4 May 2017 Overview of Rules of Origin System Albert Hendriks - - PowerPoint PPT Presentation

EP Public Hearing 4 May 2017

Overview of Rules of Origin System

Albert Hendriks European Commission

Introduction

• Rules of Origin determine EU preferential tariff

treatment

• The origin of a good is often described as its

'nationality' established through strong territorial and physical links with a country.

• Preferential origin of goods is actually a matter

for negotiation closely linked to market access deals, MFN tariffs discrepancies, sourcing needs and/or aid to development.

Introduction

• There is another category of origin rules called

"non-preferential".

• These are applied for other purposes than

preferential tariff treatment. The most important

• nes are trade defence measures (anti-

dumping/anti subsidy, quota, safeguards, etc.), but also origin labelling requirements are based

• n non-preferential rules.

Basic principles for Preferential

• rigin
• Preferential Rules of Origin are divided in three

main categories:

• - the general provisions for a product to obtain
• riginating status;
• - the procedural provisions on proving or claiming

preferential tariff treatment, verification and possible denial of preferential tariff treatment by customs in the importing party.

• - the Product Specific Rules

General provisions to obtain originating status

• either wholly obtained or
• fulfil the criteria of so called product specific rules.
• Other general provisions also play a role e.g.
• cumulation
• insufficient operations
• ther rules for general tolerances, absorption, non-

alteration, accounting segregation, principle of territoriality, returned goods, treatment of neutral elements, packing and packaging materials etc.

Procedural requirements related to proving the

• riginating status, claiming preferential tariff

treatment

Procedural origin requirements have been developed over time and are subject to modernisation

Product Specific Rules

PSR identify the criteria for an originating good Such criteria are:

• a value rule (e.g. by defining a maximum value for

the imported materials used in the production of the product);

• a tariff change criterion (which requires that the

imported materials are processed in such a way that the final product is classified in a different place in the Harmonised system

• r a specific processing requirement

Challenges for the negotiating Preferential Rules of Origin

• Explosion of FTA negotiations worldwide
• Impact of global value chains on bilateral/regional

FTAs

• Increasing interactions across FTAs (cumulation)
• Confrontation of different traditions in the way to

define and manage preferential origin

The 'pillars' for the developement

• f new rules

SIMPLER RULES SECURED ENVIRONMENT EFFICIENT PROCEDURES

DETERMINATION OF PREFERENTIAL ORIGIN AND CUMULATION OF ORIGIN ENFORCEMENT OF THE RULES BY THE COMPETENT AUTHORITIES RESPONSIBILITIES OF ECONOMIC OPERATORS AND PUBLIC AUTHORITIES IN ESTABLISHING AND CONTROLLING PREFERENTIAL ORIGIN PREFERENTIAL ORIGIN

Increase the efficiency of procedural requirements:

• Re-asses and define the responsibilities of economic
• perations and public authorities in establishing and

controlling preferential origin:

• Proof and verification of preferential origin was in general

seen as a matter for governmental authorities (in the case

• f the EU: authorities of the exporting/beneficiary country)

based on certificates

Increase the efficiency of procedural requirements:

• EU is evolving towards setting up procedural patterns

combining 3 principles:

• 1: self-certification by exporters on commercial

documents

• EU is moving to using self-certification by the exporter as

the only system, even when majority of existing agreements provide for a role for governmental authorities

• For exporters making out statements on origin the EU is

moving towards only requiring a simple registration by the exporter in the so called REX database, moving away from the need to approve (through an authorisation) exporters

Increase the efficiency of procedural requirements:

• EU is evolving towards setting up procedural patterns

combining 3 principles:

• 2: administrative cooperation in the verification of
• rigin For the verification the EU sticks to the principle for

the verifications in the exporting country to be conducted through administrative cooperation. Direct visits by importing authorities to the premises of the exporter for the verification of origin are not allowed under any EU arrangement

• 3: denial of preferential treatment by the importing

country where goods appear not being originating

• Clarify the exact conditions on when a claim of origin may

be denied by the importing authorities

Secured environment ?

• Preferential rules of origin mainly implemented by each

party on its own, with a 'joint management' limited to: verification of origin, mutual administative assistance, work in commitees set up by FTAs, possible common guidance ('explanatory notes'), and dispute settlement mechanisms

• The EU side : 'precautionary measures' ('notices to

importers'; possible withdrawal of preference in case of fraud); contribution to capacity building; development of 'monitoring' actions after entry into force