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EUROPEAN COMMISSION
DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Security & Safety, Trade Facilitation & International Coordination
Rules of Origin
Brussels, 03.11.2011
TAXUD/B3/FH
cr\193
TAXUD/1228483/11
Working document
CUSTOMS CODE COMMITTEE
ORIGIN SECTION
(Council Regulation (EEC) No 2913/92 of 12 October 1992)
15/09/2011, 10.00 hrs - 18.00 hrs – 16/09/2011, 10.00 hrs - 18.00 hrs
Summary report of the 193rd meeting of the ORIGIN SECTION of the CUSTOMS
CODE COMMITTEE, held in Brussels, on 15 and 16 September 2011
1. APPROVAL OF THE DRAFT AGENDA
The agenda was approved.
2. POSSIBLE COMMENTS ON THE DRAFT SUMMARY REPORT OF THE 192
CCC-ORI MEETING
The draft summary report of the 192nd meeting was made available to delegates on
14 September 2011 and kept open to comments during the following 15 working days. It
was considered as approved and uploaded on CIRCA on 21 October 2011.
3. PREFERENTIAL ORIGIN
3.1. Revision of the list rules in the framework of the Regional Convention on pan-
Euro-Med preferential rules of origin - (TAXUD/158694/11 Rev.1, Add.3, CIRFS
and EATP's position paper, Add.4, Add.5, Add.6.1, Add.6.2, Add.6.3, Add.7 & Add.8
+ 3 EUROFER's documents)
COM explained procedures that will apply in future for taking decisions in the Joint
Committee established by the Convention. In the case of the EU, before voting in the
Joint Committee on behalf of the EU, the Commission will have to go through the
standard procedure foreseen by the Treaty on the Functioning of the European Union
(TFEU) for establishing a "common position". More precisely, in accordance with
Article 218 (9) TFEU, the Council, acting by a qualified majority on a proposal from
the Commission, will have to adopt a decision establishing the position to be adopted
on the Union's behalf in the joint committee. This will allow Member States to have full
control on the decision process. COM also informed that one of the first tasks for the
Joint Committee will be to adopt its rules of procedure (RoP). COM also indicated that
in its view these RoP should have as one of their main objectives to introduce
provisions ensuring that the revision exercise could go ahead in any case, and in
particular in the case where one of the Contracting Parties would prove to be unable to
ratify the Convention. In other words, these RoP should be inter alia conceived with a
view to preventing any Party from paralysing the work of the joint committee and
should thus foresee, as much as possible, some "practical adjustments" to the unanimity
principle.
COM reported about the state of play of the establishment of the EU position for the
revision of the PEM list rules. This position should be considered as a starting point for
negotiation which could, and would be modified (in the direction of an alignment on
the reform's thresholds) depending on reactions on positions or expectations expressed
by partners (in particular MED countries).
The draft EU position does not contain any formal proposal for textiles (chapters 50-63)
yet. Indeed COM received a "proposal" from EURATEX but some of the latter's
members subsequently expressed their disagreement with the rules submitted by
EURATEX. Namely CIRFS disagrees with rules for non-woven products and wants to
keep current standard double transformation rules. Additionally a so called like-minded
group (LMG), which represents manufacturers from several MS as well as from
Switzerland and Norway, is in favour of more lenient rules and submitted their own
proposal. As LMG proposal was drafted in a way which is not in line with language
used in a standard list rules, COM explained that it intended to ask the LMG group to
undertake a redrafting of its suggestions in order to make it easier to compare them with
the EURATEX's proposal and seek a compromise solution.
At the meeting some MS (nine) supported the EURATEX's proposal; however four of
them expressed their preference for CIFRS' position in respect of non-woven products.
Two of them presented their opinion that dyeing should be regarded in the same way as
printing. Moreover one of them did not want any value criteria in the printing rule and
another one was not satisfied with the new wording of the printing rule.
Three other delegations supported the LMG position.
Other MS did not present their final opinions, however one of them tended to support
EURATEX. Additionally three delegations indicated that they expected simpler and
more user-friendly rules, including for non-woven.
COM asked MS to submit their final positions on rules for textiles as soon as possible.
