Green paper - On the future of rules of origin in preferential trade arrangements
Date: 2003-12-18
Institutions: European Commission
Subjects: certificate of origin, import, originating product, preferential agreement, trade agreement, trade statistics

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 18.12.2003
COM(2003) 787 final

GREEN PAPER

ON THE FUTURE OF RULES OF ORIGIN IN PREFERENTIAL TRADE
ARRANGEMENTS

EN

  EN

TABLE OF CONTENTS

GREEN PAPER ON THE FUTURE OF RULES OF ORIGIN IN PREFERENTIAL TRADE
ARRANGEMENTS ................................................................................................................... 1

Summary and Introduction......................................................................................................... 4

The objectives of the Green Paper ............................................................................................. 4

Structure and content of the Green Paper................................................................................... 4

Wide-ranging consultations........................................................................................................ 5

1.

1.1.

Preferential origin at a crossroads ................................................................................ 7

The preferential origin rules in the context of international trade and the common
policies ......................................................................................................................... 7

1.2.

Managing and monitoring compliance with the preferential origin rules.................... 9

1.2.1. Difficulties in managing administrative cooperation instruments ............................... 9

1.2.2. Verification of preferential origin on export: a false sense of security........................ 9

1.2.3. Operational problems with administrative cooperation and the handling of post-

clearance verification requests ................................................................................... 10

1.2.4.

The parties' mutual dependence as regards the action that they can take, which
depends on the quality and results of administrative cooperation. ............................ 10

1.2.5. A questionable dispute settlement procedure............................................................. 10

1.3.

2.

2.1.

2.2.

The economic and financial consequences of fraud and administrative failures to
meet the obligations imposed by preferential arrangements...................................... 11

Seeking new equilibria in preferential trade .............................................................. 12

Defining and establishing a management framework for rules of origin geared to the
objectives of the preferential arrangements and their international environment...... 12

Improving protection against the economic and financial injury resulting from poor
application of the agreements..................................................................................... 13

2.3.

Better division of responsibility for granting and monitoring preferences ................ 15

3.

Possible options for certification, declaration and control of preferential origin rules15

3.1.

Certification of preferential origin on export ............................................................. 16

3.1.1.

Improve the current system for establishing proof of origin...................................... 17

3.1.2.

Introduce certification by the exporter only............................................................... 18

3.1.3.

Introduce an intermediate system of “approved” or “registered” exporters .............. 19

3.2.

Declaration of preferential origin on import and the responsibility of the importer.. 19

3.2.1. Act on debt and debt recovery ................................................................................... 20

2

 
3.2.2. Act on the importer's responsibility and the definition of commercial risk............... 20

3.2.2.1. Assuming the authorities of the country of export remain responsible for certifying

origin .......................................................................................................................... 20

3.2.2.2. Assuming the exporter alone (whether or not he is registered or approved) bears

responsibility for certifying origin ............................................................................. 21

3.3.

Control of preferential origin ..................................................................................... 21

3.3.1.

Stepping up checks on the importer ........................................................................... 22

3.3.2.

Stepping up checks on the exporter ........................................................................... 22

3.3.2.1. Assuming the authorities of the country of export remain responsible for certifying

origin .......................................................................................................................... 22

3.3.2.2. Assuming the exporter (whether or not he is registered or approved) bears sole

responsibility for certifying origin ............................................................................. 22

(a)

(b)

Importing country carries out checks directly............................................................ 22

Country of export provides country of import with assistance .................................. 23

ANNEX I  Preferential imports into the Community (1998-2001) ......................................... 24

ANNEX II  List of preferential arrangements - Zones and types of cumulation of origin

(Situation at 1/09/2003) ............................................................................................. 46

3

 
Summary and Introduction

Within  the  framework  of  GATT  rules,  the  EU  applies  preferential  rates  of  customs  duty  to
products imported from many countries, be it under international agreements or unilaterally.
These  trading  arrangements  only  make  sense  if  the  tariff  preferences  accorded  benefit
products that are actually obtained in - "originate" in - the countries concerned. The rules of
origin serve to establish this link between products and beneficiary countries. They are useful
only in so far as they reflect the actual conditions of production and trade and the needs that
the preferential arrangements are designed to satisfy.

However, the present framework for determining, managing and verifying preferential origin
no longer seems wholly adapted either to these needs or to quantitative and qualitative trends
in  the  international  economy.  Over  and  above  an  effort  to  apply  the  rules  properly,1  the
changing situation demands a reassessment of their economic  relevance,  an  improvement in
the reliability of the system with a view to protection the financial interests of the Community
and the restoration of a balanced division of responsibilities between traders benefiting from
preferences and the supervisory authorities.

The objectives of the Green Paper

Preferential origin rules need to be fundamentally reviewed, especially in view of the level of
duties likely to emerge from the new round of  multilateral trade negotiations, the role to be
played by preferential  origin  rules  in  free  trade  agreements  and  the  policy  of  market  access
and supporting sustainable development.

Management procedures and supervisory and safeguard mechanisms also need to be designed
to  make  sure  that  preferential  arrangements  are  used  properly  and  shield  the  business
community and the financial interests at stake from abuses of the system.

The  purpose  of  this  Green  Paper  is  to  help  the  Commission  to  formulate  guidelines  in
response  to  these  objectives,  taking  account  of  the  various  interests  at  stake  and  the
contributions expected from those involved in the preferential arrangements.

Structure and content of the Green Paper

The  Green  Paper  opens  by  taking  stock  of  the  economic,  legal  and  financial  context  of  the
preferential trade arrangements2 and the concomitant rules of origin. It includes an inventory
of  the  difficulties  and  of  constraints  more  specifically  associated  with  the  diversity,
complexity  and  proper  application  of  the  present  rules  and  procedures  in  the  matter  of
preferential origin.

It then looks at different ways of adapting (a) the origin rules better to their intended purpose
and (b) the implementing procedures better to the origin rules.

1

2

The  Commission,  in  its  communication  of  23  July  1997  on  the  management  of  preferential  tariff
arrangements  (COM(97) 402  final),  had  initially  focused  on  ways  of  making  the  arrangements  work
more efficiently. This communication gave rise to the Council conclusions (Internal Market) of 18 May
1998 and Parliament Resolution of 22 October 1998 (OJ C 341, 9.11.1998).
Annex I shows trends in preferential imports as a proportion of total Community imports and Annex II
the preferential arrangements applied by the Community and the associated legal framework of origin
rules.

4

 
                                                
The Commission identifies three areas in which it believes new balances are needed:

– 

– 

– 

the  criteria  for  acquiring  originating  status  and  their  legal  framework,  so  that  the
rules of origin perform better and contribute to the smooth working of arrangements
that are increasingly geared to increased market access and sustainable development;

the  supervision  of  their  conscientious  application,  to  the  greater  good  of  legitimate
traders and the protection of the EU's financial interests;

the  establishment  of  procedures  ensuring  an  optimal  division  of  tasks  and
responsibilities  between  traders  and  the  authorities;  specific  developments  in  the
latter  area  highlight  the  conceivable  future  options  for  the  following  three
components: certification of originating status at export, the declaration of origin at
import and the verification of origin.

In  the  matter  of  certification,  a  choice  will  have  to  be  made  between  trying  to
improve  the  working  of  the  present  system,  which  would  place  the  onus  on  the
customs  authorities  of  the  country  of  export,  transferring  all  responsibility  to  the
exporter or an intermediate solution confining the  possibility  of certifying origin to
exporters approved or registered by the competent authorities.

The  choices  and  improvements  made  in  respect  of  the  other  two  components  will
very much depend on the certification method chosen. The importer's responsibility,
the  capacity  of  the  competent  authorities  of  the  country  of  import  to  supervise  the
arrangements and the machinery needed for administrative cooperation between the
parties will vary according to the degree of responsibility assigned to exporters and
the customs authorities of the country of export.

The aim of the Green Paper is therefore to identify the possible combinations so that
a "procedural model" coherently and comprehensively covering all three components
can be drawn up at the end of the consultation process.

Wide-ranging consultations

The Commission hopes to prompt interested parties to submit further analysis and imaginative
responses to the questions raised and the options presented - or even alternative proposals.

The  Green  Paper  is  aimed  at  international  traders  and  the  competent  authorities  of  the
Member  States,  candidate  countries  and  the  EU's  partner  countries  in  preferential
arrangements, as participants in these arrangements. The Commission also intends to involve
the other EU institutions in the debate.

5

 
To  enable  contributions  arising  from  the  Green  Paper  to  be  collected  and  channelled  into  a
structured discussion with the interested parties, the Commission would ask you to send your
comments in writing, by 1/03/2004, to:

Directorate-General for Taxation and Customs Union
Customs Policy - Rules of Origin
TAXUD/B/4
European Commission
B-1049 Brussels

We strongly recommended that you use the following e-mail address:

taxud-greenpaper-origin@cec.eu.int

You will find, in grey boxes following the main sections, a series of questions intended to
inform the discussion and give the contributions some structure.

6

 
1.

PREFERENTIAL ORIGIN AT A CROSSROADS

The issue of preferential origin is not simply a matter of dealing with the budgetary
and  other  fallout  from  the  malfunctioning  of  the  administrative  cooperation
procedures  and  machinery  that  were  supposed  to  ensure  compliance  with  origin
rules. It is to be seen against a wider backdrop of developments in international trade
and the implementation of the common policies on trade, industry and development.
Today the rules of origin are clearly “at a crossroads”.

1.1.

The  preferential  origin  rules  in  the  context  of  international  trade  and  the
common policies

Tariff preferences are established to develop trade between partners and contribute to
their  sustainable  economic  and  social  development.  They  are  of  immediate,  shared
benefit to the operators involved in the preferential transaction. The exporter benefits
from better access to the market of the importing country and the importer can obtain
supplies more cheaply while still ensuring his supplier receives an adequate return on
his product.

The “Doha Development Agenda” of November 2001 should lead to increased trade
liberalisation,  a  drive  for  better  market  access  and  integration  of  the  sustainable
development  dimension  in  international  trade.  This  new  round  of  multilateral  trade
negotiations  could  result  in  a  further  reduction  in  customs  duties  and  still  more
marked erosion of preferences, seriously limiting the margins still available.

In this situation, the expected gains both of regional economic integration within the
meaning  of  GATT  Article  XXIV  and  from  autonomous  preferential  arrangements
will depend increasingly on the production conditions imposed by these agreements
or  arrangements  for  goods  to  be  considered  originating  products  and  thus  benefit
from the preferences. In addition, the WTO negotiations will also cover all the rules
affecting regionalism, including preferential rules of origin.

The  preferential  rules  of  origin  are  an  instrument  of  commercial  policy.  Their
initial role was to help open up the EU market, reciprocally or otherwise, to imports
from partner countries but to do so in a manner that afforded adequate protection for
the EU interests concerned. In view of the restructuring and delocalisation of certain
industries and the low average level of duties applied by the Community, this policy
is increasingly moving towards a general drive to facilitate world trade and access for
EU exports to third country markets. In certain sectors, the preferential  origin  rules
drawn  up  by  the  Community  in  the  1970s  are  probably  not  geared  to  such  an
approach.

– 

Preferential  origin  rules  also  serve  the  objective  of  supporting  sustainable
development and integrating the developing countries into world trade, by
allowing their products to get a better access to the Community market while
generating a sufficient  value  added  in  the  country  concerned.  Experience  and
Annex I show, however, that the Community's efforts to attain its development

7

 
objectives3 are sometimes hampered by the  fact that the developing  countries
that  are  potential  beneficiaries  of  the  preferences  are  unable  to  take  full
advantage of them for a whole series of reasons, among them the difficulty of
complying  with  some  of  the  rules  of  origin4.  They  often  lack  the  production
facilities,  investment  opportunities  or  administrative  organisation  needed  to
meet  the  conditions  imposed.  Other  explanations  include  the  complexity  of
some of the rules, the fact that some traders have difficulty understanding them
and the cost of the relevant formalities. If that is the problem one must decide
on  the  type  of  development  one  wishes  to  promote  by  means  of  preferential
import tariffs and draft the origin rules and procedures to suit the purpose and
the interests involved;

Such difficulties can on the other hand foster a tendency not to comply with the rules
of  origin.  That  works  then  to  the  disadvantage  of  the  Community,  preferences
actually benefiting traders who do not obey the rules or who “passively” benefit from
the  exporting  country's  fraudulent  or  mistaken  application  of  the  rules  or  failure  to
exercise proper control.

