-preferential origin vs preferential origin

There is an important difference between non-preferential origin and preferential origin.

Non-preferential origin

Non-preferential origin is of relevance to:

  • Measures for duty-suspended goods
  • Antidumping measures
  • Anti-subsidy measures
  • Agricultural measures

The following topics are discussed below:

  • Main features of non-preferential rules of origin
  • Consistency with preferential origin

Main features of non-preferential rules of origin

In Articles 60 to 63 of the Union Customs Code (UCC) and Articles 31 to 36 of the delegated regulation of the UCC, the application of non-preferential rules of origin is discussed in more detail. The main features of the non-preferential rules of origin are:

The goods are of non-preferential origin:

  • if they are ‘wholly obtained’ in one country or, when two or more countries are involved in the manufacture of a product,
  • origin is obtained where goods underwent their last, substantial, economically justified processing.

Wholly obtained

According to Article 31 of the delegated regulation of the UCC, the following goods are considered as wholly obtained in a single country or territory:

  • mineral products extracted within that country or territory;
  • vegetable products harvested there;
  • live animals born and raised there;
  • products derived from live animals raised there;
  • products of hunting or fishing carried out there;
  • products of sea fishing and other products taken by vessels registered in the country or territory concerned and flying the flag of that country or territory from the sea outside any country’s territorial waters;
  • goods obtained or produced on-board factory ships from the products referred to in point 6 originating in that country or territory, provided that such factory ships are registered in that country or territory and fly its flag;
  • products taken from the seabed or subsoil beneath the seabed outside the territorial waters provided that that country or territory has exclusive rights to exploit that seabed or subsoil;
  • waste and scrap products derived from manufacturing operations and used articles, if they were collected there and are fit only for recovery of raw materials;
  • goods produced there exclusively from products specified in points 1 to 9.

Please note: for the purposes of these provisions, the concept of land or territory includes the territorial waters and internal waters of the country or territory concerned.

​Not wholly obtained

Goods whose production involves more than one country or territory

The following criteria apply to goods whose production involves more than one country to qualify as a product of origin:

  • If two or more countries are involved in the production of a product, the product is deemed to originate in the country where the last, substantial transformation took place;
  • The working or processing must be economically justifiable and have taken place in an undertaking set up for that purpose;
  • This working or processing must result in the manufacture of a new product or representing an important stage of manufacture.

(Article 60, paragraph 2, UCC).

Whether these criteria are met is determined on a case-by-case basis.

​Strict criteria

In almost all cases, the criteria for preferential origin are stricter than those for non-preferential origin. This means that a product of origin within a preferential arrangement is almost automatically also a product of non-preferential origin – the opposite rarely occurs.

General: preferences

Algemeen: preferenties

Most of the preferential arrangements derive from the various agreements concluded between the European Union and third countries. These agreements establish free trade areas. One of the features of a free trade area is the free movement of originating goods between the contracting parties without the simultaneous application of a common customs tariff to goods from third countries. In some cases, the European Union autonomously grants preferences to certain beneficiary countries without an agreement being in place. However, a free trade agreement or autonomous arrangement does not always cover all products, and a decision is made about which products are eligible for preferences and which are not for each free trade agreement or autonomous arrangement. In most cases – particularly in view of the European Union’s common agricultural policy – agricultural products are largely excluded.

Reduced import duties

The free movement of originated products referred to above does not always mean that the goods can be completely relieved of import duties; reduced import duties may be levied instead. This applies to imports from beneficiary countries under the Generalized System of Preferences (GSP) and sometimes, for a transitional period, to certain products from countries with which a free trade agreement has recently been concluded. When the free trade agreement enters into force, a gradual dismantling of the normally applicable import duties is provided for over a certain period of time. The speed of this dismantling within the European Union may differ from the rate applied in the country of the other contracting party.

Preferential arrangements

The European Union’s preferential system is based on the following free trade agreements and autonomous arrangements:

You can also request the arrangement as a PDF file.

Source: Customs Manual, chapters 7 and 8

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