3.2. Horizontal
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Administrative cooperation - Compliance with printing technical requirements of
movement certificates EUR.1, EUR-MED and A.TR issued by the customs
authorities of EU Member States - Follow up
During the 191st Committee, COM services invited Member States to provide them
with a sample of their EUR.1, EUR-MED and A.TR movement certificates currently in
use.
This step was taken following an increasing number of remarks from third countries
about non-compliance with printing requirements of movement certificates EUR.1 or
EUR-MED issued by the customs authorities of EU MS (for ex. recently, Norway and
Morocco complained about EUR.1 certificates of origin issued by EU MS).
COM received 22 answers from MS, some of them still incomplete. Despite a reminder
sent to MS, 5 of them were still missing.
COM examined carefully each certificate on the basis of the requirements laid down by
the relevant acts (e.g. origin protocols of FTAs, etc.) where it is systematically
mentioned that "the certificate shall have a printed green guilloche-pattern background
making any falsification by mechanical or chemical means apparent to the eye."
Mechanical implies the use of a tool whereas chemical implies the use of a process.
Mechanical means an attempt to overwrite or disguise, e.g. through the use of a pen or a
rubber, while chemical means something that would change the paper itself in some
way.
The rules prescribe that the background shall be a green-guilloche pattern. However,
they do not specify any particular template of green-guilloche pattern background.
COM has no legal basis to impose a uniform guilloche. Until now, COM has always
referred to the Concise Oxford English dictionary which defines the guilloche as "an
ornamentation resembling braided or interlaced ribbons".
For reference, the Larousse's French dictionary defines "guilloché" as "décor d'une
surface, en général incise, dessinant des lignes brisées ou onduleuses, entrecroisées ou
non".
The Littré's French dictionary defines "guillochis = guilloché" as "un ornement
composé de lignes, de traits qui se croisent avec symétrie".
The Petit Robert's French dictionary's definition is: "ornement composé de lignes, de
traits qui se croisent avec symétrie".
Since the technical rules require that the form bears a green, guilloche-pattern
background and that its aim is to help combat fraud, COM wondered what to do with
all these certificates bearing different guilloche pattern background where the
ornamentation is resembling broken or wavy lines which do not interlace or bearing
complicated pattern like flowers or geometric pattern. COM therefore focused on the
presence or absence of an anti-falsification characteristic of the guilloche pattern. COM
followed the rules very strictly and assumed that if these certificates can't be faked, then
they are compliant. On the basis of the existing rules, all the certificates drawn to
COM's attention and issued by MS cannot be falsified in a way that would not be
apparent to the eye. All of them met the criteria.
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According to COM, demanding a specific uniform template of guilloche pattern would
go too far. It is COM's understanding that the anti-falsification characteristic of the
guilloche pattern is paramount and that this characteristic is stemming from the pattern.
Concretely, in COM's view, it is where the printed "guilloche" with green curly lines or
not, interlaced ribbons or not, is such as to make it impossible to introduce invisible
changes after the issue of the certificate that in this case the pattern can be considered
as an anti-fraud system.
COM expressed its opinion that if the certificate meets the criteria, namely that the
pattern is such as to make "any falsification by mechanical or chemical means apparent
to the eye", then it is compliant.
A revision of working document TAXUD/3302/04 Rev. 1-EN would be prepared
taking into account this new approach. A certain number of non-compliant cases were
discussed during the Committee in 2004. For example, a certificate where the
background is plain, is clearly non-compliant. COM would like the Member States'
opinion on different cases, for example, where the background contains a name or logo.
(COM has initiated the procedure for determining whether a period of grace should be
granted to Nigeria. This country's certificate bears a logo in its centre. A white logo in
the centre may allow changing numbers or letters and should in COM's view be
rejected on the basis of the above principle that the background should have anti-
falsification characteristics).
When the forthcoming revised working document is approved by Member States, COM
will request the proposed uniform approach to be respected. Member States will have to
be more tolerant with beneficiary and partner countries regarding the guilloche pattern
of certificates and will be asked to focus their attention on the genuineness of
certificates.
COM would like to avoid granting periods of grace in the future when the guilloche is
not exactly the same as the one provided as an example on TAXUD website but is in
fact fraud-proof.