The  diversity  of  preferential  arrangements  and  their  objectives,  as  illustrated  by
Annex II, places a number of constraints on the design and administration of origin
rules. Despite the progress made over the years towards harmonising and simplifying
them,  preferential  origin  rules  remain  complex  in  both  practical  terms  (criteria  for
acquiring originating status) and procedural terms (proof and control of origin). The
degree  of  uniformity  that  has  been  achieved  is  obscured  by  the  multiplicity  of
schemes,  the  number  and  diversity  of  which  are  growing  all  the  time.  This
complexity is compounded by the conditions for applying cumulation of origin with
a  view  to  boosting  regional  economic  integration5.  Last  but  not  least,  the
harmonisation already achieved limits, paradoxically, the scope for the Community,
and more specifically the Commission, to provide and negotiate, at the request of its
traders or its Member States, ongoing “maintenance” and tailoring of the rules to the
needs of trade and industry and the common policies,

Questions concerning section 1.1:

Assuming  the  DDA  negotiations  result  in  a  substantial  cut  in  duties,  will  preferential  duties
1.
continue  to  be  attractive  to  traders,  in  view  of  the  costs  and  formalities,  if  current  origin  rules  and
procedures are maintained?

2.
Do  the  preferential  origin  rules  fit  the  current  objectives  of  the  Community's  commercial,
industrial, agricultural and development policies - as a whole, or by economic sector, country or group
of beneficiary countries?

3 

4

5

New preferential agreements, increased preferences, the “Everything but Arms” initiative in favour of
the least developed countries, etc.
Non-governmental  organisations  such  as  the  Centre  for  European  Policy  Studies  (CEPS  Working
Document No 183, Making EU Trade Agreements Work the role of rules of origin, referred to above),
and  Oxfam  (Rigged  Rules  and  Double  Standards  trade,  globalisation  and  the  fight  against  poverty,
referred  to  above)  have  highlighted  the  need  to  reassess  the  impact  on  development  of  preferential
arrangements and rules of origin.
Cumulation of origin allows an exporter deciding on the originating status of an export product to treat
materials  originating  in  partner  countries  as  if  they  originated  in  the  country  of  export;  bilateral
cumulation involves one other country, diagonal cumulation and full cumulation involve more than one.
For further details, see Annex II.

8

 
                                                
3.
Are there any reasons (e.g. failure to invest in manufacturing, internal administrative structures
and procedures, human or plant health regulations) other than the complexity and rigour of the origin
rules  to  explain  why  certain  beneficiary  countries  or  groups  of  countries  make  so  little  use  of  the
preference made available? Why is cumulation of origin not used more, particularly by certain groups
of developing counties?

4.
Does failure to obey the origin rules stem mainly from the complexity and/or ignorance of the
rules, the impossibility of obeying them if one wants to export goods, or deliberate intent to commit
fraud?  Is  this  failure  made  easier  by  the  limited  possibilities  to  monitor  the  proper  application  of
preferential rules of origin?

Given the current number and range of preferential arrangements, can the relevant origin rules

5.
contribute appropriately and flexibly to achieving the objectives of the arrangements?

1.2.

Managing and monitoring compliance with the preferential origin rules

The  diversity  of  preferential  arrangements  also  seriously  put  constraints  on  the
capacity of the Community, and especially the Commission, to apply and supervise
them  in  an  exhaustive  manner,  by  ensuring,  in  particular,  the  monitoring  of  the
proper working of the arrangements and application of the rules and compliance with
the  obligations  of  the  contracting  parties'  authorities,  as  advocated  by  the  Court  of
Justice.

1.2.1. Difficulties in managing administrative cooperation instruments

The actual implementation of the preferential arrangements implies a constant
exchange  of  information  essential  to  administering  the  rules  of  origin.  The
administrative  cooperation  inherent  in  those  rules  is  based  on  certification  and
controls carried out by the competent authorities, which means that the parties must
be familiar with the stamps used and the names and addresses of the authorities and
such information must be regularly updated.

With  many  countries,  this  system  does  not  work  properly,  which  leads  to
recurrent  difficulties  on  import  and  endless  reminders  to  countries  whose  interests
and  levels  of  economic  and  administrative  development  are  often  very  different.  If
results  are  not  forthcoming  in  this  area,  the  only  option  is  to  suspend  or  withdraw
preference from any country which is failing.

1.2.2.

Verification of preferential origin on export: a false sense of security

The current system  of certifying the originating status  of  products is  based  on
the principle of direct verification by the authorities of the export country when
the certificate is issued. In fact, the demands of trade are such that it is impossible for
the authorities to check each export operation thoroughly from the point of view of
the preferential origin of the goods. As with most of the other information declared
about  the  goods,  origin  is  essentially  checked  after  the  event  and  even  then  not
systematically  but  on  a  random  or  targeted  basis.  The  intervention  of  the
authorities  at  the  initial  certification  stage  therefore  gives  both  the  importing
country and the importer a false sense of security.

9

 
1.2.3. Operational  problems  with  administrative  cooperation  and  the  handling  of  post-

clearance verification requests

Preferential arrangements bind the parties in a close partnership based on a division
of  responsibilities  and  mutual  trust  in  the  other  party's  compliance  with  its
commitments  (see  the  “Les  Rapides  Savoyards”6  and  “Huygen”7  judgments).  This
means that the pillars of the system are certification of the originating status by the
authorities  of  the  export  country,  either  directly  or  indirectly  (by  “authorising”  an
“approved  exporter”),  and  administrative  cooperation  between  the  parties  in  the
matter  of  checking  origin.  The  confidence  that  the  system  offers  not  only  to  the
parties  but  also  to  their  traders  is  based  on  these  two  elements.  Subsequent
verification,  at  the  request  of  the  country  of  import,  of  preferential  origin  by  the
country  of  export  is  therefore  mandatory  when  denying  preferences  in  cases  other
than those where the certificate submitted is inapplicable.

1.2.4.

The  parties'  mutual  dependence  as  regards  the  action  that  they  can  take,  which
depends on the quality and results of administrative cooperation.

Administrative cooperation in checks on preferential origin should normally clear up
any doubts about the authenticity of the proof of origin and the originating status of
exported  goods.  Whether  the  tariff  preference  requested  by  the  importer  is  granted
will depend on the checks carried out, the  attitude of the country of  export and the
outcome of the cooperation procedure. This applies particularly to agreement-based
systems  in  which  mechanisms  for  settling  origin  disputes  rule  out  any  unilateral
withdrawal of preferences not expressly provided for.

Under  Community  law,  moreover,  failings  by  the  authorities  involved  in  certifying
and verifying origin, i.e. a  breakdown in administrative cooperation,  can  mean  that
the duties payable are not actually recovered.8

1.2.5.

A questionable dispute settlement procedure

As  regards  origin,  the  aim  of  this  procedure  in  the  contractual  and  sometimes  the
autonomous framework (OCT) is to settle disputes that have arisen over subsequent
verification  of  proof  of  origin  or,  more  generally,  over  the  interpretation  of  origin
rules.  However,  it  not  widely  used  and  the  results  are,  in  any  case,  disappointing.
After  all,  such  disputes  generally  arise  where  the  exporting  country  is  asked  to
confirm the non-originating status of products whose status it originally certified (or
allowed to be certified/failed to check) at the request of its own exporters. Moreover,
if the parties cannot reach an understanding, the  general arrangements provided  for
by the agreement must be invoked.

6

7

8

Judgment of 12 July 1984, in case 218/83.
Judgment of 7 December 1993, in case C-12/92.
Community  courts  have  increasingly  been  invoking  the  current  shared  responsibility  between  the
parties and the necessary administrative cooperation between their authorities to shift liability towards
the  public  authorities  in  charge  of  managing  and  monitoring  preferential  arrangements.  The  result  is
increased protection for importers, who would normally be liable for duties resulting from the refusal of
an unwarranted preference, where the authorities do not properly assume their responsibilities. See the
judgment of the Court of First Instance of the European Communities of 10 May 2001 in the “Turkish
televisions” case (Joined cases T-186/97, Kaufring AG and Others) and section 1.3.

10

 
                                                
Questions concerning section 1.2:

6.
Is  round-the-clock  supervision  of  our  trading  partners'  implementation  of  preferential
arrangements  really  conceivable?  Is  it  possible  to  increase/redirect  our  monitoring  capacity  in  this
field  to  ensure  the  arrangements  are  used  properly,  partly  in  the  interests  of  Community  traders
themselves, and if so how?

Do  you  agree  with  all  or  part  of  the  analysis  of  the  limitations  of  the  current  system  of

7.
administrative cooperation on preferential origin?

1.3.

The  economic  and  financial  consequences  of  fraud  and  administrative  failures
to meet the obligations imposed by preferential arrangements

In the current state of Community legislation and case-law on preferential origin and
customs debt resulting from a refusal of preference (when goods are found to be non-
originating), these consequences can be summed up as follows:

– 

– 

– 

– 

under  Community  law on remission,  repayment and non-recovery of customs
debt,9 an importer acting “in good faith”10 may be exempted from payment of
the customs debt if the commercial risk involved is considered “abnormal”; an
example  is  when  an  importer  is  confronted  with  an  error  made  by  the
competent  authorities  in  certifying  or  checking  preferential  origin  or  finds
himself in a special situation involving no negligence on his part;

the Community budget bears the corresponding financial loss;

this situation constitutes a threat to the balance of preferences and to fair trade
and competition;

the  result  is  a  perverse  system  where  one  party  suffers  the  economic  and
financial effects of negligence by the other party.

Questions concerning section 1.3:

Do you agree with this analysis? Are the consequences inherent in the system, and should the

8.
taxpayer bear the costs?

9.
Irrespective  of  the  scale  of  the  problem,  does  it  damage  the  credibility  of  the  preferential
arrangements  to  grant  the  benefit  of  preferential  tariffs  for  goods  which  do  not  in  fact  fulfil  the
conditions,  even  to  an  importer  acting  “in  good  faith”  on  grounds  of  equity  and  the  protection  of
legitimate expectations?

9

10

Articles 220(2)(b)  and  239  of  Council  Regulation  (EEC)  No 2913/92  establishing  the  Community
customs  code  respectively  concern  the  waiving  of  post-clearance  recovery  and  the  remission  or
repayment of import duties.
However, one cannot plead such a ‘good faith’ if the Commission has published a ‘notice to importers’
in  the  O.J.E.U.:  see,  on  this  point,  the  communication  COM(2000)  550  final  of  8 September  2000
(OJ C 348  of  5.12.2000),  by  which  the  Commission  has  set  out  the  conditions,  in  the  context  of
preferential tariff arrangements, for informing economic operators and Member State administrations of
cases of ‘reasonable doubt’ as to the origin of goods.

11

 
                                                
2.

SEEKING NEW EQUILIBRIA IN PREFERENTIAL TRADE

The changing trade and tariff situation and the structural problems with the working
of the preferential arrangements demand new equilibria:

– 

– 

– 

in  the  criteria  for  determining  origin  rules  and  the  framework  for  their
implementation;

in the mechanisms for safeguarding and protecting the economic and financial
interests of the contracting parties, bearing in mind the objective of promoting
legitimate preferential trade;

in  the  responsibilities  of  those  involved  in  the  procedures  for  certifying,
declaring and checking preferential origin.

Though a distinction has been drawn for ease of analysis, these factors must not be
viewed  in  isolation.  The  management  and  control  procedures,  like  the  degree  of
protection  to  be  introduced  against  risks,  therefore  depend  to  a  great  extent  on  the
strictness  and  complexity  of  the  rules.  An  overall  approach  will  therefore  be
necessary to ensure the  consistency  of  the  exercise  and  guarantee  the  quality  of  its
results.

2.1.

Defining and establishing a management framework for rules of origin  geared
to  the  objectives  of  the  preferential  arrangements  and  their  international
environment

The  economic  and  legal  framework  for  devising  and  implementing  preferential
origin rules should be reviewed in the light of the following considerations:

– 

– 

– 

– 

The  preferential  origin  rules  should  be  re-examined  in  terms  of  substance
(criteria)  and  brought  into  line  with  the  international  environment  and  the
objectives of the Community's preferential arrangements.

They  should  serve  given  economic,  commercial  and  development  interests,
corresponding 
the  common  policies  and  WTO
requirements.

the  objectives  of 

to 

A  strategy  should  be  developed  for  technical  assistance  with  preferential
arrangements and rules of origin, with recourse for example to the WTO Fund
for technical assistance for development. Where assistance is financed from the
Community  development  cooperation  budget,  the  strategy  should  reflect  the
priorities set in the “Country Strategy Papers” for the relevant period.

