Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee - The rules of origin in preferential trade arrangements - Orientations for the future
Date: 2005-03-16
Institutions: European Commission
Subjects: certificate of origin, international trade, originating product, tariff preference, trade policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.3.2005 
COM(2005) 100 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE 

The rules of origin in preferential trade arrangements 

Orientations for the future 

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Table of contents 

EXECUTIVE SUMMARY................................................................................................................................... 3 

INTRODUCTION................................................................................................................................................. 6 
Objectives of this communication ................................................................................................................... 6 
Green paper on the future of rules of origin in preferential trade arrangements ...................................... 7 
Results of the consultation process ................................................................................................................. 7 
BASIC PRINCIPLES FOR A NEW APPROACH TO PREFERENTIAL ORIGIN ..................................... 8 

1.1. 

SIMPLER AND MORE DEVELOPMENT-FRIENDLY RULES: DETERMINATION OF 

1. 
PREFERENTIAL ORIGIN AND CUMULATION OF ORIGIN .................................................................... 8 
Basic rules for the determination of preferential origin ................................................................. 8 
1.1.1.  Wholly obtained fishery products.................................................................................................... 8 
Sufficiently worked or processed products...................................................................................... 9 
1.1.2. 
Cumulation of origin as a component of regional integration ..................................................... 10 
1.2.1. 
Scope for cumulation and conditions for its application and extension........................................ 10 
1.2.2.  Regional conventions on origin..................................................................................................... 10 
Simplification and relaxation of conditions for cumulation .......................................................... 11 
1.2.3. 

1.2. 

EFFICIENT PROCEDURES: RESPONSIBILITIES OF ECONOMIC OPERATORS AND 

2. 
PUBLIC AUTHORITIES IN ESTABLISHING AND CONTROLLING PREFERENTIAL ORIGIN ..... 11 
Declaration of the origin by the importer claiming the preference ............................................. 12 
Statement on the origin by the exporter......................................................................................... 12 
Control of the origin of the products and of the economic operators by customs authorities – 

2.1. 
2.2. 
2.3. 
Administrative co-operation.......................................................................................................................... 13 

3. 
SECURED ENVIRONMENT: ENFORCEMENT OF THE RULES BY THE COMPETENT 
AUTHORITIES .................................................................................................................................................. 13 
Creating the conditions for compliance ......................................................................................... 13 

3.1. 

3.1.1.  Prior evaluation of the capacity of the beneficiary country/group of countries to administer the 
arrangement and the related rules and procedures..................................................................................... 13 
Information, training and technical assistance on preferential rules of origin............................. 14 
3.1.2. 
3.2.  Monitoring compliance in partnership .......................................................................................... 14 
3.2.1.  Monitoring compliance by the public authorities to the obligations in the arrangements............ 14 
3.2.2.  Ensuring compliance with the rules by economic operators – Fight against fraud and mutual 
assistance on fraud ...................................................................................................................................... 15 
Using safeguard mechanisms .......................................................................................................... 15 

3.3. 

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EXECUTIVE SUMMARY 

•  From  the  replies  to  the  consultation  process  launched  by  the  Green  paper  of  the 
Commission  on  the  future  of  rules  of  origin  in  preferential  trade  arrangements,  there  are 
specific  expectations  with  regard  to  these  arrangements  and  rules  concerning  both  their 
objectives and their formal presentation. 

•  Those  expectations  –  often  contradictory  -  have  to  be  matched  with  international 
commitments  and  orientations  already  submitted  by  the  Commission,  in  particular  the 
recent Communications  on  the future of textiles and the new scheme for the Generalised 
System of Preferences (GSP). 

•  In  the  context  of  the  Doha  Agenda  for  Development,  ensuring  a  better  integration  of 
developing countries into the world economy, in particular though improved access to the 
markets of developed countries remains the top priority of Community trade relations and 
shall  inspire  the  revision  of  its  preferential  rules  of  origin.  That  implies  the  necessary 
changes  to  the  substance  of  the  rules  and  conditions  should  be  accompanied  by  an 
adaptation of the procedures for their management and control, in order to make sure that 
the preferences actually benefit those who need them. 