One delegation already approved the new approach. When a certificate cannot be
forged, then it should be considered as compliant. It is true that the Spanish translation
of "guilloche pattern" by the expression "fondo de garantia" means security
background.
Another delegation expressed its point of view that rules have not changed for 35 years
and wondered about the need to deal with paper forms.
One last delegation rejected a Form A certificate of origin issued by the United Arab
Emirates (UAE) because the certificate was uniformly green. COM has granted UAE a
temporary exemption from the technical requirements. UAE can therefore continue to
use the existing non-compliant certificates of origin Form A until 1st January 2012.
3.3. EU-India FTA
Debriefing of the last Inter-Sessional Round held in New Delhi from 11 to 12 July
2011 - Information point (TAXUD/1022388/11)
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COM started its presentation by indicating that the overall negotiations with India are
entering a crucial phase. Several TPC meetings are planned in order to give MS a
complete picture of the negotiations and a realistic view of the ambitions the EU can
have for an FTA with India so as to determine how to proceed in this crucial phase.
Concerning RoO, COM reminded that EU submitted compromise proposals to India on
list rules for agri and paps (HS chapter 1 to 24) as well as textiles (HS chapter 50 to 63)
in the beginning of 2011. During Inter-sessional Meetings on Rules of Origin in New
Delhi from 1 to 3 February 2011 and from 5 to 6 April 2011, these compromise
proposals were discussed with India but India indicated that it would only react if EU
moved on its list rules for all products towards Indian requests.
As a follow-up to this meeting, COM prepared, in close collaboration with EU industry,
a 'global EU package' on rules of origin. In so far as no specific feedback was received
from EU industry on list rules, COM took, on the one hand, where India requested
lenient rules, as a limit the structure of the GSP rules (however with lower thresholds),
and, on the other hand, where India requests rather strict rules, COM took as limit the
structure of the current list rules used e.g. in the pan-euro-med-zone. Obviously in this
'global EU compromise package', the current trade flows were also taken into account
and thus the 'sensitivity' of offensive and/or defensive EU interests. This 'global EU
compromise package' on RoO was submitted to India around mid May 2011. India
invited EU to discuss this during an Inter-sessional meeting in New Delhi from 11 to
12 July.
It seemed that the idea of a global package worked as substantial and important
progress was made in July.
Nevertheless, a bit less than half of the list rules are still outstanding as India was
unable to react in July on EU's proposals on textiles and clothing (HS chapter 50 to 63)
and on agri and paps (HS chapter 1 to 24).
In addition, COM mentioned that at the ISM in July there was also substantial and
important progress on the RoO protocol itself. Indeed, after years of discussions India
accepted the 'absorption principle' (which India did not allow in its FTAs with Korea
and Japan).
However, also in the text of the RoO Protocol itself there are a limited number but still
important issues outstanding.
A) The following issues have an impact on practically all list rules:
1) As proofs of origin, India accepted to use itself the (governmental) certificate
EUR.1 (although with a different name: IND.1). However, contrary to India, EU uses
normally also a system of self-certification by its exporters. It is crucial for EU to be
able to use this system of self-certification by its exporters as for a majority of MS, this
system concerns a large part of their trade.
2) It was agreed a while ago that EU will use list rules expressed in EXW and India will
use list rules expressed in FOB. It is however not completely settled how this difference
will be taken into account. COM is aware that this issue of EU EXW-IN FOB is a very
important subject as it defines the valuation method on which all value-based list rules
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are based on. If conceptually it cannot be agreed on how both parties are going to make
calculations for the purpose of applying the list rules and if the agreed method in not
ensuring equivalent levels of stringency, an agreement on list rules would not be worth
a lot.
3) India does not want to have a prohibition of Duty Drawback in its FTA with EU.
4) Tolerances : India finds EU tolerance rules too complicated. It was decided that
tolerances for textiles and agri would be discussed together or after the corresponding
list rules are settled.
B) Other outstanding issue concern:
1) born and/or raised: India maintains its position by linking 'aquaculture' with
'products of slaughtered animals' as India wants that the same criteria of 'born and/or
raised' applies to both kind of products without further arguments. EU reiterated its
position that it wants 'born and raised' for 'aquaculture' and 'raised' for 'products of
slaughtered animals' as both products have no relation with each other and therefore
there is no reason to apply the same rule.
