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Commission Communication The Rules of Origin in Preferential Trade Arrangements Orientations for the future COM(2005)100 final 16 March 2005. Presentation. WHY?. A Communication? to involve other relevant institutions in the process to inform stakeholders and allow them to react

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  1. Commission CommunicationThe Rules of Origin in Preferential Trade ArrangementsOrientations for the futureCOM(2005)100 final16 March 2005 Presentation

  2. WHY? • A Communication? • to involve other relevant institutions in the process • to inform stakeholders and allow them to react • General orientations for PRO? • to give a follow up to the Green Paper consultation • to define a coherent approach of origin in individual arrangements and pave the way for specific changes

  3. WHAT? A package of three pillars • Simpler and more development-friendly rules for the determination of preferential origin and cumulation • More efficient procedures based on a better balance of responsibilities between trade and customs • Secured environment for legitimate trade through enforced rules

  4. HOW? • Legislative actions • Operational actions WHEN? • First application to GSP • Orientations to be used in ACP-EPAs negotiations • Progressive application to other arrangements

  5. Simplerand more Development-friendly Rules

  6. Determination of origin • Simplification of concepts and methods • Adjustment of origin requirements to development and market access needs • Clarification, simplification, appropriate relaxation of conditions and possible extension of cumulation facilities

  7. Wholly obtained fishery products • Simplified conditions for fishing vessels and factory-ships: • registration/recording and flag maintained • property maintained but appropriately simplified • Deletion of the crew condition • 'Cumulation' of conditions within a group of countries belonging to the same cumulation zone

  8. Sufficiently worked or processed productsA Single Value Added Method • Need to replace the current complex rules by simpler ones • Value Added Method is at the same time: • Simpler and across-the-board • Transparent • Flexible • Impact assessment and simulations to 'test' the method and the SPT for certain products

  9. Value Added Method is based on: • Net Production Cost = • Costs involved in the production of the exported product • Local Value Content = Value added to materials imported in a country • Sufficient Processing Threshold = • Minimum % of NPC required to consider a product as sufficiently processed

  10. Sufficient Processing – Local value Content Mexico If (GSP) Sufficient Processing Threshold = 50% NPC VNOM=45 Costa Rica LVC in Costa Rica = (120-45)/120x100 = 62,5% NPC > 50% Processing EC NPC=120 Product is originating in Costa Rica

  11. Cumulation • Scope and possible extension of cumulation: support to economic integration of coherent regional groupings, subject to identical RoO and appropriate legal framework for administrative co-operation • Regional conventions on origin: a single international instrument for countries belonging to the same cumulation zone but under separate FTAs • Possible extension of full cumulation with an ‘origin of the zone’ (not applicable to GSP)

  12. Cumulation – Allocation of Origin • Single Value-Added Method based on: • Net Production Cost of the exported product • Value Added in the country • Cumulation Thresholds expressed in % of NPC (in principle lower than the Sufficient Processing Threshold) • Cumulation Thresholds can be established for Bilateral, Regional or Diagonal cumulation • Impact assessment and simulations to 'test' the cumulation thresholds for certain products

  13. Regional Cumulation - Allocation of Origin (VA) If (GSP) Regional Cumulation Threshold = 25% NPC GSP Regional Cumulation Group II Panama VOMC=55 Value Added in Costa Rica = (120-55)/120x100 = 54% NPC > 25% Costa Rica Processing EC Product is originating in Costa Rica NPC=120

  14. EfficientProcedures

  15. Procedures to manage and control preferential origin A new breakdown of responsibilities • Declaration of origin by the Importer claiming the preference • Determination and Statement on origin by Registered Exporters • Control of the economic operators and of the origin of products by the Customs Authorities

  16. Summary of Procedures • Exporter • Is registered • Complies with rules • Accepts controls • Provides statements on origin • EX Authorities • Register and monitor exporter • Open and update register • Exclude exporter if failure • Assist IM Customs in controls commercial relation administrative co-operation relations authorities-economic operators • Importer • Verifies registration and • statements • Claims preference/declares • origin • Provides additional evidence • on request • IM Authorities • Accept claim for preference • Select declarations for control • Request additional evidence • Request subsequent verification • to EX Customs

  17. SecuredEnvironment

  18. Conditions for Compliance • Prior evaluation of administrative capacity: - Organisation/structures - Legal framework - Operational capacity to manage, control and assist the partner country • Information and training • Technical assistance

  19. Monitoring Compliance in Partnership • Monitoring compliance by the authorities with their obligations • Information and reporting system on the functioning of preferential arrangements • Targeted Monitoring Action Plan • Ensuring compliance by the economic operators: fight and mutual assistance against fraud on origin

  20. Precautionary Measures and Safeguard Mechanisms • Notice to importers • Suspension/withdrawal of preferences • Financial responsibility

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