•  Against this background, actions should be taken in three areas: 

A revision of the conditions for a product to be considered as originating in a country 

To make rules simpler and, where appropriate, more development-friendly, the Commission 
would support: 

–  a  simplification  of  the  concepts  and  methods  used for the purpose of determining origin, 
including the wording of the corresponding provisions; such simplification should improve 
clarity, aid comprehension of the rules and support their application and enforcement; the 
impact  of  such  a  simplification  should  be  fully  assessed  to  ensure  that  the  overall 
objectives are met and, if not, the Commission will adopt a different approach. 

–  an  adjustment  of  the  conditions  imposed  on  production  processes  to  confer  originating 
status, insofar as development policy and developing countries are concerned, with a view 
to guaranteeing easier access to the Community market through preferential tariff treatment 
corresponding  to  the  real  production  and  export  capacity  of  the  beneficiary  countries,  in 
particular for the least developed and smallest countries; 

–  an  additional  relaxation  of  the  conditions  to  apply  cumulation  of  origin  within  coherent 
regional  groupings,  subject  to  appropriate  mechanisms  in  place  for  administrative  co-
operation between the partners to cumulation. 

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A change in the customs procedures necessary for the proper implementation and the control 
of the use of the preferences by the economic operators: 

In  order  to  better-balance  the  responsibilities  between  economic  operators  and  public 
authorities  and  to  protect  the  legitimate  interests  at  stake,  the  Commission  would  favour  a 
system based on the following components: 

–  the  establishment  of  the  originating  status  by  the  exporters  themselves,  subject  to  prior 
registration by the authorities of the exporting country based on pre-established common 
standards; 

–  an improvement in the exchange of information between the exporters and the authorities 
of the exporting countries on the use of the preferential arrangement and the reinforcement 
of controls by these authorities on the exporters, which we can rely on; 

–  a  clarification  of  the  basic  rights  and  obligations  of  the  importers  claiming  preferential 

treatment on the basis of statements on origin made out by their foreign suppliers; 

–  the  inclusion  of  special  clauses  on  compliance  with  origin  requirements  in  commercial 
transactions  between exporters and importers, including the possibility to transmit proofs 
of origin by electronic means; 

–  the reinforcement of the exchange of information and administrative co-operation between 
the  authorities  of  the  exporting  and  importing  countries  when  verifying  origin,  based  on 
clear obligations and procedures. 

The  development  of  instruments  ensuring  that  the  beneficiary  countries  comply  with  their 
obligations: 

To  ensure  compliance  from  public  authorities  with  their  obligation  to  properly  apply  the 
arrangements and the rules of origin and to fully co-operate in preventing and fighting against 
abuses, the following actions are proposed: 

–  technical  assistance  to  beneficiary  countries  (mainly  the  least  developed  and  smallest 
countries),  which  need  support  with  regard  to  the  correct  application  of  preferential 
arrangements in order to maximise their benefits; 

–  a  targeted  monitoring  of  the  functioning  of  preferential  arrangements  based  on  an  action 

plan; 

–  the appropriate use  of  precautionary  measures and safeguard mechanisms in the  event of 

insufficient control or the failure to provide co-operation. 

•  The revision of the rules of origin along these lines will constitute an important component 

for new GSP scheme.  

•  This  new  approach  to  the  rules  of  origin  and  administrative  co-operation  should  shortly 
also be proposed, as a matter of priority, for the Economic Partnership Agreements (EPAs) 
being negotiated with six regional groups of African-Caribbean-Pacific (ACP) countries, in 
full respect of the current benefit of the Cotonou Agreement. It could then progressively be 
extended  to  existing  Free  Trade  Agreements.  This  would  support  a  sufficient  level  of 

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harmonisation  of  the  rules  in  the  framework  of  a  given  set  of  preferential  arrangements 
with  a  regional  coherence,  including  the  grouping  into  a  single  framework  (a  regional 
convention, for instance) of rules which are common to a given region.  

•  In proposing new arrangements to trade partners, the Commission will seek to ensure that 
matters which have already been settled in on-going negotiations are not put into question, 
and to approach new negotiations in a constructive and open spirit.  

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INTRODUCTION 

Objectives of this communication 

•  Rules  of  origin  are  an  essential  component of  Community  trade  policy,  especially  where 
tariff  preferences  have  to  be  granted  to  products  only  originating  in  given  countries  or 
groups of countries. Therefore, they must be consistent with the overall objective of those 
preferences of strengthening economic integration between the partners and in particular of 
facilitating  the  full  insertion  of  developing  countries  into  the  world  economy  and 
supporting their economic and social development. 