2) Ceuta, Melilla, San Marino and Andorra: Indian RoO expert indicated that
internal Indian discussions are taking place on EU's position concerning Ceuta, Melilla,
San Marino and Andorra.
To conclude on RoO in the FTA negotiations with India COM stressed that what is
agreed with India so far is satisfactory on RoO as most of it is fairly EU standard. There
are however a limited number but still important issues outstanding.
One delegation asked for data on Duty Drawback in relation to India. COM answered
that an economic assessment is currently finalised and that the chief negotiator will
submit it soon to MS. Another delegation complimented COM with the good results
achieved on RoO with India but expressed its concerns on pharmaceuticals and rubber.
Two other delegations stressed the importance of 'born and raised' requirement for
aquaculture in relation to India which COM supported by giving some trade data in
relation to aquaculture in the EU-India relation.
3.4. EU-Malaysia FTA
Debriefing on the 4th round of negotiations held in Kuala Lumpur from 13 to 15
July 2011 - Information point
COM indicated that the discussions are very slow with Malaysia (MY). In order to
change the pace, COM proposed to MY an agenda for the 5th round whereby a limited
number of topics will be discussed and thus both parties should clearly know in
advance those topics and prepare its position thereon.
Nevertheless, on the substance, progress was achieved as views were exchanged on
Title V (Proof of Origin), VII (Ceuta & Melilla), VIII (Final Provisions) and the Joint
Declarations on San Marino & Andorra of RoO protocol. Consequently, negotiators
went once through all provisions of RoO protocol after the 4th round. As MY does not
want to commit to anything, COM recorded nevertheless the discussions so that there is
a trace of the views which have been exchanged. For each provision in the RoO
protocol, COM recorded together with MY at least if there is agreement on substance.
6
Of course, also the issues where there might arise real hiccups on substance are
recorded.
To conclude, the above reflects where negotiations on RoO stand with MY. COM still
emphasized however that MY reiterated its request of ASEAN Cumulation. Whatever
is decided for Singapore in this context will have an influence on MY as the EU cannot
grant ASEAN Cumulation to Singapore and not to MY. However, COM noted that MY
does not have ASEAN Cumulation in their bilateral FTA with India and stressed that
this was raising the question why they needed it with the EU. This said, COM reiterated
that it could not be reasonably considered to have different approach for MY and for
Singapore.
One delegation asked whether MY asked for removal of Duty Drawback prohibition.
COM answered that, for the moment, COM only explained EU position on the
prohibition of Duty Drawback to MY and why EU takes such a standpoint. MY did not
take position on this issue yet towards the EU.
3.5. EU-Korea FTA
State of play - Issue of replacement proofs in case of consignments' splitting in the
EU
COM explained that there were a number of issues on which it wanted to communicate
with MS on this file.
1) One delegation asked a question about Korean authorization numbers. They wanted
to know if a number that starts with 000 is an existing one. COM interrogated Korea on
this and will come back to MS on this. (After the meeting a message was put on circa
with a public link on internet where Korean authorization numbers can be checked).
2) The same delegation asked: a) for whom the customs contact point is designed, b)
for what purpose and c) which link the latter contact point has with the trade-eu-korea-
fta@ec.europa.eu mailbox.
a) COM indicated that the customs contact point is designed for communication
between the Commission and Korean Customs Service (KCS). MS should thus NOT
use this contact point.
b) Its purpose is to streamline and facilitate the contacts and the communication
between the Commission and KCS. Since beginning of 2011, Koreans from all kinds of
different services were contacting COM for information on certain issues so it was
necessary to streamline the communication between the Parties. COM itself uses the
Korean customs contact point for example for questions raised like mentioned under
point 1.
c) the e-mail address is intended to gather all questions on the Korea FTA coming from
outside COM (i.e. from economic operators, but not from EU MS authorities who have
direct communication channels with COM). Since the entry into force of the FTA (July
2011), already 70 questions were asked on origin via the public websites. Delegates
should be assured that DG Taxud unit B3 is involved in providing answers to all
questions raised on origin even if they are sent to this functional mailbox of DG trade.
For the Delegates of the CCC-ORI this has however no influence as they can of course
7
just continue to contact Mieke Vanderstraeten directly on origin issues and do not have
to pass through this functional mailbox.
