News on the subject of Paneuromediterraneo Cumulus

Background:

The Pan-Euro-Mediterranean Convention - PEM brings together a number of States (European Union, EFTA States, Turkey, signatory countries to the Barcelona Declaration, Western Balkans and Faroe Islands) connected by a network of free trade agreements that include similar protocols of origin within them.

The most interesting aspect of the Convention is the application of the diagonal cumulation of origin criterion, which allows the use of materials from different Contracting States in the manufacturing process, provided that all apply the same rules of origin.

The pan-Euro-Mediterranean origin protocol is the result of economic collaboration between the countries of the Mediterranean basin since 1995, with the aim of promoting peace, stability and well-being in the region.

Where we are:

To encourage the economic recovery of European companies following the Covid-19 emergency, last year the European Commission launched the approval of a package of proposals aimed at promoting exchanges with the 20 partner countries of the PEM Convention.

These proposals are aimed at simplifying and modernizing the rules of preferential origin contained in the bilateral agreements signed between the EU and the PEM countries.

They do not replace the current provisions of the pan-Euro-Mediterranean Convention, but can be applied in parallel with it, on an optional and bilateral basis, pending the conclusion of the overall revision of the Convention and the adoption of the new amendments by all the countries involved.

When:

From 1 September 2021 it is possible to apply the new rules on preferential origin on an optional basis. In this first phase, the countries concerned are Switzerland, Norway, Iceland, the Faroe Islands, Albania, Jordan, Georgia, Palestine, North Macedonia.

Therefore, companies operating in the aforementioned countries (which have begun to introduce the new rules) will be able to choose, for each individual shipment, which rules of origin to use: whether the current rules of the PEM Convention or the new transitional rules of origin.

The other countries that adhere to the Convention (Serbia, Montenegro, Bosnia and Herzegovina, Kosovo, the Republic of Moldova, Ukraine, Lebanon, Turkey and Egypt) adopt the corpus of the new rules of origin at the same time in various stages of progress.

The final objective is to reach the conclusion of the revision process of the PEM Convention, in order to have a single and definitive legislation to be applied univocally to the whole pan-Euro-Mediterranean area.

The Directorate General for Taxation and Customs Union (DG TAXUD) of the European Commission has published an explanatory guide available to operators, which can be consulted at this LINK.

What changes:

The main changes entail overall rules of origin that are more flexible and in line, not only with the needs of the current industrial and commercial context, but also with the rules of origin adopted in the most recent agreements concluded by the European Union.

Specifically, the changes concern:

• 1-full cumulation: the concept of "full" cumulation is introduced, which makes it possible to divide the manufacturing operations necessary for the acquisition of preferential origin among the various countries;
• 2-proofs of preferential origin: there is a single type of proof (EUR1 or declaration of origin), which replaces the double modality EUR1 and EUR MED; the REX system is also introduced for the declaration of origin on the invoice;
• 3-the tolerance thresholds for non-originating components: the current threshold of 10% of the EXW price of the product is increased, providing for the new threshold of 15% for agricultural products (calculated on the net weight) and for industrial products respectively (calculated on the value of the EXW price);
• 4-direct transport: storage and separation under customs control are allowed, without compromising the principle of non-handling of the goods;
• 5-the refund of duties (return of duties): it is possible to obtain the refund of duties on imported components relating to most of the products, in order to contribute to the competitiveness of EU exporters.

Our Customs Consultancy team is at your complete disposal to illustrate the advantages of the new rules of origin, based on the needs and characteristics of each business context.