•  Such  rules  should  reflect  the  nature  and  the  importance  of  the  link  that  should  exist 
between  the  products  and  the  country  concerned,  in  particular  the  level  of  processing  on 
external inputs in a particular country, required for the products obtained to be considered 
as  originating  in  that  country.  Customs  procedures  shall  be  established  in  order  to  show 
and check that these requirements have actually been fulfilled. The current situation, which 
combines,  in  a  number  of  cases,  complex  rules  with  weaknesses  in  their  enforcement,  is 
not satisfactory. 

•  This communication aims at providing general orientations on the basic principles that the 
Commission  intends  to  follow  in  improving  rules  of  origin  in  the  various  Free  Trade 
Agreements and autonomous preferential arrangements. 

•  Such an improvement will consist in simplifying and appropriately relaxing the concept of 
origin,  tightening  the  related  procedures  and  developing  the  tools  needed  to  ensure 
compliance.  For  each  of  these  three  aspects,  the  Commission  intends  to  promote 
transparency and to adjust the rules to the objectives of the arrangements. 

•  The  need  for  such  changes  has  been  highlighted,  in  particular,  in  the  context  of  the 
preparation  of  the  new  Generalised  System  of  Preferences  (GSP)  for  the  period  2006-
20151,  the  opening  of  the  negotiations  on  the  new  regional  Economic  Partnership 
Agreements  (EPAs)  with  the  African-Caribbean-Pacific  (ACP)  countries,  and  the 
reflection on the future of the textile sector2.  

•  According to its Communication "Developing countries, international trade and sustainable 
development:  the  function  of  the  Community’s  generalised  system  of  preferences  (GSP) 
for the ten-year period from 2006 to 2015", the Commission intends to target GSP "on the 
countries that most need it and must encourage regional cooperation between developing 
countries  by  various  means.  The  GSP  should  assist  these  countries  to  attain  a  level  of 
competitiveness which could make them self-supporting economically and full partners in 
international trade." 

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Communication  from  the  Commission  to  the  Council,  the  European  Parliament  and  the  European 
Economic and Social Committee - COM(2004) 461, 7.7.2004. 
Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  on  the  future  of  the  textiles  and 
clothing sector in the enlarged European Union – COM(2003) 649, 29.10.2003. 

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•  In  order  to  support  this  objective,  the  GSP  will  therefore  provide  the  first  opportunity  to 
apply  these  general  guidelines  for  improving  rules  of  origin,  subject  to  fine-tuning  the 
details  of  their  implementation.  This  will  be done  through  amendments  to  the  provisions 
laid down in the implementing provisions o the Community customs code3. 

Green paper on the future of rules of origin in preferential trade arrangements 

•  In  the  context  of  international  trade  liberalisation,  the  Commission  has  adopted  a  Green 

Paper4 which provided: 

–  an overall assessment of the current problems of origin in preferential arrangements; 

–  a focus on aspects which require a consistent approach to bring them under control; 

–  an  overview  of  the  options  available,  particularly  with  regard  to  the  systems  for 
certification,  declaration  and  control  of  the  originating  status  of  products  and  ways  of 
refocusing the current system of administrative cooperation. 

Results of the consultation process 

•  The consultation process on the Green paper ran from January 2004 until 15 March 2004 
and  involved  international  traders  and  competent  authorities  of  the  Member  States, 
acceding  and  candidate  countries  and  countries  taking  part  in  various  preferential 
arrangements with the European Union. 

•  The  Commission  produced  in  September  2004  a  summary  report  of  the  results  of  the 
consultation process, whose main objective was to give a clear view and summary of the 
opinions and comments made by the contributors. 

•  Having  in  mind  the  need  to  balance  the  various  interests  at  stake,  the  contributions 
received represented a valuable source of material for the Commission in the preparation of 
this communication. 

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Commission Regulation (EEC) No 2454/93 of 2 July 1993 (OJ L 253, 11.10.1993), last amended by the 
Act of Accession (OJ L 236, 23.9.2003). 
Green  paper  on  the  future  of  rules  of  origin  in  preferential  trade  arrangements  -  COM(2003)  787, 
18.12.2003. 