3) Another delegation asked for a clarification of Article 34 of the Protocol. They are
apparently experiencing many cases where goods were imported in the EU in 2009 and
have been stored in customs warehouses since then. These goods are released for free
circulation now. The delegation asked if Article 34 may apply in such circumstances
and namely if the duration of the storage was limited or not. COM indicated that Article
34 does indeed not provide for any limitation of the storage duration. This is something
which might have to be taken up with for future agreements but it advised the
delegation not to hesitate to request a verification if the time elapsed since exportation
was in their opinion too important.
4) COM informed the delegates that one delegation submitted an e-mail of the Verband
der chemischen Industrie eV. (VCI) addressed to their services where the Association
complains about a certain insecurity which is faced in the chemical industry when
making out origin declarations for trading with Korea. As already mentioned during the
discussions in the 191 – CCC-ORI they informed COM that traders fear that in case of
verification requests, especially under the Protocol on mutual administrative assistance
in customs matters, confidential information will be disclosed to KCS. Regarding this
uncertainty the traders abstain from making out origin declarations for the time being.
The Association insists on a clear statement of their Ministry how to deal with
verification requests and which information will be given to KSC in case of joint
inquiries. The same delegation indicated therefore that there is an urgent need for a
statement of the services of the Commission in writing how MS should deal with
verification request and which documents/information KCS will be entitled to ask for.
COM repeated that the MAA protocol does not fall under DG Taxud's competence but
is OLAF's responsibility. Nevertheless, COM indicated that Mr. Deffaa already wrote
already the following to the chemical industry:
"First, it should be underlined that in the EU-Korea FTA there is no legal basis for KCS
officials to be present during 'verifications' under the RoO protocol (contrary to EFTA-
Korea FTA) and the EU fought hard for that during the negotiations. Verifications
based on the RoO protocol will thus only be carried out by the customs officials of the
EU Member States without KCS officials.
However, concerning enquiries into 'custom irregularities' falling under the protocol for
Mutual Administrative Assistance in customs matters (MAA) in the EU-Korea FTA, it
is stipulated that: 'Duly authorised officials of a Party involved may, with the
agreement of the other party involved and subject to the conditions laid down by the
latter, be present at enquiries carried out in the latter's territory.' Such requests must,
to prevent "fishing expeditions", of course be supported by justifications and,
especially, a description of enquiries already carried out on the custom irregularities at
stake. Furthermore, being present at enquiries in EU territory means, during enquiries
conducted by customs officials of the MS concerned, therefore there is no provision for
Korean authorities to contact traders directly. I would also like to emphasize that the
MAA provisions of the EU-Korea FTA are entirely standard (such EU provisions are
currently in force with 58 third countries).
8
It is true that documents can be looked at during such enquiries under MAA. Which
documents, precisely, would depend on what customs irregularities are being
investigated and what facts are relevant for the application of the customs measures at
stake. It is also true that the requested authority must indeed supply copies of documents
relevant to the issues at stake. However, "Assistance may be refused or may be subject
to the satisfaction of certain conditions or requirements, in cases where a Party is of
the opinion that assistance under this Protocol would [...] violate an industrial,
commercial or professional secret" [Art. 9(1)(c) MAA]. On the basis of this provision,
the custom authorities of the EU MS can thus refuse KCS officials to look into and/or
to supply those documents."
COM trusts that the above will reassure the chemical industry as there no legal basis
and thus also no reason to fear that EU business will have to disclose 'sensitive'
information to KCS officials. Nevertheless, the delegation reiterated its request that
COM should make a statement on this issue. COM indicated that it will reflect on this
with the different relevant services involved.
5) COM announced that an EU conference on the implementation of the EU-Korea
FTA will take place on 27 October 2011 for all stakeholders. The programme is already
circulated via circa.
6) Several MS received questions from Korea for data on the number of approved
exporters they have within their country. Even if COM collected such data itself for its
own information in the context of the FTA negotiations with India, COM never shared
such data with either India or Korea. In any case, the EU should take one single
approach towards these Korean requests as it cannot be that a certain MS submits the
info to Korea and another does not. No MS objected to take the common approach that
such data should not be communicated to Korea. COM counts now on all MS to
implement this common approach in case such data is requested (again) by Korea.