A more  “integrated”  regional approach  should  be  envisaged  for  the  legal  and
institutional  framework  of  origin  rules  by  adopting  regional  agreements  that
include  in  a  single  act  the  preferential  origin  rules  corresponding  to  the
different areas of cumulation of origin.

12

 
Questions concerning section 2.1:

10.
Against  the  backdrop  of  the  trend  towards  lower  customs  duties,  would  gearing  the  rules  of
preferential origin primarily to access by Community products to third country markets and access by
developing  countries'  products  to  the  Community  market  seem  to  be  compatible  with  maintaining
sufficient Community production and export capacity to ensure growth and employment?

11. What  conditions  could  the  origin  rules  for  a  given  product  or  sector  be  designed  to  suit,
particularly  under  reciprocal  agreements,  in  order  to  facilitate  Community  exports,  without
jeopardising Community production or Community suppliers of the raw materials used?

12. What conditions could the origin rules for a given product or sector be designed to suit in order
to contribute to development in the country of export,  without jeopardising  Community production?
What  type  of  development  and  what  types  of  economic  activity  in  the  beneficiary  countries  should
origin rules promote in this way?

Does  the  approach  need  to  be  refined  according  to  the  industrial  or  agricultural  sector  in

13.
question, and if so, in what way? Do the interests of large businesses and SMEs differ in this respect?

14.
How  can  a  strategy  of  internationally  funded  technical  assistance  primarily  geared  to
development be reconciled with partnerships between the Community and given countries or groups
of countries? Could the Community conceivably organise technical assistance on demand? How can
(existing or new) programmes and financing tools for technical assistance be best used? How can we
ensure technical assistance is programmed precisely where and when it is most needed?

15. Would  regrouping  origin  rules  and  their  management  into  fewer  legal  instruments  (for
example covering large regional groups of countries applying identical rules and cumulation of origin)
make them more transparent for all those involved and more likely to be applied correctly?

2.2.

Improving protection against the economic and financial injury resulting from
poor application of the agreements

The  aim  of  such  protection  is  to  ensure  that  arrangements  are  fairly  and  properly
implemented,  in  the  interests  of  both  the  Community  and  its  trading  partners.  In
practice, fraud and failure to meet the  conditions for granting preferential treatment
may  not  only  mean  a  loss  of  revenue  for  the  country  granting  preference  but  may
damage  its  legitimate  economic  interests,  and  those  of  its  partners,  by  distorting
competition.

13

 
Providing such protection entails:

– 

greater capacity for the Community to prevent and  react to problems of fraud
or incorrect application of preferential origin rules;11

To be effective, this protection implies, at Community level, a clear breakdown
of tasks and responsibilities between  the Commission  and  the  administrations
of the Member States, in charge of controlling compliance with rules of origin,
by  the  economic  operators  as  well  as  by  the  countries  benefiting  from
preferences;  it  also  implies  enhanced  co-operation  and  harmonisation  of
controls to perform, together with the allocation of the means necessary to this
end.

a  clause  suspending  preferences  in  the  event  of  fraud  or  other  irregularities
and/or lack of administrative cooperation, which is progressively incorporated
into the preferential agreements on a reciprocal basis;12 

This instrument will be used where repeated problems adversely affect both the
proper application of the arrangements and compliance with their objectives. It
will  have  a  preventive  or  deterrent  effect  on  those  inclined  to  abuse  the
arrangements or neglect to supervise them.

a clause assigning financial liability to any contracting party that has failed to
implement  a  preferential  agreement  correctly  and  consequently  caused  injury
to  the  other  party.  This  clause  should  be  considered  not  as  an  instrument  of
retaliation available to one of the parties but as an essential factor in ensuring
that all parties implement the agreements fairly.

– 

– 

Moreover, these instruments need to function in an environment in which the parties'
obligations and the rules and procedures to be followed have been well defined and,
if necessary, redefined in order to restore and improve the equilibrium of the system.

Questions concerning section 2.2:

How can we ensure, in the current legal situation, that problems of fraud and poor application
16.
of  preferential  arrangements  are  tackled  quickly  so  as  to  protect  both  the  economic  and  financial
interests involved?

How  can  introducing  clauses  on  the  suspension  of  preferences  and  financial  liability  into
17.
preferential agreements enhance the protection of the interests at stake? Can their scope be anything
other than financial?

11

12

The  Commission  has  already  developed  this  reaction  capacity  in  several  fields,  which  in  some  cases
(e.g. products imported from settlements in the Israeli-occupied territories and sugar imported from the
Western Balkan countries) has led to notices to importers being published in the Official Journal.
Some  agreements  (with  Croatia,  Former  Yugoslav  Republic  of  Macedonia  and,  shortly,  Algeria  and
Lebanon) include a specific  clause  allowing  one  party  to  take  “appropriate  measures”  in  the  event  of
fraud  and/or  the  other  party's  failure  to  meet  its  obligations  under  the  agreement.  A  clause  explicitly
providing for the suspension of preferences in such cases is already included in autonomous preferential
arrangements  (GSP  and  the  Western  Balkans).  For  the  very  first  time  this  type  of  clause  has  been
introduced  into  the  new  EC-Chile  agreement,  and  the  Commission  will  negotiate  its  inclusion  in  the
other preferential agreements.

14

 
                                                
2.3.

Better division of responsibility for granting and monitoring preferences

Preferential  origin  procedures,  combined  with  the  rules  applicable  to  imports  of
products into the Community, should reflect more accurately the respective roles of
those involved in preferential arrangements:

– 

– 

Economic operators are both the people  most familiar with  the  economic and
industrial  realities  of  their  commercial  transactions  and  the  immediate
beneficiaries of preferential arrangements. They can therefore take account of
moves  to  integrate  the  supply,  production  and  distribution  chains  in  the
definition of their responsibilities and preferential aspects of their commercial
contracts. Importers do not buy blind; they possess (or should demand from the
supplier) full information on the production, specifications and hence the origin
of  the  goods,  in  the  industrial  sense  of  the  term.  Generally  they  manage  this
supply (if not the production process) themselves, according to their needs, as
customers, often within an integrated (group) structure.

The  public  authorities  are  the  managers  of  the  preferential  arrangements  and
they  must  therefore  assume  responsibility  for  “policing”  preferential  trade,
monitoring compliance with the agreements and settling disputes. In matters of
origin,  as  with  any  other  information  (value,  quantity,  tariff  classification)
which affects the calculation of duties owing, the question is to what degree the
administrations  should  be  involved  in  the  initial  determination  of  preferential
origin.

Certification, declaration and control of the rules of origin could therefore take into
account  the  consequences  of  international  developments  in  the  organisation  of
production,  product  marketing  and  the  availability  of  the  relevant  information.  The
authorities  of  a  country  no  longer  have  command,  at  the  time  of  export,  of  all  the
data  needed  to  determine  by  themselves  whether  certain  products  should  have
originating status.

Questions concerning section 2.3:

18.
If a tariff preference exists for a product (affecting the price), how is it incorporated into the
conditions of an international trade transaction? How does the buyer/importer insure himself against
the risk that preference may ultimately be withheld on import or later, if checks reveal that the product
did not qualify for preference or was non-originating?

19. Which of the people involved in preferential arrangement are best placed to establish the origin
of a product?

Should the authorities' main role be to establish the originating status of products or to check

20.
that it has been correctly established?

3.

POSSIBLE  OPTIONS  FOR  CERTIFICATION,  DECLARATION  AND  CONTROL  OF
PREFERENTIAL ORIGIN RULES

Once the rules of  origin have  been  defined,  procedures  to  implement  them  play  an
essential  role  in  ensuring  that  preference  schemes  work  properly.  Granting  or
refusing  a  preference  depends  on  deciding  correctly  whether  the  products  have
originating status. This decision requires being able to rely on complete sources and
data and to check the accuracy of the information used.

15

 
Current origin procedures do not fully satisfy this dual objective.

This section therefore aims to present possible courses of action on the fundamental
aspects of management and control of the origin rules:

– 

– 

certification of preferential origin in the country of export benefiting from the
preferences,

declaration  of  preferential  origin  on  import  and  the  responsibility  of  the
importer benefiting from preferential duties,

– 

verification that the declaration and the certificate are correct.

The  choices  to  be  made  with  regard  to  each  of  these  points  are  highly
interdependent; certification procedures, in particular, have a major impact on
the  importer's  responsibility  and  the  object  or  form  of  the  checks  to  be
introduced.

When  considering  whether  the  options  presented  are  appropriate,  therefore,  it  is
essential to evaluate them not in isolation but as a whole, combining them to obtain a
series  of  procedures  intended  to  ensure  preferential  treatment  is  properly
applied, from the issue of proof of origin to the consequences of any checks which
might challenge the originating status of the goods and ultimately lead to preference
being refused.

This document does not purport to cover all possible options; others may emerge for
consideration during the consultation process.

3.1.

Certification of preferential origin on export

Certification  is  the  mainstay  of  every  preferential  system.  It  is  the  basis  for
requesting  and  granting  preferences  and  the  object  on  which  checks  will  focus.  At
present  it  is  carried  out  either  directly  by  the  customs  or  governmental  authority
(through certification) or by the exporter (by means of an invoice declaration), who
must  be  authorised  by  the  administration  if  he  conducts  operations  above  a  certain
threshold. In both cases, the administration of the country of export is responsible for
obtaining  proof  of  preferential  origin.  We  have  discussed  the  limitations  of  this
hybrid system above.

Whichever option is selected for certification, it will not be fully effective unless the
traders  involved  in  preferential  trade  are  fully  aware  of  the  rules  and  procedures
applicable, the obligations associated with their application and their liability if they
fail to honour their obligations. Companies wishing to take advantage of preferential
arrangements in accordance with the rules must therefore dispose of all the relevant
information.

16

 
There are three conceivable options for certification:

3.1.1.

Improve the current system for establishing proof of origin

Modalities

– 

– 

– 

Develop training and information projects on the principles and practicalities of
the  rules  of  origin,  issue  of  certificates  and  the  corresponding  checks  on  the
originating  status  of  the  products  or  the  authorisation  and  checks  on  the
practices of approved exporters authorised to make invoice declarations.

Step  up  monitoring  as  well  as  administrative  cooperation  and  mutual
assistance, including joint enquiries on the spot.

Step up capacity to identify and react to fraud situations and poor application
of the rules (see point 2.2).

–  Make  the  authorities  of  the  beneficiary  countries  take  responsibility  by
introducing preference suspension and, if necessary, financial  liability clauses
to  be  triggered  in  the  event  of  failure  to  obey  the  rules  or  a  lack  of
administrative cooperation.

Advantages

– 

– 

Such  action  would  ensure  that  the  authorities  and  traders  in  beneficiary
countries  had  a  better  knowledge  of  the  rules  to  be  applied  and  could  use
preferences more effectively.

It  would  help  to  ensure  administrative  cooperation  and  checks  worked  more
smoothly.

Limitations

– 

– 

– 

This  has  been  the  approach  followed  so  far:  training  and  technical  assistance
activities  and  control/inquiry  measures,  which  were  supposed  to  help  the
authorities of the export countries take responsibility and ensure the best use of
preferences. It entails mobilising substantial resources.

It  has  shown  its  limitations  both  in  terms  of  ensuring  the  preferential
arrangements run smoothly and protecting the respective financial interests of
the  parties.  Available  resources  do  not  allow  to  introduce  full  and  permanent
checks  on  the  way  the  arrangements  are  implemented,  given  the  number  of
beneficiary countries and the continually changing legal frameworks.

However  much  effort  is  invested  to  that  end,  this  approach  carries  a  risk  of
recurrent failings, with a concomitant erosion of traders' sense of responsibility
and potential difficulties in recovering duties on import into the Community

17

 
3.1.2.

Introduce certification by the exporter only

Modalities

– 

– 

Give  the  exporter  alone  the  task  of  certifying  the  originating  status  of  the
products, as a factor in his commercial relationship with the importer, without
prejudice to  any  checks  conducted  by  the  competent  authorities  to  ensure  the
origin rules are complied with.

A standard form of certificate would incorporate all the details needed (with a
view  to  subsequent  checks)  to  identify  the  exporter,  the  goods  and  the
conditions of production on which their originating status is based; the exporter
would fill in the form and send it (electronically, perhaps) to the importer.

Advantages

– 

– 

– 

– 

– 

This option assigns the task of certification to the person best placed to carry it
out in the first instance, albeit subject to subsequent checks by the authorities.

It  basically  improves  the  division  of  tasks  and  responsibilities  between  the
private sector that benefits from preferences, whether as purchaser or vendor of
the  beneficiary  products,  and  the  public  authorities  responsible  for  ensuring
that such transactions are legal and comply with the rules.