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BASIC PRINCIPLES FOR A NEW APPROACH TO PREFERENTIAL ORIGIN 

As emphasised in the Green paper, any improvement of preferential rules of origin implies a 
combination  of  appropriate  provisions,  meeting  the  objectives  of  the  arrangements  and  the 
needs  of  stakeholders,  efficient  procedures,  allocating  in  an  optimal  way  responsibilities  in 
managing and controlling origin and strict compliance with legal obligations and conditions 
through enforcement instruments5. The overall approach of a revision could be summed up as 
follows: 'appropriate rules, efficient procedures, secured environment'. 

1. 

SIMPLER  AND  MORE  DEVELOPMENT-FRIENDLY  RULES:  DETERMINATION  OF 
PREFERENTIAL ORIGIN AND CUMULATION OF ORIGIN 

•  Subject to the main objectives of given arrangements (reciprocal enhanced market access, 
development of poor countries, security, regional co-operation and integration), differences 
in  the  definition  of  the  preferential  treatment  and  also  in  the  conditions  for  a  product  to 
enjoy such preference will be kept as this is in line with the ultimate substitution of such 
arrangements with a multilateral approach. 

•  The Commission supports both a formal simplification of the concepts and methods used 
for  the  purpose  of  determining  origin,  including  the  rewording  of  the  appropriate  legal 
provisions  and  relaxation  in  substance,  in  particular  where  developing  countries  are 
concerned.  Simplification  should  improve  clarity,  aid  comprehension  of  the  rules  and 
support  their  application  and  enforcement  and  boost  development  impact  within  and 
between regional trade blocs. Relaxation should allow better market access. 

•  Depending  on  the  context  and  the  objectives  of  the  preferential  arrangement,  such  an 

adaptation of the rules of origin can be achieved, through: 

–  a revision of the basic rules imposed on products, in order to be considered as originating 
because  they  are  'wholly  obtained'  in  a  country  or  'sufficiently  processed'  there  from 
external inputs, and 

–  a  revision  of  the  conditions  for  the  cumulation  of  origin  between  countries  belonging  to 

economically-integrated regional entities. 

1.1. 

Basic rules for the determination of preferential origin 

1.1.1.  Wholly obtained fishery products 

•  Insofar  as  'wholly  obtained  products'  are  concerned,  the  main  aspect  which  needs 
improvement is the determination of the origin of fishery products through the 'nationality' 
of  the  vessel:  some  of  the  current  criteria  may  have  to  be  reviewed  in  the  light  of  new 

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COM(2004)  461  on  GSP,  point  6.6:  "The  rules  of  origin  lay  down  the  main  criteria  for  access  to 
preferences but they were drawn up at a time when the international economy was very different from 
that of today and when goods were produced in a very different way. In the light of recent consideration 
of  this  question  (see  the  Green  Paper  referred  to  at  point  6.3),  the  need  for  change  is  widely 
recognised:  in  form  (simplification),  in  substance  (amendment  of  the  origin  criteria  and  cumulation 
rules) and in procedures (formalities and controls)." 

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developments in the fisheries sector. The Commission considers that the origin of the fish 
should be based on the flag, registration and simplified yet adequate conditions regarding 
property, the crew conditions being removed. 

•  Moreover,  in  the  context  of  a  system  of  cumulation  of  origin,  those  conditions  may  be 

fulfilled in any of the countries belonging to that system. 

1.1.2. 

Sufficiently worked or processed products 

•  The  basic  origin  rules  in  the  relevant  preferential  arrangements  should  reflect  both  the 
production capacity of countries and processing operations with a real added-value in the 
country. 

•  For  that  purpose,  the  Commission  favours  using  a  method  of  evaluation  of  sufficient 
processing based on a 'value added test' as the starting point. Under this method, a product 
resulting from the working or processing of imported non-originating materials would be 
considered as originating if the value added in the country (or in a region in the event of 
cumulation), amounts at least to a certain threshold (a minimum 'Local or Regional Value 
Content'), expressed as a percentage of the net production cost of the final product. 

•  The  importance  of  the  input  required,  shown  through  the  percentage  of  value  added 
demanded, must be fixed on the basis of a sound economic analysis and according to the 
objectives of the arrangement and, when it does not thwart these objectives, to the required 
degree of trade liberalisation. 