7) A first Joint Customs Committee (JCC) meeting should normally be held between
EU and Korea in Seoul before the end of the year. Initially the planning was November
but this is now already delayed to December. The agenda still has to be established so
MS are invited to submit points that they would like to see discussed at the JCC, if they
wish so.
8) COM is still working together with colleagues responsible for TARIC to determine
which TARIC document codes should be applied for origin declarations with Korea.
COM thanks two delegations for their contributions to this. A proposal will be
submitted soon to MS in the relevant committee(s).
9) At the previous meeting one of them raised a question on how to deal with splitting
of consignments within the EU. COM indicated that it had not taken a definite
standpoint yet but that a solution should be found which is similar to the one used in the
new GSP for registered exporters. Two delegations indicated at the time that they
would prefer to use EUR.1 and especially one delegation indicated that a solution to
this issue should be found urgently, which was supported by several MS. Upon this a
whole debate followed with the involvement of many MS where it was concluded that
EUR.1 was not a good solution. In the margins of the CCC-ORI meeting held before
the summer break, Another delegation proposed however to make a template for a new
replacement proof to be used in case of 'splitting'. This document was uploaded in
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CIRCA during the summer in DE, EN and FR languages. COM thanked the delegation
for its efforts. COM also indicated that it did not finish its own reflection on how to
solve this problem. Therefore, COM announced that no decision would be taken during
this 193rd committee on the issue of splitting of consignments but that it wanted MS to
respond on their proposals to be able to gather all relevant arguments pro and contra
this or other options for solutions.
After this presentation, a lively debate took place where many MS intervened. There
was on the one hand, a discussion whether a temporary solution should quickly be
found or whether a solution also valid on the long run would be preferable. It was also
discussed whether it was necessary to involve Korea on this or not. It was also correctly
raised by one delegation that this issue will have to be dealt with for other ongoing
negotiations as well where no EUR.1 will be used as proof of origin (e.g. Singapore
FTA). Moreover, one delegation indicated twice that there should be a legal basis for
the solution found as a new document cannot just be invented without a proper basis for
this document in legislation. Nevertheless, several MS indicated that they could live
with the proposal made by one delegation. One further delegation stressed that any
solution should also ensure that MS could subsequently request a verification of the
proof (and in this context the question was raised whether such requests should be
made to Korea by the customs office under whose responsibility the consignment was
splitted or by the customs office having cleared the consignment). Moreover, there was
a group of three MS which initially indicated, for sometimes different reasons, that they
do not want a new document as proposed, but use the EUR.1. However, COM
indicated that if one conclusion could be drawn from the debate, it was that using the
EUR.1 movement certificate was not an option.
3.6. EU-Canada
3.6.1. State of play after the 8th round of negotiations held in Brussels from 11 to
15 July 2011 - Information point (TAXUD/1019813/11)
3.6.2. Possible discussion point on Motor Vehicles in the framework of EU-
Canada CETA - (TAXUD/1021936/11)
COM informed the delegates that discussions at the main VIII Round of negotiations
with Canada (CA) focused mostly on the product-specific rules of origin (PSRs), with
the exception of the discussion on the rule for wholly obtained minerals and other non-
living resources obtained by extraction from the seabed soil or subsoil of the Parties
and a few other 'horizontal' issues. There are still many points regarding drafting and
structure of the origin rules where the Parties' positions differ greatly, but these issues
were not specifically raised at this Round.
On the seabed exploitation issue, the two Parties agreed to consider as wholly obtained
the minerals extracted from their respective Exclusive Economic Zones / continental
shelves and from the High Seas, provided that for the latter there is an exploitation
licence from UNCLOS.
Agricultural products' PSRs were discussed separately, and later jointly with the main
group.
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On non-agricultural product-specific rules, the Parties reviewed the still outstanding
product cases in an effort to indicate where they may have flexibility to help reach an
agreement. They also reiterated the agreement to review the case of all the column 4
EU proposals expressed in terms of non-focused maximum value added [from non-
originating materials] as alternatives to column 3 agreed rules.
There was also a discussion, jointly with the Market Access group, on the automotive
question. The issue was presented in detail in a working document which was placed at
the disposal of the delegates for discussion.