It  relieves  the  authorities  of  a  task  that  they  are  not  able  to  perform  at  the
export  stage  and  which  also  has  the  disadvantage,  at  Community  level,  of
taking responsibility away from the importer.

Nor  should  it  have  any  deterrent  effect  on  exporters  wishing  to  benefit  from
preferences  as  they  already  have  to  undertake,  in  requesting  a  certificate  or
authorisation  as  an  approved  exporter,  to  comply  with  the  preferential  origin
rules for the products in question.

From the point of view of protecting the Community's financial interests, this
approach also has the advantage of no longer making recovery of duties due in
the  event  of  refusal  of  a  preference  dependent  on  the  behaviour  of  the
authorities of the export country.

Limitations

– 

– 

This  option  removes  the  “filter”  represented  in  theory  by  the  governmental
authorities'  approval  (assuming  such  proof  takes  the  form  of  a  certificate  and
not  an  invoice  declaration)  and  risks  increasing  the  level  of  fraudulent
certification  (since  the  authorities  in  the  country  of  export,  or  the  country  in
which  the  certificates  issued  are  registered,  will  no  longer  intervene)  to  the
detriment of importing countries and importers.

It could lead to abuse or fraudulent use of preferential tariff quotas opened for
certain products, notable agricultural products,  and thereby  harm  the  interests
of  the  beneficiary  countries  themselves;  some  way  of  conducting  joint
surveillance with them would have to be found.

18

 
– 

It  also  reduces  the  scope  for  subsequent  checking,  since  the  exporter  will  no
longer  be  identified  and  could  disappear  from  one  day  to  the  next.  It  would
make the importer alone financially liable for fraudulent certification.

3.1.3.

Introduce an intermediate system of “approved” or “registered” exporters

Modalities

– 

– 

Abolish  all  certification  by  the  authorities  and  entrust  the  task  to  exporters
identified for this purpose by the country of export.

Choose  between  two  formulas:  “approval”,  entailing  an  audit  (mainly  of  the
firm's  management  structure,  financial  health  and  length  of  time  in  business)
and prior authorisation plus monitoring of practice, and “registration”, limited
to  listing  exporters  likely  to  certify  preferential  origin,  with  a  view  to
facilitating subsequent checking.

Advantages

– 

– 

– 

This  approach  offers  the  advantages  of  the  second  option  (abolishing
certification by the authorities) while maintaining a minimal framework within
which exporters should operate.

This makes the competent authorities of the country of export responsible for
the conditions in which they issue authorisations and control their use.

This option could give importers greater security and ensure that checks could
be made on operators of sufficient long-standing.

Limitations

– 

– 

Keeping a system of prior authorisation could present similar disadvantages to
direct certification if the authorisations are not correctly  granted  and their use
properly controlled by the country of export.

The "registration" formula reduces this risk but it would have to be backed up
by the introduction of a suitable information system.

3.2.

Declaration  of  preferential  origin  on  import  and  the  responsibility  of  the
importer

We should all be able to agree that granting tariff preferences to products which do
not  have  the  required  originating  status  is  illegitimate  in  both  economic  and
budgetary  terms.  There  is,  moreover,  a  general  principle,  established  in  law,  that  a
declarant  vouches  for  the  accuracy  of  the  information  and  the  authenticity  of  the
documents supplied in support of the declaration. If he does not fulfil this obligation
the  declaration  is  false  and  could  render  him  liable  for  the  customs  debt  for  any
duties not paid as a result, and possibly subject to penalties.

However,  where  preferential  origin  is  concerned,  the  binding  nature  of  the
declaration  made  in  applying  for  preference,  and  its  impact  on  the  importer's
obligation  to  pay  the  duties  owing  if  preference  is  ultimately  refused  because  the

19

 
products are not originating, will obviously depend on the options chosen regarding
the nature of, and arrangements for establishing, the proof of origin.

3.2.1.

Act on debt and debt recovery

Modalities

–  Without  changing  the  current  systems  of  certification  and  administrative
cooperation, abolish all reference to equity and legitimate expectations by the
debtor with  regard to the recovery  of  debt  incurred  as  a  result  of  a  refusal  to
grant preference,

or, alternatively,

– 

spell  out  the  conditions  to  be  met  by  the  importer/debtor  (particularly  as
regards his relations with the exporter) to qualify for a waiver of post-clearance
recovery or remission/repayment.

Advantages

– 

– 

The first option would make the “objective” nature of the customs debt clear,
depriving the debtor of any legal basis for a waiver of post-clearance recovery
or repayment/remission relying on an administrative failure and/or the trader's
good faith (and thereby abolishing “administrative risk”).

The  second,  less  radical,  option,  would  be  aimed  at  finding  a  new  balance
between “commercial risk” and “administrative risk”, enabling the former to be
invoked  against  a  debtor  applying  for  a  waiver/repayment/remission  and
reducing the impact of the latter.

Limitations

– 

– 

These  options,  while  they  remain  within  the  current  legal  and  administrative
framework  regarding  origin,  could  appear  to  be  attempts  to  restrict,  by
legislation, the scope of what are now clearly general principles upheld by the
Community  courts  on  grounds  of  equity  and  the  protection  of  legitimate
expectations.

These  principles  are  not  limited  to  customs  debts  incurred  in  respect  of
preferential origin, and it is likely that, given comparable situations, the courts
will  use  their  authority  to  reinstate  the  right  to  remission/repayment  or  a
waiver.

3.2.2.

Act on the importer's responsibility and the definition of commercial risk

3.2.2.1. Assuming the  authorities  of the  country  of  export remain  responsible  for  certifying

origin

Modalities

– 

Impose  additional  commitments  and  obligations  on  the  importer  applying  for
preference (special declaration promising to comply with the rules of origin, an
“origin clause” in the contract with the exporter, etc.).

20

 
– 

Amend/reinforce  the  Customs  Code  implementing  provisions  regarding
customs  declarations  and/or  the  preferential  origin  rules  (systematically
requiring a specific declaration by the importer).

Advantages

– 

This  option  would  increase  the  importer's  commitment  with  regard  to  the
declaration  of  origin  and  his  obligation  of  diligence  in  relation  to  his
contractual partner, the exporter, since their relationship includes an element of
“commercial risk”.

Limitations

– 

Under Community law the declarant is already responsible for the accuracy of
his declaration, including preferential origin: if the authorities' role in certifying
origin  is  maintained  there  may  nonetheless  continue  to  be  a  high  degree  of
“administrative  risk”  likely  to  give  grounds  for  a  waiver  of  recovery,
repayment, or remission.

3.2.2.2. Assuming  the  exporter  alone  (whether  or  not  he  is  registered  or  approved)  bears

responsibility for certifying origin

Modalities

– 

– 

– 

Ensure the importer's liability for the declaration of preferential origin based on
a direct, exclusive commercial relationship with the exporter.

Spell out the importer's commitment when declaring preferential origin, on his
own  responsibility,  on  the  basis  of  the  certificate  and  information  received
from the exporter. Make it obligatory to keep such information  and  to supply
additional  information  on  request  in  case  of  doubt  about  the  origin  of  the
products.

Provide for a mechanism to reverse the burden of proof of preferential origin,
offering the country of import the option of refusing preference if the origin of
the product cannot be confirmed following checks or failing cooperation by the
country of export.

Advantages

– 

This  approach  can be seen,  in  terms  of  the  importer's  position  and  checks  on
origin,  as  complementary  to  giving  the  exporter  the  task  of  certifying
preferential origin. It restores the roles of the traders in preferential trade.

Limitations

– 

This option could be seen by importers as increasing their liability.

3.3.

Control of preferential origin

Checks on whether goods really qualify  for preferential origin should be conducted
both on the importer, who declares their origin and applies for the preferential rate of
duty, and the exporter, who meets the conditions for their certification. In both cases,

21

 
the modalities chosen for certification will affect the nature and results of the checks
carried out, and it seems essential to step up checks on import.

3.3.1.

Stepping up checks on the importer

Modalities

– 

Develop  mechanisms  and  criteria  at  Community  level  to  target  controls  on
declarations of preferential origin and direct enquiries relating to the importer
and,  if  necessary,  the  exporter.  Step  up  checks  on  import  using  these
mechanisms. Make sure that the importer's liability is invoked.

Advantages

– 

– 

– 

Identifies  import  operations  involving  a  risk  in terms of the  preferential  tariff
arrangements.

Reverses burden of proof for granting preference in customs' favour.

Gives direction to requests for assistance from export countries and checks on
exporters.

Limitations

– 

Difficulties with any approach coordinated at Community level.

3.3.2.

Stepping up checks on the exporter

3.3.2.1. Assuming the  authorities  of  the  country of export remain  responsible  for  certifying

origin

Modalities

–  Make  current  procedures  for  post-clearance  checks  and  administrative

cooperation work.

Advantages

– 

No legal amendments would be needed.

Limitations

– 

The limitations of the current system have been set out at length.

3.3.2.2. Assuming  the  exporter  (whether  or  not  he  is  registered  or  approved)  bears  sole

responsibility for certifying origin

(a)

Importing country carries out checks directly

Modalities

– 

Provide  for  the  legal  bases  and  procedures  allowing  direct  checks  on  the
exporter  by  the  country  of  import,  by  means  of  a  questionnaire  or  on  the
premises, as is done in the North American Free Trade Area (NAFTA).

22

 
Advantages

– 

Such  checks  would  enable  information  to  be  sought  directly  “at  source”,
enabling any doubts about the declared origin to be confirmed or removed.

Limitations

– 

Language and legal problems with contacting exporters are to be expected.

(b)

Country of export provides country of import with assistance

Modalities

–  Mutual assistance and specific  cooperation mechanisms to enable  the  country
of  import  to  have  the  country  of  export  check  the  origin  of  the  products
exported and, if necessary, be involved in these operations.

– 

– 

Checks  carried  out  in  this  way  should  enable  the  authorities  to  establish  that
products  declared  to  be  of  preferential  origin  really  are.  Failing  positive  and
satisfactory confirmation, the country of import could refuse preference on the
basis of the information at its disposal.

The  assistance  and  control  procedures  to  be  introduced  and  the  scope  for
traders to appeal should be subject to a more detailed description than exists at
present.

Advantages

– 

– 

This  new  form  of  assistance  and  cooperation  with  checks  would  involve  the
parties in checking that traders apply it properly.

The risk of having preference refused on import if they fail to cooperate would
encourage the country of export and traders to behave more responsibly.

Limitations

– 

– 

– 

This involves drafting specific and detailed rules for implementing cooperation
regarding checks.

This still requires collaboration on the part of the country of export.

The rights of traders should be maintained in the procedure.

Questions concerning section 3:

21. What do you think of the various options presented for the procedure's three components and
of the analysis of their advantages and limitations?

22. What  combination  of  options  would,  in  your  opinion,  offer  the  most  balanced  and  coherent
procedure  for  establishing  a  product's  preferential  origin,  checking  the  truth  and  protecting  the
economic and financial interests at stake?

23.

Are any other options and combinations conceivable?

23

 
ANNEX I

Preferential imports into the Community (1998-2001)

The  purpose  of  this  Annex  is  to  give  readers  of  the  Green  Paper  a  general  picture  of  the
significance of imports into the Community of goods receiving preferential tariff treatment. It
does not purport to be a thoroughgoing statistical analysis, but does offer some commentary
on the figures presented.

Section 1 covers the overall share of preferential imports in global imports and changes over
the past four years.

Section 2 breaks these imports down into the various categories of preferential arrangements
referred to in Annex II.

Section 3 shows the respective share of the preferential arrangements and economic sectors in
question.

Section 4 gives details of the sources, terminology and methodology used. It also points out
the  limitations  of  this  exercise.  We  recommend  that  you  refer  to  it  before  studying  the
previous sections.

24

 
1.

PREFERENTIAL IMPORTS IN RELATION TO WORLD IMPORTS

1.1.

Preferential imports as a proportion of total Community imports in 2001

Table T1 shows, for 2001, the value (V) and quantity (Q) of preferential imports (non-GSP,
GSP  and  cumulative  preferences)  as  a  proportion  of  total  imports  from  the  beneficiary
countries and total Community imports.