•  The  likely  impact  of  the  value  added  approach  against  the  guiding  principles  of 
simplification  and  development  friendliness  should  be  carefully  evaluated.  That  could  be 
achieved  through  simulations  on  valuation  and  percentages  carried  out  on  representative 
samples based on real situations of developing countries, especially the poorest ones, thus 
allowing  a  comparison  with  the  present  situation.  It  is  imperative  that  developing 
countries’  current  levels  of  access  to  the  EC  market  should  not  be  reduced  by  this  new 
approach. 

•  The percentage of added value required should in particular be fixed so as not to exceed 
the production capabilities of developing countries while at the same time discouraging the 
transhipment of products coming from non-eligible countries and only virtual or minimal 
processing.  In  addition,  it  should  not  represent  an  obstacle  to  improving  efficiency  and 
competitiveness by reducing production costs. 

•  Different  percentages  could  be  fixed  in  different  sectors  for  that  purpose  and  under  GSP 
specific  thresholds  could  also  be  established,  for  Least  Developed  Countries  benefiting 
from Everything But Arms. 

•  Moreover,  in  a  number  of  sectors  including  agricultural,  fishery  or  textiles  products, 
moving  to  a  new  method  for  the  determination  of  origin  will  represent  a  major  change 
whose  impact  needs  to  be  properly  evaluated  in  advance.  Should  this  evaluation 
demonstrate that the value added approach would not deliver the expected results in terms 
of development and simplification for certain sectors, the Commission will adopt another 
approach  to  better  achieve  these  objectives.  Moreover,  the  value-added  criterion  may, 
where appropriate to prevent possible misapplication or circumvention of preferences, be 
supplemented with additional conditions or criteria supporting actual development.  

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•  Combining  clarity,  workability  and  flexibility  in  the  establishment  of  percentages,  this 
method would allow the level of processing on various products to be evaluated through a 
single  unit  of  measurement  and  thus  avoid  inequitable  treatment;  it  would  also  render 
superfluous the 'negative list' of insufficient operations and the use of tolerances in value. 

1.2. 

Cumulation of origin as a component of regional integration 

1.2.1. 

Scope for cumulation and conditions for its application and extension 

•  Cumulation should come into effect only within coherent regional groups or zones where: 

–  preferential  trade  and  cumulation  are  part  of  an  overall  process  of  actual  economic 

integration; 

–  cumulation is based on free trade agreements or results from autonomous arrangements; 

–  preferential treatment is granted to products according to the application of identical rules 

of origin  

–  a  legal  administrative  framework  has  been  developed  in  the  countries  involved  and 
between them to administer and control, through appropriate administrative co-operation, 
the origin of products benefiting from cumulation. 

The same conditions should apply to any extension of cumulation or to cumulation between 
different regions. 

•  With regard to reciprocal enhanced market access, there should be a focus on the regional 
(including  a  bloc-to-bloc  as  is  the  case  under  the  Cotonou  Agreement,  whose  benefits 
should  be  maintained)  approach  through  cumulation  of  origin,  without  excluding  the 
necessary adaptations in basic origin rules which are of mutual interest in terms of external 
sourcing and access to the respective markets of the parties. 

•  With  regard  to  development,  cumulation  within  coherent  regional  groupings  would  offer 
additional  opportunities  for  developing  countries,  especially  the  least  developed  ones,  to 
maximise the benefits resulting from a balanced relaxation of the basic rules. 

•  Currently, there are under GSP three regional groups corresponding to ASEAN, SAARC 
and  a  recent  merger  of  Andean  Community  and  Central  America  Common  Market  in  a 
single  group.  The  Commission  is  ready  to  examine  any  request  for  establishing  new, 
merged  or  wider  groups,  insofar  as  economic  complementarities  exists,  differences  in 
preferential arrangements applicable to the  various countries and the related risk of tariff 
circumvention are taken into consideration and the necessary structures and procedures for 
administrative co-operation for management and control of origin are put in place. 

1.2.2.  Regional conventions on origin 

•  Rules of origin common to a given group of trade partners associated in a cumulation zone 
should be laid down in a single international instrument, to which the various preferential 
agreements would refer. 

•  In the PanEuroMediterranean zone, such a single international instrument should take the 
form of a regional convention on origin between the trade partners. It should not only make 

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the management of origin easier but also contribute to enhancing the integration between 
the  parties  to  various  Free  Trade  Agreements  through  a  single  set  of  rules  of  origin 
allowing cumulation. 

•  The  same  approach  should  be  favoured  in  order  to  support  possible  cumulation  between 

other countries or regions subject to separate Free Trade Agreements. 