One delegation asked about one of the solutions under consideration for motor vehicles,
whether it is against the principle of territoriality. COM replied that the solution, if
selected, would indeed require a derogation from that principle for CA.
Another delegation had a scrutiny reservation, as they didn't have the time to reflect on
the Working Paper's content.
Another delegation was in favour of an ad hoc solution for cars in the case of CA. One
of their biggest car manufacturers has acquired participation in companies producing in
CA and therefore a way must be found for cars to remain in CETA. As car imports
from CA to the EU are minimal, in the case that a quota solution is envisaged, it should
not be limited in time.
The same delegation also communicated the position of one of their biggest food
producers who are apparently against the sugar content limit the EU has proposed to
CA (the latter not accepting), as production of sugar has been relatively low and prices
high lately, the limit proposed by the EU risks to make European chocolates non-
originating. They also stated that they are against refining of sugar being considered as
an origin-conferring operation. Perhaps a derogation should be considered for the
sweets industry. COM indicated that the sugar issue was already scheduled for
discussion in the Committee the following day.
Another delegation announced they will submit their comments in writing as the WD
was put on CIRCA rather late. COM expressed its regrets for not having been able to
gather sooner all the necessary elements for that paper. It also seized the opportunity to
announce that the issue raised by one delegation about Article 27 § 11 had been
resolved: CA accepted to reintroduce the phrase 'in cases of reasonable doubt' in that
provision.
Another delegation said they remain firm in their position about cars, and also against
cumulation with third countries (namely, the USA). They expressed concerns about the
situation with biodiesel and footwear. COM informed them that both issues are still
pending and no concessions have been made.
Another delegation raised another issue in Article 27 §7, to delete the phrase "and
sufficient information" and adopt the text that was agreed in the FTA with Korea. COM
said it will examine the issue.
Another delegation also submitted a scrutiny reservation about the WD on cars.
Another delegation considered the possibility of a derogation from the territoriality
principle problematic and found the flexibility CA requires from the EU surprising.
11
They wondered whether CA has any ambition to enter the European car market and
stressed that the percentage they ask would create a problematic precedent, as it is
higher than the one granted to GSP beneficiaries. The delegation also inquired where
negotiation were in respect of Duty Drawback prohibition and considered that as CA
applies it in the framework of NAFTA, they should not oppose it here.
The same delegation also asked if the word 'raised' was removed from the wholly
obtained meat provision. COM replied that it was actually superfluous as it didn't
quantify the minimum length of time the animal should be raised. They also drew
attention to the reference to insufficient transformation in Art.5 and the difficulty to
control the system proposed by CA for sets. COM said it would further examine these
issues.
3.7. EU-Mercosur FTA
Debriefing of the 6th round of negotiations in Brussels from 5 to 7 July 2011 -
Information point (TAXUD/1022263/11)
COM informed Member States on the outcome of the most recent round of negotiations
towards an Interregional Association Agreement with Mercosur for rules of origin.
COM stressed that the discussions continued to be quite fruitful and substantive.
However, the round resulted in limited progress as concessions in rules of origin are
linked to the exchange of offers on the market access table and progress made in tariffs
negotiations.
The Parties analysed the outstanding issues in the origin protocol including the EU
revised proposal on origin certification, annex to the protocol incorporating
Introductory Notes as well as the outstanding list rules for agricultural/processed
agricultural products. Parties also consolidated their revised positions for the list rules
for industrial products of HS chapters 25-97 but Mercosur again did not present its
position for textiles and cars. As a result the remaining issues from the text of the
Protocol continue to be wholly obtained criteria for fisheries and vessels conditions,
DDB prohibition, Special provisions on Ceuta & Melilla, Joint Declarations on San
Marino and Principality of Andorra, and the EU proposal regarding self-certification.
Additionally COM informed that the next round of negotiations will take place on 8-12
November in Montevideo, Uruguay and that further progress on the text of the
Protocol, along with some more substantive discussion on list rules for industrial
products was expected. One delegation informed COM that they will forward the list
with technical questions relating to agricultural products, another one presented its
negative opinion on new, relaxed rules for tobacco and cigarettes of HS chapter 24
proposed to Mercosur by COM, a further one wanted COM to confirm that DDB
prohibition issue would be subject to impact assessment studies prior to making any
final decision on it, and a last one stressed the sensitiveness of rules concerning
agricultural products and motor vehicles.
