Rules of Origin Main Elements Mieke Vanderstraeten - Taxud B3

Rules of Origin Main Elements Mieke Vanderstraeten - Taxud B3 Food Drink Europe Brussels, January 2013 The need for RoO in FTAs • Purpose of RoO: t...
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Rules of Origin Main Elements Mieke Vanderstraeten - Taxud B3

Food Drink Europe Brussels, January 2013

The need for RoO in FTAs • Purpose of RoO: to decide whether a product

benefits from the tariff preferences granted by the FTA

• Tool: Protocol on Rules of Origin and methods of administrative cooperation

Content presentation

I

Concept of ‘originating status’

II

Cumulation of origin

III

Requirements to obtain ‘originating status’

IV

Proofs of Origin

V

Administrative co-operation & verification

VI

Basis used for FTA Negotiations

VII

Some information on ongoing negotiations

I Originating status A link between a product and a country • depending on: - the location of the production - the conditions of the production

• in order to : - decide about granting (or not) tariff preferences

Some basic notions used by EU • • • • • •

Manufacture Materials Products Goods Ex-works price of the product Value limit of non-originating materials (NOM)

Originating Status Originating products are either:

• Wholly obtained (no imported materials) or • Sufficiently worked or processed in the exporting Party from non-originating imported materials (list rules = Product Specific Rules, PSR)

Sufficient working or processing • CTC (change of tariff classification like CTH or CTSH)

• Value limit of non-originating materials/foreign content

• specific operations (e.g. textiles)

• or a combination of those

'Absorption principle' (roll-up) • The 'absorption principle' allows



non-originating materials which have acquired origin by meeting specific processing requirements to maintain this origin when used as input in a subsequent transformation for a product in the same Party. i.o.w., the non-originating material is 'absorbed

Insufficient working or processing = Minimal operations • A Minimal operation is an operation which does not confer originating status even if products fulfill the list rule/PSR

• EU has a substantial list of insufficient/minimal operations

II

Cumulation

• Objective: Expand the originating zone by considering materials originating in partner country as originating in the other Party

Bilateral Cumulation • bilateral cumulation: cumulation only between the two FTA partners

• However, products obtained in exporting Party by incorporating materials originating in the other Party, should be subject to an operation more than minimal in the exporting Party

Cumulation beyond bilateral as agreed with SGP (model for FTAs with other ASEAN countries) • 2 types: - Materials originating in an ASEAN country, which is applying with the EU a preferential arrangement in accordance with Article XXIV of the General Agreement on Tariffs and Trade (GATT), shall be considered as materials originating in a Party when incorporated in a product obtained there, provided that they have undergone working or processing which goes beyond the operations referred to in Article 6. - Materials originating in an ASEAN country, shall be considered as materials originating in a Party when further processed or incorporated into one of the products listed in Annex IV obtained there, provided that they have undergone working or processing which goes beyond the operations referred to in Article 6.

III Requirements to obtain 'Originating Status' • Principle of territoriality (All working or

processing must be carried out inside the Parties without interruption - i.o.w. no outward processing allowed) • Prohibition of Duty Drawback • Direct transport clause replaced by nonmanipulation : • assumption that exported goods are same as imported goods (re-inverse 'burden of proof') • Splitting of consignments in third countries is allowed

IV

Proofs of origin

• EU promotes self-certification as a matter of policy

• Self-certification by 'approved exporters' • Proof of origin = origin declaration by approved exporters

Administrative Co-operation, Mutual Assistance and verification of origin • Verification based on 'Mutual Trust'

• Verification carried out by the exporting country • Requests from the importing country: • at random, or • because of ‘reasonable doubts’

VI Basis used for FTA Negotiations • EU 'standard' RoO were the RoO which are used

in the PAN-EURO-MED zone • The PAN-EURO-MED – RoO are currently under revision and negotiated in multilateral negotiations with the MED and EFTA countries • EU GSP reform applies since 1 January 2011 to LDCs and non-LDCs • Both the new GSP and EU position in negotiations with PAN-EURO-MED give guidance for FTAs

VII Some information on ongoing negotiations • Canada • India • ASEAN: Singapore, Malaysia and Vietnam

Thank you for your attention

Rules of Origin Main Elements Mieke Vanderstraeten - Taxud B3 Food Drink Europe January 2013