T1 - SITUATION PREF/NON PREF IMPORTS IN 2001

IMPORTS 2001

V_PREF

V_TOTAL

Q_PREF

Q_TOTAL

000.000_EUR

000.000_EUR

000_TONS

000_TONS

WORLD (EXTRA EU)

NON-GSP_TOTAL

NON-GSP_TOTAL/WORLD

NON-GSP_PREF/TOTAL

NON-GSP_PREF/WORLD

GSP_TOTAL/WORLD

NON-GSP_PREF

GSP_TOTAL

GSP_ELIGIBLE

GSP_PREF

GSP_ELIGIBLE/TOTAL

GSP_PREF/ELIGIBLE

GSP_PREF/TOTAL

GSP_PREF/WORLD

PREF/WORLD

NON_PREF/WORLD

CUMUL_PREF

NON_PREF

149.592

44,83%

16,09%

44.534

45,48%

12,34%

4,79%

194.126

20,88%

929.754

333.669

35,89%

360.782

38,80%

97.918

27,14%

735.627

79,12%

124.356

19,05%

8,77%

28.470

47,34%

3,16%

2,01%

152.827

10,78%

1.417.630

652.721

46,04%

900.535

63,52%

60.138

6,68%

1.264.804

89,22%

Note: The sum of total imports from non-GSP and GSP countries does not equal total imports  from  countries
granted preferences because some countries belong to both the GSP and another preferential arrangement.

The relative shares in 2001 of preferential imports (GSP and non-GSP) and non-preferential
imports by value are shown in the pie chart below (C1):

25

 
C1 - SITUATION PREF/NON PREF IMPORTS IN 2001

PREF_NON-GSP
16%

PREF_GSP
5%

NON_PREF
79%

NON_PREF

PREF_NON-GSP

PREF_GSP

Comments:

– 

The  value  of  preferential  imports  as  a  percentage  of  the  total  is  relatively  small
(around 21%). However, bear in mind the following points:

– 

– 

– 

– 

– 

for a large number of products, no customs duty has been set or an autonomous
exemption or suspension of duties has been  granted or  the  erga  omnes  bound
rates under the GATT are zero or minimal and/or tariff quotas exist;

no  preferential  arrangements  apply  to  the  Community's  main  trading  partners
(the US, Japan, etc.);

when  a  preferential  arrangement  is  agreed  with  a  given  country  or  group  of
countries, it does not necessarily cover all products: products may be excluded
from the scope of an agreement or be covered by the agreement but not granted
tariff  preferences;  for  example,  in  agreements  with  many  GSP  beneficiary
countries  entire  sectors  are  “graduated”  and 
therefore  excluded  from
preferential treatment;

even  where  preferential  tariff  treatment  has  been  provided  for,  the  relevant
products do not always fulfil the conditions required to receive it;

even  if the  conditions  are fulfilled,  international  traders  may  opt  not  to  apply
for  preferential  treatment  on  commercial  grounds,  because  of  the  procedural
constraints or costs.

– 

– 

Preferential imports account for around 45% of the value of imports from countries
outside the GSP with which the Community has preferential arrangements, which is
fairly substantial given that such arrangements rarely cover all products.

For  GSP  countries,  preferential  imports  account  for  some  45%  of  the  value  of
products eligible for GSP preference, not total products. This is because many GSP

26

 
beneficiary  countries  are  also  beneficiaries  of  a  different  preferential  arrangement
for the same product or  for other products which are not eligible  for the GSP  (see
point 4.2). However, note that:

– 

– 

imports  from  GSP  beneficiary  countries,  both  with  and  without  preference,
account for a high proportion of total Community imports (around 40%);

the proportion of those countries' products eligible for the GSP is low (27%),
so  that  GSP  preferential  imports  account  for  only  around  12%  of  total
Community imports; however, both figures are averages: they are affected by
the large volumes of ineligible imports from certain countries with “graduated”
sectors  and  do  not  reflect  the  diversity  of  beneficiary  countries  or  groups  of
countries (least developed countries).

– 

Given  what  has  been  said  about  imports  from  countries  with  “dual”  preferential
arrangements, “GSP” and “other”, all that can be extrapolated from Table T1 is that
in  2001  imports  appeared  to  break  down  into  three  more  or  less  equal  parts  by
value,  totalling  around  EUR  900  billion,  with  GSP  countries,  countries  benefiting
from  non-GSP  preferential  arrangements  and  countries  with  no  preferential
arrangements each accounting for imports of around EUR 300 billion.

1.2.

Evolution 1998-2001

1.2.1. Non-GSP preferences

Table  T2  and  chart  C2  show  the  evolution  of  preferential  imports  and  total  imports  from
countries  benefiting  from  non-GSP  preference  over  four  years  and  the  percentage  of
preferential imports.

T2 - EVOLUTION IMPORTS NON GSP 1998-2001

PERIOD

V_TOTAL

V_PREF

Q_TOTAL

Q_PREF

000.000_EUR

000.000_EUR

000_TONS

000_TONS

1998

1999

2000

2001

PREF/TOTAL

PREF/TOTAL

PREF/TOTAL

PREF/TOTAL

222.248

240.954

315.539

333.669

102.264

46,01%

111.837

46,41%

134.085

42,49%

149.592

44,83%

602.637

593.725

636.356

652.721

96.014

15,93%

116.932

19,69%

122.511

19,25%

124.356

19,05%

27

 
C2 - EVOLUTION IMPORTS NON GSP 1998/2001
(V=000.000_EUR - Q=000_TONS)

1998

1999

2000

2001

V_TOTAL

V_PREF

Q_TOTAL

Q_PREF

700 000

600 000

500 000

400 000

300 000

200 000

100 000

0

Comments:

– 

As total imports from the (non-GSP) beneficiary countries rose, preferential imports
kept pace and remained relatively stable in percentage terms.

1.2.2. Generalised system of preferences

Table  T3  and  charts  C3a  and  C3b  show  the  evolution  of  preferential  imports,  eligible
imports  and  total  imports  from  GSP  countries  over  four  years  and  the  relationship  between
them.

28

 
T3 - EVOLUTION IMPORTS GSP 1998-2001

PERIOD

V_TOTAL

V_ELIGIBLE

V_PREF

Q_TOTAL

Q_ELIGIBLE

Q_PREF

000.000_EUR

000.000_EUR

000.000_EUR

000_TONS

000_TONS

000_TONS

1998

ELIGIBLE/TOTAL

PREF/ELIGIBLE

PREF/TOTAL

1999

ELIGIBLE/TOTAL

PREF/ELIGIBLE

PREF/TOTAL

2000

ELIGIBLE/TOTAL

PREF/ELIGIBLE

PREF/TOTAL

2001

ELIGIBLE/TOTAL

PREF/ELIGIBLE

PREF/TOTAL

260 907

33,49%

244 540

33,02%

357 729

26,92%

360 782

27,14%

87 387

37 919

764 802

53 911

25 068

43,39%

80 757

42,57%

96 287

44,61%

97 918

45,48%

14,53%

34 379

14,06%

42 951

12,01%

44 534

12,34%

7,05%

799 823

6,44%

866 393

6,51%

900 535

6,68%

46,50%

51 538

46,60%

56 369

47,98%

60 138

47,34%

3,28%

24 015

3,00%

27 044

3,12%

28 470

3,16%

Note: The “PREF/ELIGIBLE” percentage represents the average annual rate of utilisation of GSP preferences.

C3a - EVOLUTION IMPORTS GSP 1998/2001
(V=000.000_EUR - Q=000_TONS)

1 000 000

900 000

800 000

700 000

600 000

500 000

400 000

300 000

200 000

100 000

0

1998

1999

2000

2001

V_TOTAL

V_ELIGIBLE

V_PREF

Q_TOTAL

Q_ELIGIBLE

Q_PREF

29

 
C3b - EVOLUTION IMPORTS GSP 1998/2001
(V=000.000_EUR)

1998

1999

2000

2001

V_TOTAL

V_ELIGIBLE

V_PREF

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0

Comments:

– 

– 

Both eligible imports and preferential imports failed to keep pace with the rise in the
value  of  total  imports.  One  might  note,  conversely,  that  the  inherent  constraints  of
generalised preferences (eligibility and compliance with the conditions imposed) do
not  appear  to  have  generally  slowed  down  the  advance  of  total  imports  from
developing  countries,  whether  under  the  erga  omnes  tariff  regime  or,  for  some
countries, under other preferential  arrangements.  However,  that  does  not  mean  that
every GSP  beneficiary  country succeeded in participating in that  global  advance  to
the same degree.

The figures for 2001 do not show the “Everything But Arms” initiative to have had
any  global  impact  on  GSP  imports  as  a  whole  (total,  eligible  or  preferential).
However,  one  must  bear  in  mind  that  the  EBA  initiative  only  involved  least
developed  countries,  and  mainly  their  agricultural  products;  moreover,  some  of  the
countries  concerned  also  benefited  from  other  preferential  arrangements  (ACP  or
OCT).  The  initiative  is  also  too  recent  for  proper  evaluation,  as  there  is  always  a
time-lag between the adoption of such a measure and its economic impact.

2.

BREAKDOWN OF PREFERENTIAL IMPORTS BY REGIME

2.1.

Breakdown of preferential arrangements as a whole

Table T4 and charts C4a to C4c show the various categories of preferential  arrangements,
including the GSP, as a proportion of total preferential imports in 2001.

30

 
T4 - BREAKDOWN OF PREFERENTIAL IMPORTS IN 2001

2001

V_PREF

Q_PREF

V_TOTAL

Q_TOTAL

V_RATE

Q_RATE

PREF_REGIMES

000.000_EUR

000_TONS

000.000_EUR

000_TONS

%

%

EFTA

CEEC

ACP

MED

Turkey

S-Africa

Mexico

Balkans

OCT

Faroe

Andorra

Ceuta_Melilla

46 799

59 112

8 320

18 727

11 363

1 230

1 542

2 018

232

239

12

0

28 738

36 699

9 984

34 794

9 235

1 466

908

2 183

269

67

13

0

PREF_NON-GSP

149 592

124 356

PREF_GSP(/Elig)

44 534

28 470

PREF_GSP(/Total)

PREF_TOTAL

194 126

152 826

101 981

100 263

44 222

42 481

18 224

15 063

6 389

3 498

973

523

47

5

333 669

97 918

360 782

183 963

119 012

139 022

114 080

16 459

58 022

11 493

8 547

1 009

227

883

4

652 721

60 138

900 535

45,89%

58,96%

18,82%

44,08%

62,35%

8,16%

24,13%

57,67%

23,80%

45,65%

25,18%

1,31%

44,83%

45,48%

12,34%

15,62%

30,84%

7,18%

30,50%

56,11%

2,53%

7,90%

25,55%

26,63%

29,33%

1,46%

0,42%

19,05%

47,34%

3,16%

C4a - BREAKDOWN OF NON GSP AND GSP PREFERENTIAL IMPORTS
IN 2001

GSP(PREF-ELIG)
23%

NonGSP
77%

NonGSP

GSP(PREF-ELIG)

31

 
C4b - BREAKDOWN OF PREFERENTIALIMPORTS BY REGIME IN 2001

60 000

50 000

40 000

30 000

20 000

10 000

0

Efta

Ceec

ACP

Med

Turkey

S-Africa Mexico

Balkans

OCT

Faroe

Andorra Ceuta_M

GSP

V_PREF 000.000_EUR

Q_PREF 000_TONS

C4c - BREAKDOWN OF PREFERENTIAL IMPORTS BY REGIME IN 2001
(V_PREF 000.000_EUR)

Balkans
1%

Mexico
1%

S-Africa
1%

Turkey
6%

GSP
23%

Med
10%

ACP
4%

Efta
24%

Ceec
30%

Efta
Ceec
ACP
Med
Turkey
S-Africa
Mexico
Balkans
OCT
Faroe
Andorra
Ceuta_M
GSP

Comments:

– 

– 

Note  that  the  Community's  European  partners  account  for  the  bulk  of  its  total
preferential  imports  (EFTA,  CEEC  and  Turkey  together  account  for  some  60%),
even if the GSP share (23%) is fairly substantial.

Enlargement,  which  should  involve  eight  Central  and  Eastern  European  and  two
Mediterranean  countries,  will  obviously  upset  this  breakdown  as  the  new  Member
States'  present  external  trade  is  reassigned,  partly  as  internal  Community  trade  and

32

 
partly  as  external  Community  trade.  As  far  as  preferential  imports  are  concerned,
given their current volume of trade with the Community and their high proportion of
preferential trade (around 60%, according to table T4), it is, however, likely that the
increase in current preferential imports into the new Member States from outside the
Community will not offset the fall in preferential imports caused by their accession
to the EU.

– 

Imports totalling less than 1% were not shown on the charts.

2.2.