1.2.3. 

Simplification and relaxation of conditions for cumulation 

•  For  the  sake  of  clarity  and  enforcement,  juxtaposition  of  various  forms  of  cumulation 
(bilateral,  diagonal,  full),  involving  the  same  countries  in  different  preferential  contexts, 
should be avoided. 

•  A progressive extension of full cumulation to the various preferential frameworks could be 
considered,  insofar  as  traceability  of  the  status  of  materials  can  be  ensured.  As  far  as 
possible and taking into account the various levels of preferences applied to the respective 
members of the group, full cumulation should entail putting in place a common origin for 
the group. Such requirements exclude however full cumulation in the context of GSP. 

•  With  regard  to  GSP  regional  cumulation,  it  is  proposed  to  replace  the  current  double 
condition  for  the  allocation  of  origin  to  a  member  country  of  a  group  (a  more  than 
insufficient operation and the highest value-added are required) by a single one, based on 
the  same  method  (the  value  added  test)  as  the  one  used  to  determine  whether  or  not  the 
processing  on  non-originating  materials  is  sufficient.  A  product  will  be  considered  as 
originating in the country of the group where the final processing on materials originating 
in other countries of the same group has taken place, if the value added there is higher than 
a standard percentage. 

•  In order to support cumulation and regional integration, the percentage should in general 
be fixed at a level much lower than the one required for the same product where resulting 
from  a  processing  of  non-originating  materials.  However,  to  take  into  account  specific 
situations in some sectors, for the same reasons as mentioned above, the cumulation value 
threshold  may,  where  appropriate,  be  defined  and/or  supplemented  with  additional 
conditions  or  criteria,  in  order  to  prevent  possible  misapplication  or  circumvention  of 
preferences. 

2. 

EFFICIENT  PROCEDURES:  RESPONSIBILITIES  OF  ECONOMIC  OPERATORS  AND 
PUBLIC AUTHORITIES IN ESTABLISHING AND CONTROLLING PREFERENTIAL ORIGIN 

•  Whatever the specific objectives, preferential arrangements could not be properly reshaped 
simply  through  the  revision  of  the  legal  conditions  to  be  fulfilled  in  order  to  enjoy  the 
preferential  treatment.  Such  a  revision  shall  be  accompanied  by  setting  up  appropriate 
procedures,  controls  and  methods  of  administrative  co-operation  between  the  competent 
authorities of the Parties to an arrangement, which ensure compliance with the conditions, 
prevent abuses and protect legitimate economic and financial interests at stake. 

•  This  could  be  achieved  through  a  breakdown  of  responsibilities  between  the  economic 
operators,  responsible  for  the  determination  and  declarations  concerning  the  origin  of 
products,  and  the  customs  authorities,  which  shall  perform  the  necessary  audits  and 
controls,  relying  on  appropriate  administrative  capacity  and  mutual  assistance.  In  such  a 

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new  context,  'proofs  of  origin'  would  be  replaced  by  'declarations'  and  'statements'  on 
origin, to be either accepted or challenged. 

2.1. 

Declaration of the origin by the importer claiming the preference 

•  The importer bears responsibility with regard to the particulars of his customs declaration 
and the possible customs debt incurred from an incorrect declaration, without prejudice to 
the  non-recovery  of  duties  justified  by  'active  errors'  of  the  competent  authorities.  Like 
other elements to take into account where declaring goods to customs, a wrong statement 
on the originating status of products for which preferences are claimed would be part of the 
commercial risk borne by the importer. 

•  The  basic  rights  and  obligations  of  the  importers  claiming  preferential  treatment  on  the 
basis of statements made out by their foreign suppliers should be clarified. That includes 
the definition of: 

–  the conditions under which the customs authorities of the importing country can question 

the origin declared and request additional evidences; 

–  the  burden  of  the  proof  in  the  event  where  the  customs  authorities  challenge  the  origin 

declared; 

–  the obligation for these authorities, in such an event and on importer's demand, to request a 

subsequent verification by the authorities of the exporting country; 

–  the situations where the customs authorities are entitled to refuse the preferential treatment, 

without prejudice to appeal procedures available to the importer. 

•  These  procedural  elements,  valid  at  the  time  where  a  preference  is  claimed,  should  be 
adapted  to  the  event  of  subsequent  controls  of  customs  declaration  under  which 
preferences have already been granted.  

