Workshop on pan-Euro Mediterranean preferential rules of origin

Workshop on pan-Euro. Mediterranean preferential rules of origin PEM Convention: general provisions and ratification process 16 -17 April 2013 Jan Vangheluwe European Commission DG Taxation and Customs Union Origin of goods

Presentation content Regional Convention on pan-Euro. Mediterranean preferential rules of origin (PEM Convention) 1. 2. 3. 4. 5. 6. 7. 8. General Ratification process Diagonal cumulation The extended PEM matrix The linkage to the Convention in FTAs The Joint Committee Accession of third parties Roadmap 2

1. General What? • An international agreement (legal instrument) laying down a single set of rules of origin • Intended to replace the origin rules in all Free Trade Agreements (FTAs) between the Contracting Parties (CPs) to the PEM Convention with a single legal instrument fixing rules of origin • Creating one big zone of diagonal cumulation (merging current PEM cumulation and SAP cumulation) • Published in the EU in the Official Journal L 54 of 26. 2. 2013 3

1. General Who? § Contracting Parties: § EU § EFTA States § Faroe Islands (represented by DK) § Participants in the Barcelona Process (MEDs) § Participants in the EUs Stabilisation and Association Process (SAP partners) 4

1. General Why? Ø Set identical rules for all partners ( = condition for applying diagonal cumulation) Ø Provide for extended diagonal cumulation (between EFTA states and SAP countries; between SAP countries and MEDs) Ø Can be managed/amended more easily – no need to amend more than 60 individual protocols Ø Make it easier to update the rules of origin in view of their simplification and adaptation to economic reality Pave the way for long expected simplification Ø Can be extended to include new Partners more easily (more partners = more sourcing possibilities) 5

Bosnia and Herzegovina Turkey EU Norway Switzerland/ Lichtenstein Montenegro Iceland Faeroe Albania Morocco Croatia Algeria Former Yugoslav Rep. of Macedonia Tunisia Serbia Egypt Lebanon Jordan West Bank and Gaza Strip Israel Syria

Bosnia and Herzegovina Turkey EU Norway Switzerland/ Lichtenstein Montenegro Iceland Kosovo* Albania Croatia Former Yugoslav Rep. of Macedonia Reference to PEM Convention replacing Protocol on rules of origin in each FTA Faeroe Morocco Algeria Serbia Tunisia Lebanon Jordan Egypt West Bank and Gaza Strip Israel * This designation is without prejudice to positions on status and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence. Syria

2. Ratification process Why should partners ratify asap? Ø To support an initiative creating better trade opportunities and promoting regional integration in the framework of the European Neighbourhood Policy Ø To allow their companies to benefit from extended cumulation possibilities ( = enhanced sourcing opportunities) Ø To be able to actively participate to the revision of the Convention (only Partners having ratified the Convention have the right to vote) Ø To avoid disruption of trade: if Appendix I to the Convention is revised before all Partners ratified, those not having ratified will be prevented from applying diagonal cumulation 8

State of play 2. Ratification process Partner Signature Ratification Entry into force Norway 15. 06. 2011 09. 11. 2011 01. 2012 Switzerland 15. 06. 2011 28. 11. 2011 01. 2012 Lichtenstein 15. 06. 2011 28. 11. 2011 01. 2012 Croatia 15. 06. 2011 20. 01. 2012 01. 03. 2012 Iceland 30. 06. 2011 12. 03. 2012 01. 05. 2012 Albania 27. 06. 2011 05. 03. 2012 01. 05. 2012 EU 15. 06. 2011 26. 03. 2012 01. 05. 2012 FYROM 15. 06. 2011 14. 06. 2012 01. 08. 2012 Montenegro 15. 06. 2011 02. 07. 2012 01. 09. 2012 Faroe Islands 15. 06. 2011 Jordan 07. 2011 Turkey 04. 11. 2011

2. Ratification process Partner Signature Morocco 18. 04. 2012 Algeria 05. 10. 2012 Serbia 12. 11. 2012 Tunisia State of play Ratification 16. 01. 2013 Bosnia and Herzegovina Egypt Israel Kosovo* Lebanon Palestine Syria * This designation is without prejudice to positions on status and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence. Entry into force

2. Ratification process Procedure Ø Signature of the Convention Ø Ratification of the Convention Ø Deposit your instrument of acceptance with the depository of the Convention ( = General Secretariat of the Council of the EU) Ø Target: By end October 2014 Ø Entry into force: 1 st day of 2 nd month following deposit Ø Target: entry into force for all CPs by 1. 1. 2015 11

Current situation 3. Diagonal cumulation PEM cumulation - 16 partners: EU, TR, Faroe Islands, EFTA States, MEDs SAP cumulation (Stabilisation and Association Process) – 8 partners: (EU, TR, 6 Western Balkan countries) • More than 60 Free Trade Agreements (FTA) between these partners • Each containing a Protocol setting identical rules of origin • Modifying rules of origin requires changing all the Protocols • PEM and SAP do not overlap 12

3. Diagonal cumulation Conditions ØExistence of a preferential trade agreement (FTA) between Contracting Parties (CPs) involved in the acquisition of the origin status and the CP of destination ØMaterials and products have acquired originating status by the application of rules of origin identical to those of the Convention ØNotices indicating fulfilment of the requirements to apply cumulation published in the OJEU and in Contracting Parties party to the relevant agreements ØMention dates as of which diagonal cumulation can apply 13