Breakdown between preferential arrangements other than the GSP

Based  on  table  T4,  charts  C5a  and  C5b  allow  a  comparison  of  the  respective  shares  of
different  non-GSP  beneficiary  countries  or  groups  of  countries  in  total  imports  and
preferential imports from those countries in 2001.

C5a - BREAKDOWN IN VALUE OF TOTAL IMPORTS BY NON GSP REGIME 
IN 2001

S-Africa
5%

Mexico
2%

Turkey
5%

Efta
31%

Med
13%

ACP
13%

Efta

Ceec

ACP

Med

Turkey

S-Africa

Mexico

Balkans

OCT

Faroe

Andorra

Ceuta_M

Ceec
30%

33

 
C5b - BREAKDOWN IN VALUE OF PREFERENTIAL IMPORTS
BY NON GSP REGIME IN 2001

Turkey
8%

Efta
31%

Ceec
39%

Efta

Ceec

ACP

Med

Turkey

S-Africa

Mexico

Balkans

OCT

Faroe

Andorra

Ceuta_M

Med
13%

ACP
6%

Comments:

– 

– 

3.

Excluding the GSP, the share of European partners is even more striking at 66% of
total imports and 78% of preferential imports.

Imports totalling less than 1% were not shown on the charts.

PREFERENTIAL  IMPORTS  AS  A  PROPORTION  OF  TOTAL  IMPORTS  BY  REGIME  OR
PRODUCT CATEGORY

3.1.

Preferential imports as a proportion of total imports by preferential regime

Table T4 also shows preferential imports for each country or group of countries covered by a
particular preferential regime as a percentage of its total imports.

For the GSP, it distinguishes between preferential imports as a percentage of imports eligible
for GSP preference (GSP/ELIG: “rate of utilisation of preferences”) and preferential imports
as a percentage of total imports from GSP countries (GSP/TOTAL).

This  comparison  of  preferential  imports  and  total/eligible  imports  is  also  shown  in  charts
C3a  and  C3b  (GSP),  C6a  (non-GSP)  and  C6b  (giving  percentages  for  all  preferential
arrangements, by value).

34

 
200 000

180 000

160 000

140 000

120 000

100 000

80 000

60 000

40 000

20 000

0

C6a - BREAKDOWN OF PREFERENTIAL/TOTAL IMPORTS FROM NON GSP 
BENEFICIARY COUNTRIES BY REGIME IN 2001
(V=000.000_EUR - Q=000_TONS)

Efta

Ceec

ACP

Med

Turkey

S-Africa Mexico

Balkans

OCT

Faroe

Andorra Ceuta_M

V_PREF

V_TOTAL

Q_PREF

Q_TOTAL

C6b  - RATES OF PREFERENTIAL IMPORTS COMPARED TO TOTAL 
IMPORTS FROM BENEFICIARY COUNTRIES BY REGIME IN 2001
(based on Values)

70,00%

60,00%

50,00%

40,00%

30,00%

20,00%

10,00%

0,00%

y
e
k
r
u
T

c
e
e
C

s
n
a
k
a
B

l

Comments:

a

t
f

E

e
o
r
a
F

d
e
M

a
r
r
o
d
n
A

i

o
c
x
e
M

T
C
O

P
C
A

a
c
i
r
f

A
S

-

M
_
a

t

u
e
C

P
S
G
n
o
N

I

G
L
E
P
S
G

/

L
A
T
O
T
P
S
G

/

– 

– 

The  tables  and  charts  show  the  marked  disparity  in  percentages  of  preferential
imports between beneficiary countries and groups of countries.

Groups  such  as  EFTA,  the  CEEC,  the  Mediterranean  countries,  the  Balkans  and
countries or territories such as Turkey and the Faeroe Islands account for a very large
share of preferential imports. This might be because of the scope of the preferences,

35

 
which cover large product sectors, or the level of preference, which may make them
extra attractive to importers.

– 

The  data  for  the  countries  with  which  the  Community  has  a  customs  union  are  of
particular interest:

– 

– 

Turkey has a very high proportion of preferential imports (62.35%). In theory,
preferential  arrangements  between  the  Community  and  Turkey  only  cover
agricultural  products,  former  ECSC  products  and  any  industrial  products
declared as originating in Turkey on the strength of pan-European cumulation
of  origin  rules.  However,  it  is  likely  that  a  substantial  proportion  of  imports
classed as “preferential” (box 36, code 3), including industrial products, do in
fact  qualify  for  free  circulation  in  the  customs  union  (box  36,  code  099)  and
that a mistake has been made in the code.

Andorra has a rather lower proportion of preferential imports (25.18%), which
seems  to  correlate  better  with  the  breakdown  of  imports  between  agricultural
products, which are the only products subject to preferential arrangements, and
industrial  products  subject  to  the  customs  union.  However,  here  too,  coding
errors cannot be ruled out.

– 

By  contrast,  the  proportion  of  preferential  imports  for  countries  such  as  the  ACP
countries and South Africa is very low, even taking into account the fact that some of
their preferential imports are covered by the GSP.

3.2.

Preferential imports as a proportion of total imports by product category

3.2.1. Non-GSP preferences

Table  T5  and  charts  C7a  to  C7c  give  a  breakdown  of  preferential  imports  from  non-GSP
beneficiary  countries  by  product  category,  defined  according  to  the  Sections  of  the
Harmonised  System  (listed  in  the  Appendix),  and  as  a  percentage  of  total  imports  of  such
products from those countries.

36

 
T5 - NON GSP PREFERENTIAL IMPORTS BY HS SECTIONS IN 2001

2001

V_PREF

V_TOTAL

Q_PREF

Q_TOTAL

V_RATE

Q_RATE

HS SECTION

000.000_EUR

000.000_EUR

000_TONS

000_TONS

%

%

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

XII

XIII

XIV

XV

XVI

XVII

XVIII

XIX

XX

XXI

4 032

3 283

203

5 133

6 372

12 656

6 738

1 021

1 806

3 895

20 489

2 214

2 648

771

15 808

34 392

14 533

5 340

77

4 195

4 039

16 660

25 281

1 837

22 655

153 575

62 897

24 769

10 730

13 631

16 063

64 158

10 339

7 841

33 166

51 469

252 166

69 141

40 650

540

26 644

25 864

1 154

3 620

377

4 302

43 795

17 999

3 465

63

4 466

4 340

1 827

140

2 988

6

17 171

3 938

2 422

60

10

1 170

17 619

5 604

51 467

4 335

44 933

1 041 689

44 908

11 513

1 593

53 722

18 866

9 428

1 333

8 263

51

55 096

13 429

8 282

609

21

6 280

36 745

TOTAL

149 642

929 754

130 932

1 417 630

24,20%

12,99%

11,04%

22,66%

4,15%

20,12%

27,20%

9,52%

13,25%

24,25%

31,93%

21,41%

33,76%

2,33%

30,71%

13,64%

21,02%

13,14%

14,20%

15,74%

15,61%

16,09%

20,60%

7,03%

8,70%

9,58%

4,20%

40,08%

30,09%

3,95%

8,31%

23,01%

19,38%

10,54%

36,17%

11,21%

31,17%

29,33%

29,25%

9,86%

45,59%

18,64%

47,95%

9,24%

C7a - BREAKDOWN IN VALUE OF PREFERENTIAL/TOTAL IMPORTS FROM 
NON GSP BENEFICIARY COUNTRIES BY HS SECTIONS in 2001

300 000

250 000

200 000

150 000

100 000

50 000

0

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

XII

XIII

XIV

XV

XVI

XVII XVIII XIX

XX

XXI

V_PREF 000.000_EUR

V_TOTAL 000.000_EUR

37

 
C7b - BREAKDOWN IN VALUE OF TOTAL IMPORTS FROM NON GSP 
BENEFICIARY COUNTRIES BY HS SECTIONS IN 2001

XVIII
4%

XIX
0%

XX
3%

XXI
3%

I
2%

II
3%

III
0%

IV
2%

XVII
7%

V
17%

XVI
27%

XV
6%

XIV
4%

XIII
1%

XII
1%

X
2%

XI
7%

VI
7%

VII
3%

VIII
1%

IX
1%

C7c - BREAKDOWN IN VALUE OF PREFERENTIAL IMPORTS FROM NON 
GSP BENEFICIARY COUNTRIES BY HS SECTIONS IN 2001

XVIII
4%

XIX
0%

XX
3%

XXI
3%

I
3%

II
2%

III
0%

IV
3%

V
4%

XVII
10%

XVI
23%

Comments:

XV
11%

XIV
1%

XIII
2%

XII
1%

VI
8%

VII
5%

VIII
1%

IX
1%

X
3%

XI
14%

– 

Sections  VI  (chemicals),  XI  (textiles),  XV  (metals),  XVI  (machinery)  and  XVII
(vehicles) account for the lion's share of both preferential imports and total imports
from  non-GSP  beneficiary  countries.  The  poor  showing  of  Section  V  (minerals)  in
preferential  imports  relative  to  total  imports  is  solely  due  to  the  fact  that  such
products are exempt from duty and therefore do not need any preferential treatment.

38

 
3.2.2. Generalised system of preferences

Table  T6  and  charts  C8a  to  C8c  give  a  breakdown  of  preferential  imports  from  GSP
beneficiary  countries  by  product  category,  defined  according  to  the  Sections  of  the
Harmonised  System,  and  as  a  percentage  of  total  imports  of  such  products  from  those
countries.

T6 - GSP PREFERENTIAL IMPORTS BY HS SECTIONS IN 2001

2001

V_ELIGIBLE

V_PREF

Q_ELIGIBLE

Q_PREF

% VALUE

% QUANT

HS SECTIONS

000.000_EUR 000.000_EUR

000_TONS

000_TONS

%

%

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

XII

XIII

XIV

XV

XVI

XVII

XVIII

XIX

XX

XXI

4 001

3 624

401

3 469

3 912

5 831

4 775

1 043

1 250

1 404

23 448

3 630

1 165

1 056

4 411

22 566

5 301

4 907

0

1 725

0

2 138

1 232

93

1 236

1 765

2 517

3 321

561

664

971

8 041

2 200

666

644

2 260

10 375

3 037

1 739

0

1 075

0

1 098

2 623

824

2 133

17 523

14 073

2 526

70

1 627

1 242

3 785

386

1 242

14

6 473

3 175

867

166

0

293

0

639

871

156

664

8 669

5 053

1 900

37

890

959

1 168

204

828

8

3 570

2 073

514

85

0

182

0

53,44%

34,00%

23,14%

35,62%

45,12%

43,17%

69,55%

53,85%

53,10%

69,19%

34,29%

60,59%

57,14%

60,95%

51,23%

45,98%

57,29%

35,45%

58,19%

33,19%

18,93%

31,12%

49,47%

35,91%

75,24%

53,54%

54,70%

77,23%

30,87%

52,91%

66,69%

57,16%

55,15%

65,28%

59,33%

50,99%

62,30%

61,99%

TOTAL

97 918

44 534

60 138

28 470

45,48%

47,34%

39

 
C8a - BREAKDOWN IN VALUE OF  PREFERENTIAL/ELIGIBLE GSP 
IMPORTS BY HS SECTIONS IN 2001

25 000

20 000

15 000

10 000

5 000

0

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

XII

XIII

XIV

XV

XVI

XVII XVIII XIX

XX

XXI

V_PREF 000.000_EUR

V_ELIGIBLE 000.000_EUR

C8b - BREAKDOWN IN VALUE OF ELIGIBLE GSP IMPORTS
BY HS SECTIONS IN 2001

XX
2%

XIX
0%

XXI
0%

I
4%

XVII
5%

XVIII
5%

II
4%

III
0%

IV
4%

V
4%

XVI
23%

XV
5%

XIV
1%

XIII
1%

XII
4%

XI
24%

VI
6%

VII
5%

VIII
1%

IX
1%

X
1%

40

 
C8c - BREAKDOWN IN VALUE OF PREFERENTIAL GSP IMPORTS
BY HS SECTIONS IN 2001

XVII
7%

XVIII
4%

XIX
0%

XX
2%

XXI
0%

I
5%

II
3%

III
0%

IV
3%

V
4%

VI
6%

VII
7%

VIII
1%

IX
1%

X
2%

XV
5%

XIV
1%

XIII
1%

XII
5%

XI
18%

XVI
23%

Comments:

– 

There  is  a  very  clear  correlation  between  the  distribution  of  products  for  eligible
imports and that for preferential imports. Sections XI (textiles) and XVI (machinery)
are very heavily represented. Sections VI (chemicals), VII (plastic and rubber), XII
(footwear),  XV  (metals),  XVII  (vehicles)  and  XVIII  (optical  instruments,  etc.)  are
also significant, each accounting for at least 5% of imports.