•  In  order  to  assist  the  importer  in  securing  his  declaration  of  origin,  special  clauses  on 
compliance  with  origin  requirements  should  be  introduced  in  commercial  transactions 
between exporters and importers, including the definition of responsibilities in the event of 
failures and the possibility to transmit statements of origin by electronic means.  

2.2. 

Statement on the origin by the exporter 

•  There  should  be  prior  registration  by  the  authorities  of  the  exporting  country  based,  in 
order to identify those exporters entitled to operate under a given preferential arrangement. 
Registration of exporters should require access to relevant financial records and accounts. 
Without weakening controls, it should also prevent discrimination against small operators.  

•  The  originating  status  should  be  established  and  a  statement  on  origin  made  out  by  the 

registered exporters themselves.  

•  The  exporter  should  be  in  a  position  to  prove  the  importer  that  he  is  registered  in  the 

country of export. 

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•  The  statements  should  make  clear  why  the  exported  products  can  be  considered  as 
originating in the beneficiary country, using standard forms or – where in electronic format 
–  e-documents  or  standardised  messages.  The  completion  of  these  formalities  should  be 
made easier thanks to a simplification of the rules. 

•  The flow of information on preferential exports between the exporters and the authorities 
of the exporting countries should be enhanced in order to support proper monitoring of the 
exporter's activity and pave the way for subsequent controls. 

•  The  customs  authorities  of  the  exporting  country  would  be  obliged  to  maintain  an  up-to 
date list of their registered exporters and to sanction, by a temporary or definitive exclusion 
from the list, those exporters who do not comply with the rules. This list should be made 
available  to  the  customs  authorities  of  the  importing  country,  using  secured  electronic 
means in order to preserve confidentiality and to prevent abuse. 

2.3. 

Control of the origin of the products and of the economic operators by customs 
authorities – Administrative co-operation 

•  Control on preferential imports by the authorities of the importing country should also be 
improved and targeted through risk analysis in order not to hinder legitimate trade flows. 

•  Based  on  the  status  of  registered  exporter  and  the  appropriate  communication  of 
information on the preferential exports, controls on the exporters by the authorities of the 
exporting country should be reinforced and targeted through risk analysis. 

•  The  exchange  of  information  and  the  administrative  co-operation  between  the  authorities 
of the exporting and of the importing countries, in charge of controlling preferential origin, 
should  be  based  on  clear  obligations  and  procedures  and  reinforced  from  a  legal  and 
operational point of view. 

3. 

SECURED  ENVIRONMENT:  ENFORCEMENT  OF  THE  RULES  BY  THE  COMPETENT 
AUTHORITIES 

•  In return for the correct application of the rules and obligations,, the economic operators 
should benefit from a secured environment in the execution of their commercial operations 
under preferential arrangements.  

•  To  ensure  compliance  by  public  authorities  with  their  obligation  to  properly  apply  the 
arrangements  and  the  rules  of  origin  and  to  fully  co-operate  in  preventing  and  fighting 
against abuses, the following actions are proposed: 

3.1. 

Creating the conditions for compliance 

3.1.1.  Prior  evaluation  of  the  capacity  of  the  beneficiary  country/group  of  countries  to 

administer the arrangement and the related rules and procedures 

•  Such a prior evaluation concerns countries with which a new arrangement or an extension 
or revision of an existing one has to be put in place. Satisfactory results shall constitute a 
pre-condition  for  setting  up  the  arrangement  with  the  country  concerned.  With  regard  to 

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new  preferential  agreements,  the  evaluation  shall  be  integral  part  of  the  negotiation 
process. 

•  The  evaluation  shall  show  that  the  country  concerned  has  the  organisation,  the  legal 
framework  and  the  operational  capacity  to  administer  and  control  the  functioning  of  the 
arrangement and to properly provide assistance and administrative co-operation. 

•  In  the  event  of  'bloc-to-bloc'  arrangements,  the  evaluation  would  focus  on  each  region 
concerned,  which  would  have  to  report  on  the  capacity  of  the  group  and  of  each  of  its 
members to maintain their obligations resulting from the arrangement. 

3.1.2. 