3. Diagonal cumulation 3/15/2018 Current situation – PEM (OJ C 156, 26. 5. 2011, p. 3)

3. Diagonal cumulation 3/15/2018 Current situation – SAP (OJ C 154, 31. 05. 2012, p. 14)

4. The extended PEM matrix Ø WHY? Ø Add SAP partners in the matrix, emphasising one of the main objectives of the PEM Convention: to include SAP countries in the system of PEM diagonal cumulation of origin ( = SAP+) Ø Main changes in the notice and matrix (see doc TAXUD/111007/13) Ø Matrix groups Parties (EU, EFTA, Faroe Islands, MEDs, TR, SAP) Ø 2 types of dates: Ø Date preceded by "C": cumulation based on reference to the PEM Convention in the FTA (so far only CH(+LI)-IS-NO ME) Ø Other dates: cumulation based on current protocols on rules of origin in FTAs Ø Note Ø SAP-matrix remains valid for the time being Ø Dates will be moved to PEM matrix as links are made to the Convention 16

5. The linkage General Protocols on rules of origin in all FTAs between CPs will have to be replaced by Protocols referring to the Convention Ø Requires a Decision of the Joint Committee competent for amending the rules of origin in the relevant Agreement Ø Target date: by end 2014 Ø Condition: Convention has entered into force for the CPs concerned Following Agreement currently qualify: ü EFTA-ME (already done) / EFTA-AL / EFTA-MK ü EU-CH (+LI) / EU–IS / EU-NO / EU-AL / EU-MK / EU-ME 17

5. The linkage Text Ø Draft text of the Protocol: Ø Contains the reference to the Convention Ø Provision on dispute settlement ü Joint Committee provided for in the relevant FTA remains competent for disputes concerning verification procedures ü Disputes between importer and customs of country of import: legislation of that country applies Ø Provision on withdrawal from the Convention Transitional provisions: Ø To avoid that cumulation possibilities available under the relevant FTA would not be possible during the transitional period Ø To avoid imposing EUR-MED certification in cumulation involving only EU, TR, SAP and EFTA (until revision of the Convention) 18

5. The linkage Next steps Ø PEM Working Group of 14 -15 May 2013: Presentation of the text and discussion Ø June 2013 – December 2014: insertion of the link to the Convention in ALL FTAs linking CPs to the Convention 19

6. The joint committee General (Art. 3) Ø Each CP shall be represented Ø CPs for which Convention entered into force: have voting right Ø CPs for which Convention has not entered into force and third parties invited to accede: have observer status Ø Acts by unanimity (except for Decisions on new accessions where one CP cannot veto or amendments of Appendix II) Ø Meets whenever necessary but at least once a year Ø Shall adopt rules of procedure at first meeting (provisional dates: 23 -24/10/2013) Ø May set up sub-committees or working groups (e. g. on the revision of the Convention) 20

6. The joint committee Tasks (Art. 4) Ø Administer and ensure proper implementation of the Convention Ø Recommend to the CPs: Ø Explanatory notes and guidelines for the uniform application of the Convention Ø Other measures for its application Ø Adopt by decision: Ø Amendments to the Convention Ø Invitations to third parties to accede Ø Transitional measures in case of accession of new CPs 21

7. Accession of third parties Who? EU Neighbourhood Policy Union for the Mediterranean MED countries are Partners to PEM Convention Eastern Partnership Possible accession to PEM Convention foreseen in DCFTAs under discussion between EU and Ø Ukraine Ø Georgia Ø Moldova Ø Armenia

7. Accession of third parties Procedure CP ati on 5. Deposit instrument of accession CP fic Depositary oti N 7. Ø Condition: candidate has an FTA with at least one of the Contracting Parties 1. Request Ø Steps (Art. 5): CP 6. Accession becomes effective 1 st day of 2 nd month after 5. 4. JC decision 2. Request Candidate 3. JC decision Joint Committee (JC) decides (1 CP may not oppose) 23

8. Roadmap Action/Event PEM Working Group Date/Target 14 -15/5/2013 Subjects Discuss ratification process, PEM matrix, rules of procedure of Joint Committee, linkage, revision of the PEM Convention, etc. Publication extended End 4/2013 PEM matrix Beginning 7/2013 Matrix including SAP countries Update following accession HR to the EU Further updates as CPs insert link to the PEM Convention in their FTAs Joint Committee – 1 st 23 -24/10/2013 meeting (provisional dates) Adoption of rules of procedure, planning of actions, setting up of sub-committees or working groups, revision, etc. Sign/ratify PEM Convention By 10/2014 Complete process of signing/ratification by CPs so that they can deposit their instrument of acceptance by end October 2014 Entry into force of PEM Convention in all CPs By 1/1/2015 Date depends on date of deposit of the last instrument of acceptance 24

8. Roadmap Action/Event Linkage Date/Target Subjects By 1/1/2015 All protocols on rules of origin in FTAs between CPs to be replaced by link to PEM Convention Revision of the PEM By end 2014 Convention Finalise discussions on the revision and vote in the Joint Committee Different actions (signing/ratification; linkage; revision) have to be carried out in parallel! 25

THANK YOU ! • European Commission DG Taxation and Customs Union • Unit B 3 • TAXUD-UNIT-B 3@ec. europa. eu • http: //ec. europa. eu/taxation_customs/customs_ duties/rules_origin/preferential/index_en. htm 26