EU Rules of Origin: Base principles and recent developments ECCO - PowerPoint PPT Presentation

External Trade EU Rules of Origin: Base principles and recent developments ECCO Symposium 7 September 2011 María Isabel García Catalán TRADE G3

External Trade First Part: The basics of the rules rules of of origin origin • • First Part: The basics of the � 1. Introduction: why do we need rules of origin? � 2. Methods to determine the origin of goods � 3. Other rules (duty drawbacks, cumulation) • Second Part: State of play Second Part: State of play of the EU of the EU RoO RoO • 1. Panorama of EU preferences 2. Panorama of the new EU rules of origin First wave: Cotonou Second wave: Korea, Central America, Peru and Colombia Third wave: The reform (GSP) 3. Panorama of Cumulation • Third Part: Part: Rules Rules of of origin origin in future in future FTAs FTAs . The CETA negotiations • Third

preferential RoO RoO The basics of the EU preferential Part I The basics of the EU External Trade

(I) 1. Introduction: why do we need External Trade preferential rules of origin? Because we need to link a product with a country in order to grant to that product a preferential tariff treatment Korea EU China

(I) 1. Introduction: why do we need rules of External Trade origin? Because we need to link a product with a country in order to grant to that product a preferential tariff treatment ? Korea EU China

(I) 1. Introduction: why do we need rules of External Trade origin? Because we need to link a product with a country in order to grant to that product a preferential tariff treatment ? Korea RoO are the instruments that permit to link a product with a country, the instruments EU that help us to consider a China product as sufficiently linked to a country as to receive a preferential tariff treatment

External Trade (I) 2. Methods to determine the origin How to express that a product has sufficiently transformed transformed ? been sufficiently • 1. Value added: local content acquired in the country of the preference • 2. Specific operations � I.e., Diffusion for integrated circuits • 3. Change of tariff classification

External Trade (I) 2. Methods to determine the origin Customs value • Rule: Value added • Rule: Value added of the imported material when importing in the Country B 30% maximun • Example: 70% VA 25.000 € beneficiary non-originating materials Country A EC Country C 20.000 € 50.000 € 100.000€ All costs Ex work price Benefit

External Trade (I) 2. Methods to determine origin Rule: Specific operations. Rule: Specific operations. Example: � Diffusion Country A Country B EC Operation in which integrated circuits are formed on a semiconductor substrate by the selective introduction of an appropriate dopant

External Trade (I) 2. Methods to determine origin Manufacture from materials • Rule: Change of tariff heading • Rule: Change of tariff heading of any heading except that of the product • Example: Country B Country A EC 8401 10 8401 40

External Trade (I) 3. Other rules Prohibition of Duty Drawback Prohibition of Duty Drawback Non-originating materials used in the manufacture of products shall not be subject to the exemption of customs duties, remission, refund, non-payment partial or complete. The exporter needs to be prepared to submit all appropriate documents proving that no drawbacks have been obtained .

EU • Prohibition of Drawbacks Country X External Trade (I) 3. Other rules No duties Beneficiary

External Trade (I) 3. Other rules Proofs of origin Proofs of origin Two types of proofs: Two types of proofs: • Issued by the customs authorities of the exporting country: certificates EUR 1, The rest EUR MED or FORM A GSP Meds • Made out by the exporter/producer: invoice declarations For consignments up to 6000 Euros (all exporters) For consignments beyond 6000 Euros (only approved exporters)

External Trade 3. Cumulation possibilities • Rule: Value added Country B • Example: 70% VA Country A 60% Country C EC • 100.000 55.000 40.000 + +

3. Cumulation possibilities External Trade Diagonal Cumulation Third Country • Rule: Value added • Example: 70% VA Country B Country A EC Country A considers the whole whole value value of the materials originating in B The non-originating material as its owns RoO is further processed and become originating become originating in B in B VA 50% + VA: 20000 + Final value: 100.000 VA: 55.000 Final value: 40.000

3. Cumulation possibilities External Trade Diagonal Cumulation Third Country • Rule: Value added • Example: 70% VA 60% RoO Country A VA 50% Country B EC cannot consider Country A cannot the material processed in B The non-originating material as its owns is further processed but not not enough as to consider it as originating in B originating in B VA: 15.000 Final value: 100.000 VA: 55.000 Final value: 40.000