Information, training and technical assistance on preferential rules of origin 

•  Updated  information  and  training  about  the  preferential  rules  of  origin,  the  conditions  to 
fulfil, the opportunities offered and the obligations to be met are of the responsibility of the 
countries themselves. However, support to beneficiary countries can be provided from the 
regional  level  (when  the  country  belongs  to  a  regional  group),  from  international  level 
(WTO and WCO) and from Community level. 

•  The Commission has already put on the Europa Web site pages dedicated to rules of origin, 
where basic information, handbooks (on GSP and Pan European rules of origin) and links 
with legal texts are available. On the other hand the 'Expanded Exports Helpdesk' data base 
provides, by product heading, the rules of origin necessary which must be complied with in 
the context of a number of preferential arrangements . 

•  Insofar  as  technical  support  by  the  Community  is  concerned,  it  should  mainly  focus  on 
those  countries  which  need  more  assistance  in  the  field  of  origin  (LDCs  and  smallest 
countries and countries in political transition or reconstruction).  

•  To  this  end,  technical  assistance  can  be  provided  through  the  trade  and  customs 
components  of  existing  programmes  like  MEDA,  TACIS  or  CARDS,  from  the  new 
instrument for the European Neighbourhood Policy or through instruments to be developed 
in  the  context  of  the  new  regional  Economic  Partnership  Agreements  with  the  ACP.  A 
better co-ordination with the bilateral assistance provided by some Member States should 
however be ensured. 

3.2.  Monitoring compliance in partnership 

3.2.1.  Monitoring  compliance  by  the  public  authorities  to  the  obligations  in  the 

arrangements  

•  A proper functioning of the arrangements is of mutual interest to ensure fair trade between 
the  Community  and  its  trade  partners.  A  proper  monitoring  of  this  functioning  has 
therefore to be ensured in partnership. 

•  In  order  to  keep  an  overview  of  the  way  the  arrangements  are  working,  a  periodical 
reporting  system  by  the  beneficiary  countries  on  their  management  and  control  of 
preferential  origin  should  be  foreseen  in  the  arrangement  concerned.  A  similar  reporting 
should also be put in place from the Member States to the Commission in order to allow 
the Community to have an overview of the situation and to be in a position to report to its 
partners. 

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•  A Commission action plan for the monitoring of preferential arrangements should be put in 
place,  in  co-ordination  with  the  Member  States.  It  should  be  based  on  gathering 
information regarding the use of preferential arrangements and the operation of procedures. 
This information should be directed to a central point to be analysed and processed in order 
to identify – possibly through an annual programme - those products and/or countries for 
which more in-depth monitoring appears necessary. This monitoring would be performed 
using  contacts  with  the  country  concerned,  questionnaires  and,  where  necessary, 
monitoring visits in the country. 

•  Legal  bases,  technical  modalities  and  funding  of  expenses  involved  in  this  monitoring 

exercise should be identified initially. 

3.2.2.  Ensuring compliance with the rules by economic operators – Fight against fraud and 

mutual assistance on fraud 

•  Anti-fraud action is mainly the responsibility of the competent authorities in the exporting 

and importing countries. 

•  However, joint actions are needed in a domain like preferential treatment and origin, where 
these authorities shall play complementary roles. To this end, mutual assistance in matters 
of fraud shall be fully used and an active contribution to Community investigations, from 
third countries benefiting from preferences, is expected.  

3.3. 

Using safeguard mechanisms  

•  Precautionary  measures  and  safeguard  mechanisms  shall  be  used  as  appropriate  in  the 
event of insufficient control or the failure to provide co-operation, including assistance in 
investigations against fraud. 

•  These measures include notices to importers, suspension of preferences where foreseen and 

possible financial responsibility of the failing country to be introduced. 

•  Preferential  arrangements  confer  obligations  on  the  official  authorities  regarding 
implementation  and  control  of  the  fulfilment  of  the  conditions  for  granting  preferential 
treatment. Any non-observance by those authorities of their obligations is likely to involve 
their being financially responsible, whenever the non-observance of obligations by one of 
the  parties  impacts  on  the  financial  interests  of  the  other  party  (loss  of  income  from 
customs  duties  which  cannot  be  recovered  from  the  importer)  and  a  causal  link  is 
established  between  the  fault  (or  failure)  and  the  resulting  financial  damage.  Obviously, 
before  introducing  any  external  financial  responsibility  clause,  the  Commission  and 
Member  States  should  reach  agreement  regarding  Member  States'  internal  financial 
responsibility for their active errors. 

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