3.2.3.

Agricultural imports

Table T7 and chart C9 show preferential imports as a proportion of imports of agricultural
products of Sections I to IV (Chapters 1 to 24) of the HS in 2001.

T7 - AGRI PREFERENTIAL IMPORTS IN 2001

HS Sections I to IV
(Chapters 1 to 24)

VALUE
000.000_EUR

QUANTITY
000_TONS

WORLD
NON-GSP_PREF

NON-GSP_PREF/WORLD

GSP_PREF

CUMUL_PREF

GSP_PREF/WORLD

NON_PREF

CUMUL_PREF/WORLD

NON-PREF/WORLD

66 432
12 651
19,04%
4 608
6,94%
17 259
25,98%
49 174
74,02%

106 339
9 454
8,89%
2 297
2,16%
11 752
11,05%
94 587
88,95%

41

 
C9 - BREAKDOWN IN VALUE OF PREF/NON PREF AGRI IMPORTS IN 2001

NON-GSP_PREF
19%

GSP_PREF
7%

NON_PREF
74%

NON-GSP_PREF

GSP_PREF

NON_PREF

Comments:

– 

– 

The  data  presented  in  the  previous  sections  revealed  the  relatively  low  figure  for
agricultural products (Sections I to IV, Chapters 1 to 24 of the HS), as a proportion
not  only  of  total  imports  from  non-GSP  beneficiary  countries  (7%)  but  of  eligible
imports  from  GSP  countries  (12%)  and  preferential  imports  from  beneficiary
countries (8% for non-GSP countries and 11% for GSP countries).

Preferential  imports of agricultural  products nonetheless  account  for  26%  by  value
of  total  imports,  which  is  proportionally  higher  than  the  average  for  preferential
imports as a whole, taking all products together (21%: see table T1 and chart C1).
The same applies to agricultural imports from GSP countries (7% as against 5%).

4.

SOURCES, TERMINOLOGY AND METHODOLOGY

4.1.

Sources

This  Annex  was  drafted  using  statistical  data  available  for  the  four  years  1998-2001  from
EUROSTAT databases.

The  statistics  are  compiled  from  customs  declarations  for  the  release  of  goods  for  free
circulation in the Community, which give:

- the Combined Nomenclature code of the goods (box 33 of the declaration);

- their (customs) value;

- the quantity (net mass, in box 38);

- the country of origin (box 16 or 34a, as appropriate)

42

 
- the tariff arrangements applied for, preferential or otherwise (box 36 “Preference”).

The latter information, “Preference”, uses the following code for the first of the three digits:

Code 1

Erga omnes tariff arrangements (MFN treatment, no preference)

Code 2

Generalised system of preferences (GSP)

Code 3

Other tariff preferences

Code 0

Other  cases,  including  non-collection  of  customs  duties  under  Community
provisions or customs union agreements concluded by the Community (three-digit
code: 099).

The declarant is obliged to provide this information under the implementing provisions of the
Community  customs  code,  even  if  no  preference  applies,  and  the  Member  States  send  it  to
EUROSTAT in accordance with the regulations on statistics.

However, a number of anomalies have been identified. Box 36 is not always used as it should
be with regard to the intended tariff arrangements (for example, Code 2 (GSP) is selected for
imports for which the country of origin is stated to be the US, or Code 3 (“Other preferences”)
is  used  for  imports  within  a  customs  union.  Since  the  Member  States  do  not  filter  the
statistical  information  before  sending  it  to  EUROSTAT,  such  anomalies  still  exist  in  the
aggregate  Community  data.  However,  EUROSTAT  does  filter  out  the  most  blatant
inconsistencies regarding the GSP,  in  addition to  identifying those  imports eligible  for  GSP
preferences from the figures for imports from the GSP countries (see below).

In some Member States, box 36 is not used at all, which creates uncertainty as to which tariff
arrangements  actually  applied  to  the  product.  In  this  analysis,  such  “indeterminate”  imports
have been treated as “non-preferential” (Code 1).

4.2.

Terminology and methodology

The data were grouped by country or group of countries benefiting from identical or similar
autonomous or contractual preferential arrangements (GSP, ACP, OCT, EFTA, CEEC, MED,
Balkans) and by Sections in the Combined Nomenclature (CN), which are the same as those in
the Harmonised Commodity Description and Coding System (HS) (the list of Sections is given
in the Appendix). They were given by value (customs value expressed in EUR thousands) and
quantity (net mass in tonnes).

With regard to the data in the tables and charts, the following applies:

- preferential imports means imports for which preferential tariff treatment based on
the origin of the products (Code  2  or  3)  was  requested;  imports  qualifying  for  free
circulation by virtue of a customs union (i.e. from Turkey, Andorra, and San Marino:
Code 099) are therefore not included;

- total imports from a beneficiary country or a group of countries means all imports
from  that  country  or  group  of  countries  whether  or  not  preferential  treatment  was
requested for them;

43

 
-  non-preferential  imports  from  a  beneficiary  country  or  group  of  countries  means
the  difference  between  total  imports  and  preferential  imports  from  the  relevant
countries;

- world imports (total Community imports) means all imports from outside the EC,
i.e. the sum of total imports from preference-receiving and non-preference-receiving
countries.

As regards the generalised system of preferences, one must also distinguish between:

- total imports from GSP beneficiary countries, which covers all imports from such
countries,  whether  or  not  preference  is  available  and  whatever  preferential
arrangement is ultimately applied;

- GSP-eligible imports from GSP beneficiary countries, which only covers products
for which a GSP preference has been established for the country concerned, whether
or not it is requested for the goods;

-  preferential  imports  (Code  2)  from  GSP  beneficiary  countries,  for  which  GSP
preference has been established and requested; GSP countries have been treated as a
single group, rather than subdividing them into special schemes, which would have
made presentation too complicated; the special scheme for least developed countries
(“Everything  But  Arms”)  was  not  singled  out  as  it  is  too  recent,  particularly  as
regards agricultural products, to enable any significant change to be measured, and

-  the  rate  of  utilisation  of  generalised  preferences,  which  represents  the  ratio  of
preferential imports to eligible imports.

It was not always possible to give an overall picture of the situation of preferential imports in
relation  to  total  imports  from  beneficiary  countries  or  total  Community  imports,  as  certain
countries  or  originating  products  from  those  countries  may  be  covered  by  both  a  particular
preferential  arrangement  and  the  GSP.  This  applies  for  example  to  ACP  countries  and  the
OCT,  South  Africa,  Mexico  and  most  Mediterranean  countries.  While  exporters  from  such
countries  generally  prefer  their  own  specific  preferential  arrangement,  which  is  more
favourable than  the  GSP,  the  fact  that  they  qualify  for  both  means  that  in  total  Community
imports from those  countries,  preferential  imports  may  fall  partly  under  the  GSP  and  partly
under  another  preferential  scheme.  Total  imports  from  such  “dual  preferential  regime”
countries  are  therefore  counted  in  total  imports  from  both  GSP  countries  and  non-GSP
countries, which means that the two figures cannot be combined.

44

 
APPENDIX
COVERAGE OF THE HARMONISED SYSTEM SECTIONS

SECTION

(ABRIDGED) TITLE

I

II

III

IV

V

VI

VII

VIII

IX

X

XI

XII

XIII

XIV

XV

XVI

XVII

XVIII

XIX

XX

XXI

Live animals and animal products

Vegetable products

Animal or vegetable fats and oils, etc.; prepared edible fats; animal or vegetable waxes

Prepared foodstuffs; beverages, spirits and vinegar; tobacco etc.

Mineral products

Products of the chemical or allied industries

Plastics and articles thereof; rubber and articles thereof

Raw hides and skins, etc.; saddlery and harness; travel goods, etc.

Wood and articles of wood, wood charcoal; cork, etc.; manufactures of straw, basketwork etc.

Pulp of wood or other fibrous cellulosic material; etc. paper and paperboard and articles thereof

Textiles and textile articles

Footwear,  headgear,  umbrellas,  sun  umbrellas,  walking  sticks,  seat-sticks,  whips,  etc.;  prepared
feathers, etc.; artificial flowers; …

Articles of stone, plaster, cement, etc.; ceramic products; glass and glassware

Natural or cultured pearls, ... stones, precious metals, etc.; imitation jewellery; coin

Base metals and articles of base metal

Machinery  and  mechanical  appliances;  electrical  equipment;  parts  thereof;  sound  recorders  and
reproducers, television image and sound recorders and reproducers, etc.

Vehicles, aircraft, vessels and associated transport equipment

Optical,  photographic,  cinematographic,  measuring,  checking,  precision,  medical  and  surgical
instruments and apparatus; clocks and watches; musical instruments; …

Arms and ammunition, parts and accessories thereof

Miscellaneous manufactured articles

Works of art, collectors pieces and antiques

45

 
ANNEX II

List of preferential arrangements - Zones and types of cumulation of origin

(Situation at 1/09/2003)

BRIEF INTRODUCTION TO THE PREFERENTIAL RULES OF ORIGIN

Preferential arrangements

This  Annex  lists  autonomous  and  contractual  preferential  arrangements  (agreements  establishing  free  trade  areas)
introduced  by  the  Community.  These  arrangements  are  based  on  the  origin  of  the  products  benefiting  from  tariff
preferences;  the  Annex  therefore  excludes  customs  union  agreements  concluded  by  the  Community  with  Turkey,
Andorra and San Marino.

For each preferential arrangement the first column cites the country or group of countries, legal framework and
OJ  publication  references  and  the  second  column  cites  the  text  of  the  relevant  rules  of  origin  and  the  type  of
cumulation of origin applicable.

Given that it relates to the current situation of preferential arrangements, the Annex is not organised to reflect the
fact that some of the countries with which the Community has concluded preferential agreements may be candidates
for EU membership.

The origin of a product

Rules of origin are the means of determining the country from which the goods originate, i.e. not the country from
which there were dispatched but where they are considered to have been produced or manufactured, for the purpose
of applying certain tariff or non-tariff  measures. Preferential rules of origin are applied to  ensure  that  a  product
qualifies for preferential tariff treatment (autonomous or contractual) and that preferential treatment is given only to
products from the countries intended.

Some products clearly originate in a given country, because they are wholly obtained there from local raw materials.
In most cases, however, the goods are the product of working or processing of non-originating, imported goods in
the country concerned. If the product is to obtain originating status, the  processing  must  be  substantial  enough  to
establish  a  genuine  link  between  the  product  and  the  country.  Criteria  have  therefore  been  established  for  each
category of products (a change in the HS tariff  heading,  the  percentage  of  value  added,  the  specific  process,  or  a
combination of these criteria) to determine whether the operations carried out in a given country on non-originating
materials used to obtain the products are sufficient to consider them as originating from that country. Certain minor
operations (“minimal processes”) never confer originating status on the goods.

Cumulation of Origin

The criteria for sufficient working or processing used to determine the origin of a product apply in principle to all
materials  imported  from  a  third  country  for  use  in  obtaining  the  product  in  the  country  of  export.  In  order  to
encourage regional economic integration, however, systems of cumulation of origin enable materials originating in
partner countries to be exempted from the criteria, so as to make it easier for producers to draw on those countries
for  their  supplies.  Assuming  the  finished  product  acquires  originating  status,  it  is  allocated  to  one  or  other  of  the
partner countries involved in the operation according to specific provisions:

– 

– 

bilateral  cumulation  involves  two  partners  and  allows  an  operator  in  country  A  to  use  materials
originating in country B as if they originated in A, and vice versa, with the origin criteria applying only to
non-originating goods; it is therefore sufficient for the operation carried out in A to have been “more than
minimal”  to  obtain  A  origin  for  the  goods;  this  form  of  cumulation  is  applied  in  all  the  bilateral
agreements concluded by the Community and in its autonomous preferential arrangements (GSP, Western
Balkans, OCT).

diagoal  cumulation  is  based  on  the  same  principle  but  involves  at  least  three  partners  who  must  have
established a network of free trade agreements among themselves incorporating the same rules of origin
and  providing  for  this  type  of  cumulation;  the  prototype  of  this  form  of  cumulation  is  “pan-European”
cumulation, involving the Community, the EFTA countries, the CEECs and Turkey.