3. Cumulation possibilities External Trade Full Cumulation Third Country • Rule: Value added • Example: 70% VA RoO Country A VA 50% Country B EC can consider Country A can the value value added added in B The non-originating material as its owns is further processed but not enough as to consider it as originating in B in B originating + VA: 15.000 + Final value: 100.000 VA: 55.000 Final value: 40.000

of the EU RoO RoO play of the EU Part II External Trade State of play State of

(II) 1. General panorama of EU preferences External Trade Korea SNG MLS Chile India Mexico MERCOSUR Canada CA CAN Preferences Reciprocal Other EPAs Ukraine Lybia PNG EU Balkans CARIFORUM Pan-Euro-Med South Africa Autonomous Preferences ATMs ATPs GSP countries XS XK MOL MAR/OCTs XK MOL (ACPs initialled EPAs

(II) 2. Panorama of EU rules of origin External Trade Old standard RoO Korea SNG MLS Chile India Mexico MERCOSUR Canada CA CAN Preferences Reciprocal Other EPAs Ukraine Lybia PNG EU Balkans CARIFORUM Pan-Euro-Med South Africa Autonomous Preferences ATMs ATPs GSP countries XS XK MOL MAR/OCTs XK MOL (ACPs initialled EPAs

(II) 2. Panorama of EU rules of origin External Trade Old standard -Change of tariff classification and and Country B - 40 40 % maximun non-originating materials Country A 8401 40 EC Country C 8401 10 40.000€ 100.000€ 7304

(II) 2. Panorama of EU rules of origin External Trade Old standard -Change of tariff classification and and Country B - 40 40 % maximun non-originating materials 30 Country A 40.000€ 8401 40 EC 30.000€ Country C 8401 10 100.000€ 7304

External Trade (II) 2. Panorama of EU rules of origin Old standard RoO with deep focused relaxation: Cotonou +; This relaxation does not affect chapter 84 Korea SNG MLS Chile India Mexico MERCOSUR Canada CA CAN Preferences Reciprocal Other EPAs Ukraine Lybia PNG EU Balkans CARIFORUM Pan-Euro-Med South Africa Autonomous Preferences ATMs ATPs GSP countries XS XK MOL MAR/OCTs XK MOL (ACPs initialled EPAs

External Trade (II) 2. Panorama of EU rules of origin Old standard RoO with some relaxation, not focused This relaxation affect chapter 84 in Korea and Colombia-Peru Korea SNG MLS Chile India Mexico MERCOSUR Canada CA CAN Preferences Reciprocal Other EPAs Ukraine Lybia PNG EU Balkans CARIFORUM Pan-Euro-Med South Africa Autonomous Preferences ATMs ATPs GSP countries XS XK MOL MAR/OCTs XK MOL (ACPs initialled EPAs

(II) 2. Panorama of EU rules of origin External Trade Korea -Change of tariff classification Country B and - 40 % maximun non-originating materials Country A 8401 40 EC Country C 8401 10 40000€ 100.000€ 7304

(II) 2. Panorama of EU rules of origin External Trade Korea Country B 45 - 30 30 % maximun non-originating materials Country A 8401 40 EC No certificates certificates issued issued No 30000€ by customs by customs Country C Only invoice declaration 45000€ by approved exporters 8401 10 100.000€ No prohibition of DDB (though with a type 7304 of safeguard)

(II) 2. Panorama of EU rules of origin External Trade Colombia-Peru -Change of tariff classification Country B and - 40 % maximun non-originating materials Country A 8401 40 EC Country C 8401 10 40000€ 100.000€ 7304

(II) 2. Panorama of EU rules of origin External Trade Colombia-Peru Country B 60 - 30 30 % maximun non-originating materials 30000€ Country A 8401 40 EC 45000€ Certificates issued issued Certificates by customs by customs 60000€ Country C 8401 10 100.000€ No prohibition of DDB (though with a type 7304 of safeguard)

External Trade (II) 2. Panorama of EU rules of origin The most generalised relaxation: the reform This relaxation affects chapter 84 Korea SNG MLS Chile India Mexico MERCOSUR Canada CA CAN Preferences Reciprocal Other EPAs Ukraine Lybia PNG EU Balkans CARIFORUM Pan-Euro-Med South Africa Autonomous Preferences ATMs ATPs GSP countries XS XK MOL MAR/OCTs XK MOL (ACPs initialled EPAs

(II) 2. Panorama of EU rules of origin External Trade The reform (GSP) -Change of tariff classification Country B and - 40 % maximun non-originating materials Country A 8401 40 EC Country C 8401 10 40000€ 100.000€ 7304