The EUROMED Community aims to promote economic integration across EU states, their neighbours, North Africa as well as Middle Eastern countries. With effect from September, the “transitional rules of origin” have been introduced within the community to simplify the current rules arising from the regional PEM convention. What do the new transitional rules mean in practice? Which EUROMED countries have already adopted them?
New transitional rules of origin
The Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention) has been in force for many years. However, despite much effort at simplification, any attempts at its amendment have been failing for a long time. Nevertheless, due to the initiative of the majority of PEM Convention states, new rules of origin, i.e. ‘transitional’ rules of origin have been developed. The newly established transitional rules can be generally considered less stringent and more favourable compared to the rules of the original PEM Convention. Therefore, it can be assumed that volumes of goods whose preferential origin can be certified under these transitional rules will increase significantly.
Validity of the new transitional rules of origin
The new rules took effect already on 1 September 2021 and for the time being, they are being applied among some EUROMED countries, specifically across the EU and Albania, Georgia, Faroe Islands, Iceland, Palestinian National Authority, Jordan, Switzerland and Norway. Since 9 September, these rules have also been in force for relations between the EU and North Macedonia. The adoption process of these rules in other EUROMED countries is underway in various stages. Therefore, the current development in this area should be monitored and the adoption of transitional rules in other countries timely responded to.
What does this mean in practice?
The existing rules of the PEM Convention are still in force and applicable. The application of the newly established transitional rules is therefore not mandatory; the rules can be regarded as a new alternative to the present ones.
If you are a supplier exporting to countries that have agreed with the EU on the transitional rules, it is at your discretion whether you use the original EUROMED rules or the transitional ones for the calculation of origin. If you export to countries that have not yet accepted the new rules, you are required to follow the applicable PEM Convention rules.
If you decide to use the transitional rules for the calculation of origin, this change has to be reflected in the supplier’s declaration you should always require from your supplier. For these purposes, it is thus not possible to use supplier’s declarations that are based on the rules of the original Convention and that do not refer to the transitional rules.
If, on the contrary, you receive a supplier’s declaration referring to the transitional rules but you still intend to calculate under the original rules, this fact has to be communicated with the issuer of the supplier’s declaration and the supplier’s declaration has to be reissued.
As the end of the year approaches, i.e. the period when most long-term supplier’s declarations are issued, we recommend paying increased attention to this topic. Products for which supplier’s declarations have not been issued so far due to the incompliance with the preferential rules of origin may newly be nominated to the group of products originating in the EU due to the application of the transitional rules that are in many respects more lenient.
How we can help
We will gladly assist you in assessing the preferential origin of your goods or clarifying any issues in the area of the new transitional rules of origin. Should you be interested, we can examine which “version” of the calculation of origin is the most convenient for you and how the supplier’s declarations could potentially be altered so that the Customs Administration cannot dispute them in case of an inspection.