46

 
– 

– 

regional GSP cumulation is a form of diagonal cumulation involving  members of a regional  group  of
beneficiary  countries  (ASEAN,  for  example)  with  a  view  to  conferring  originating  status  on  products
intended  for  export  to  the  Community  with  a  view  to  obtaining  generalised  preference;  in  this  case,
originating status is allocated to the country in which the “more than minimal” operation was carried out
and where value was added at least equal to the customs value of the originating materials from the other
countries in the group which were used in manufacture.

full  cumulation,  on  the  other  hand,  is  based  on  “cumulation  of  working”;  the  originating  status  of  the
goods is determined with reference to a package of  working or processing operations carried out in the
area formed by the countries involved; for this purpose, the processing carried out in country A is treated
as having been carried out in country B if the non-originating product obtained in A is then reprocessed in
B;  this  type  of  cumulation,  or  some  variant  of  it,  is  found  in  preferential  arrangements  with  the  ACP,
OCT, Maghreb and EEA (in the latter, the European Economic Area is treated as one territory in which
products may acquire EEA originating status through full cumulation.

47

 
PREFERENTIAL ARRANGEMENTS BASED ON THE ORIGIN OF THE PRODUCTS

PREFERENTIAL AGREEMENTS

RULES OF ORIGIN/CUMULATION

EFTA countries

SWITZERLAND

- Industrial products (01.01.1973)(Free Trade Agreement of 22.07.1972, OJ L
300, 31.12.1972)

Protocol No 3

“Pan-European” diagonal cumulation [a]

- Agricultural products (01.06.2002)- (Agreement of 21 June 1999 on trade in
agricultural products, OJ L 114, 30.4.2002)

Article  4  of  the  Agreement  on  agriculture
(reference to EFTA Protocol No 3)

ICELAND (01.04.1973)

Protocol No 3

(Free Trade Agreement of 22 July 1972, OJ L 301, 31.12.1972)

“Pan-European” diagonal cumulation [a]

NORWAY (01.07.1973)

Protocol No 3

(Free Trade Agreement of 14 May 1973, OJ L 300, 27.06.1973)

“Pan-European” diagonal cumulation [a]

EUROPEAN ECONOMIC AREA (EC-IS-NO-LI)

Protocol 4

(Association Agreement of 2 May 1992, OJ L 1, 03.01.1994)

Central and Eastern European Countries

Total  and  “Pan-European”  diagonal
cumulation [a]

HUNGARY (01.03.1992)

Protocol No 4

(Europe (Association) Agreement of 16 December 1991, OJ L 347, 31.12.1993)

“Pan-European” diagonal cumulation [a]

POLAND (01.03.1992)

Protocol No 4

(Europe (Association) Agreement of 16 December 1991, OJ L 348, 31.12.1993)

“Pan-European” diagonal cumulation [a]

CZECH REPUBLIC (01.03.1992)

Protocol No 4

(Europe (Association) Agreement of 4 October 1993, OJ L 360, 31.12.1994)

“Pan-European” diagonal cumulation [a]

SLOVAK REPUBLIC (01.03.1992)

Protocol No 4

(Europe (Association) Agreement of 4 October 1993, OJ L 359, 31.12.1994)

“Pan-European” diagonal cumulation [a]

BULGARIA (31.12.1993)

Protocol No 4

(Europe (Association) Agreement of 8 March 1993, OJ L 348, 31.12.1994)

“Pan-European” diagonal cumulation [a]

ROMANIA (01.05.1993)

Protocol No 4

(Europe (Association) Agreement of 1 March 1993, OJ L 357, 31.12.1994)

“Pan-European” diagonal cumulation [a]

ESTONIA (01.01.1995)

Protocol No 3

(Europe (Association) Agreement of 12 June 1995, OJ L 68, 09.03.1998)

“Pan-European” diagonal cumulation [a]

LATVIA (01.01.1995)

Protocol No 3

(Europe (Association) Agreement of 12 June 1995, OJ L 26, 02.02.1998)

“Pan-European” diagonal cumulation [a]

LITHUANIA (01.01.1995)

Protocol No 3

(Europe (Association) Agreement of 12 June 1995, OJ L 51, 20.02.1998)

“Pan-European” diagonal cumulation [a]

SLOVENIA (01.01.1997)

Protocol No 4

(Europe (Association) Agreement of 10 June 1996, OJ L 51, 26.02.1999)

“Pan-European” diagonal cumulation [a]

Western Balkan countries

MACEDONIA (Former Yugoslav Republic of) (01.06.2001)

Protocol No 4

(Interim Agreement of 9 April 2001, OJ L 124, 04.05.2001)

Bilateral cumulation

48

 
CROATIA (01.01.2002)

(Interim Agreement of 29 October 2001, OJ L 330, 14.12.2001)

Protocol No 4

Bilateral cumulation

Mediterranean Countries

TURKEY (products outside the scope of the customs union)

- ECSC products (01.01.1997)

Protocol No 1

(Agreement of 25 July 1996, OJ L 227, 07.09.1996)

“Pan-European” diagonal cumulation

- Agricultural products (01.01.1998)

Protocol No 3

(Decision  No  1/98  of  the  Association  Council,  of  25  February  1998,  OJ  L  86,
20.03.1998)

Bilateral cumulation

MALTA (01.04.1971)

(Association Agreement of 5 December 1970, OJ L 61, 14.03.1971)

CYPRUS (01.06.1973)

(Association Agreement of 19 December 1972, OJ L 133, 21.05.1973)

ALGERIA (01.07.1976) [c]

(Cooperation Agreement of 26 April 1976, OJ L 263, 27.09.1978)

TUNISIA (01.03.1998)

Protocol

Bilateral cumulation

Protocol

Bilateral cumulation

Protocol No 2

Bilateral cumulation

Protocol No 4

(Euro-Mediterranean Association Agreement of 17 July 1995, OJ L 97, 30.03.1998)

“Maghreb”  bilateral,  diagonal  and  full
cumulation

MOROCCO (01.03.2000)

Protocol No 4

(Euro-Mediterranean  Association  Agreement  of  26  February  1996,  OJ  L  70,
18.03.2000)

“Maghreb”  bilateral,  diagonal  and  full
cumulation

ISRAEL (01.06.2000)

Protocol No 4

(Euro-Mediterranean  Association  Agreement  of  20  November  1995,  OJ  L  147,
21.06.2000)

Bilateral cumulation

PALESTINIAN AUTHORITY (01.07.1997)

Protocol No 3

(Euro-Mediterranean  Association  Agreement  of  24  February  1997,  OJ  L  187,
16.07.1997)

Bilateral cumulation

EGYPT (01.07.1977) [b]

(Cooperation Agreement of 18 January 1977, OJ L 266, 27.09.1978)

JORDAN (01.05.2002)

Protocol No 2

Bilateral cumulation

Protocol No 3

(Euro-Mediterranean  Association  Agreement  of  24  November  1997,  OJ  L  129,
15.05.2002)

Bilateral cumulation

LEBANON (01.03.2003)

Protocol No 2

(Euro-Mediterranean Association Agreement of 17 June 2002, OJ L 262, 30.09.2002)

Bilateral cumulation

SYRIA (01.07.1977) [c]

(Cooperation Agreement of 18 January 1977, OJ L 269, 27.09.1978)

Protocol No 2

Bilateral cumulation

Other countries and territories

ANDORRA  (agricultural  products  outside  the  scope  of  the  customs
union)

Appendix to the Agreement

Bilateral cumulation

(Agreement, OJ L 374, 31.12.1990)

FAEROE ISLANDS/Denmark (01.01.1997)

(Agreement of 6 December 1996, OJ L 53, 22.02.1997)

Protocol No 3

Bilateral cumulation

49

 
AFRICA, THE CARIBBEAN AND THE PACIFIC (ACP) (01.04.2003)

Protocol 1 to Annex V

(Partnership Agreement between ACP, EC and Member States, signed in Cotonou on
23 June 2000,  OJ  L  65,  808.03.2003;  OJ  L  83,  01.04.2003;  provisional  application
from 01.03.2000)

“EC-ACP-OCT” 
cumulation [f]

bilateral 

and 

full

SOUTH AFRICA (01.01.2000)

Protocol 1

(Trade, Development and Cooperation Agreement: provisional application, OJ L 311,
4.12.1999)

Bilateral cumulation [g]

MEXICO (01.07.2000)

Annex III to the Decision

(Decision  2/2000  of  the  EC-Mexico  Joint  Council:  provisional  application  of  the
Partnership Agreement, OJ L 157, 30.06.2000 and OJ L 245, 29.09.2000)

Bilateral cumulation

CHILE (01.02.2003)

Annex III to the Agreement

(Provisional  application  of  the  Association  Agreement,  OJ  L  352,  30.12.2002;  OJ  L
26, 31.1.2003)

Bilateral cumulation

AUTONOMOUS PREFERENTIAL ARRANGEMENTS

RULES OF ORIGIN/CUMULATION

OVERSEAS COUNTRIES AND TERRITORIES (02.12.2001)

Annex III to the Decision

(Council Decision No 2001/822/EC of 27 November 2001, OJ L 314, 30.11.2001; OJ
L 324, 7.12.2001: Appendix II to Annex III)

GENERALISED SYSTEM OF PREFERENCES

(Council Regulation (EC) No 2501/2001 of 10 December 2001, OJ L 346, 31.12.2001)

bilateral 

and 

full

“EC-OCT-ACP” 
cumulation

Articles 66 to 97

(Commission  Reg. (EEC) No 2454/93  of  2
July 1993)

“EC-NO-CH”  bilateral, 
diagonal cumulation [h]

regional  and

WESTERN BALKAN COUNTRIES (Albania, Bosnia-Herzegovina, Serbia
and Montenegro)

(Council Regulation (EC) No 2007/2000 of 18 September 2000, OJ L 240, 23.09.2000)

Articles 66 and 98 to 123

(Commission  Reg. (EEC) No 2454/93  of  2
July 1993)

CEUTA AND MELILLA

(Protocol No 2 to the Act of Accession of Spain)

Bilateral cumulation

Council  Reg.  (EC)  No  82/2001  of  5
December 2000 (OJ L 20, 20.01.2001)

Bilateral  cumulation  with  the  EC  and
diagonal or full cumulation, as appropriate,
with partner countries of the EC [i]

50

 
Notes :

(a)

[b]

[c]

[d]

[e]

[f]

[g]

“Pan-European”  diagonal  cumulation  covers  products  originating  in  the  Community,  Bulgaria,
Switzerland (including Liechtenstein), the Czech Republic, Estonia, Hungary, Iceland, Lithuania, Latvia,
Norway, Poland, Romania, Slovenia, the Slovak Republic and Turkey (with the exception of agricultural
products covered by Annex 1 of the EC Treaty) (for the state of agreements enabling cumulation, see OJ
C 100, 25.4.2002, p.5); it also covers industrial products of Chapters 25 to 97 of the HS originating in the
Principality of Andorra and products originating in the Republic of San Marino.

This  new  Euro-Mediterranean  Association  Agreement  has  been  signed  but  has  not  yet  been  ratified  or
entered into force.

New Euro-Mediterranean Association Agreement subject to negotiation.

Cumulation of origin  with South  Africa is also provided for  by  this  Agreement  but  has  not  yet  entered
into force.

Cumulation of origin with the ACP States is also provided for by this Agreement but has not yet entered
into force.

Bilateral  GSP  cumulation  applies  between  the  EC  and  the  beneficiary  country,  diagonal  cumulation
applies  between  the  EC,  Norway  and  Switzerland  and  the  beneficiary  country  and  regional  cumulation
applies between the beneficiary country belonging to one of the four GSP regional cumulation groups (the
Association  of  South-East  Asian  Nations,  the  Central  American  Common  Market,  the  Andean
Community, and the South Asian Association for Regional Cooperation). These types of cumulation may
be combined for a single operation.

These different types of cumulation apply under Regulation No 82/2001, in trade between the Community
and Ceuta and Melilla, but  under the rules of origin of the preferential arrangements established by the
Community with third countries they also apply to trade with those third countries and Ceuta and Melilla
(for the list of countries with which the various types of cumulation are allowed, see OJ C 108, 4.5.2002,
p.3).

51

 
FINANCIAL STATEMENT

This  Green  Paper  is  not  a  legislative  proposal  but  a  discussion  paper  aimed  at  opening  up  the
debate. It therefore has no immediate financial impact.

52

 
IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS WITH SPECIAL REFERENCE TO
SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)

This  Green  Paper  is  not  a  legislative  proposal  but  a  discussion  paper  aimed  at  opening  up  the
debate. It therefore has no immediate impact on business, and in particular SMEs.

The consultations launched by the Green Paper on the future of the rules of origin in preferential
arrangements will, however, be targeted primarily on business circles. Business, whether in the
form  of  individual  firms  or  representative  organisations,  will  be  able  to  contribute  to  the
discussion and state its needs in the matter.

53