3.8. EU-Singapore FTA
Text of the Protocol on Rules of Origin in EU-Singapore FTA negotiations -
Discussion point (TAXUD/1022352/11)
COM recalled that Singapore (SGP) proposed a list of priorities for a number of
products and in return would offer
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to accept, without any change, the EU's proposed list rules in most HS Chapters, with
only a small number of exceptions;
for the text of the Protocol, to accept with some minor requests for modification EU’s
proposal which takes into account the last modification in alignment with the GSP
reform.
Central to SGPs request is the possibility to source materials from countries in the
region provided for under the rules on ASEAN cumulation. The working document
submitted to the views of the Committee therefore foresees:
- to provide for bilateral cumulation: (Article 3(1));
- extended cumulation to ASEAN FTA partners (Art 3(2)-(8)) which allows cumulation
for all materials originating under an EU-ASEAN country FTA unless they are
excluded;
- extended cumulation (Art. 3(9)-(14) for all materials originating under the GSP rules
for ASEAN countries used in the production of products listed in a positive list.
It is noted that mainly the extended cumulation under Art. 3(9)-(14) could be seen as
sensitive, but that the provision as it now stands only provides the mechanism, not the
list of products (which should be the focus of attention for the negotiations).
One delegation agreed with the proposal.
Another delegation noted that it is still considering a final position and might circulate
its view at a later date. It would favour reciprocity as well as the possible inclusion of a
safeguard clause to ensure that imports do not get out of control. For the time being it
still favours providing for bilateral cumulation only.
Another delegation supported the previous one in favouring in principle no more than
bilateral cumulation, as well as, if ASEAN cumulation is inevitable, the need for a
possible inclusion of a safeguard clause. A negative list, used for ASEAN FTA
cumulation should likely go beyond the GSP list (for exclusion of regional cumulation)
given the sensitivities for industrial products.
Another delegation noted the importance of the text for ASEAN cumulation as it will
become the template for the region, which merits discussions at TPC level as well.
Products to be included in the positive list for ASEAN GSP cumulation would need to
be discussed at Heading, rather than at Chapter level.
Another delegation noted that the current request of SGP would concern more than
80% of their export into the EU. Discussions on allowing ASEAN GSP cumulation are
very sensitive.
Another delegation generally supported the proposals by COM and suggested first to
focus on the approach and then look at the list for which cumulation is permitted.
One last delegation, in support of another one noted that it prefers not to allow ASEAN
GSP cumulation for an intermediate period to avoid taking away incentives for other
ASEAN countries to negotiate FTAs.
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COM concluded that, although tabling of proposals for ASEAN cumulation is still
subject to many factors, but that acceptance of the cumulation mechanism will move
the focus to the discussions on the list(s) of products.
MS which have asked for more time were requested to provide more detailed feedback
before the end of September.
3.9. Sugar - Rules of origin and accounting segregation
Current situation and problems faced by the EU operators - Discussion point
(TAXUD/1022374/11)
COM recalled that sugar of different origin is often stored together in the same silos by
sugar suppliers and sugar processors. This form of mixed storage effectively means that
all such mixtures lose their EU origin, even where the fraction of imported sugar is only
a minimal one unless use is made of accounting segregation. As confectionery
manufacturers are generally supplied by sugar manufacturers who also act as traders of
non-EU sugar, the non acceptance of accounting segregation at the latter level means
that the sugar used by confectionery manufacturers is considered as non-originating and
accordingly they cannot allow their customers to benefit from preferences foreseen
under the FTAs. Given the changes in the sugar market following the 2006 reform,
sugar processors have become more and more reliant on imports of non-originating
sugar.
COM suggested that a possible solution could be to explore the possibility of a flexible
interpretation of the accounting segregation provision, according to which e.g. upstream
operators would be allowed to also resort to accounting segregation as they, by
preparing the sugar for further processing (e.g. purification etc.), can be seen as taking
part in the manufacturing of the final product (which would bring them under the scope
of economic operators eligible to use accounting segregation).
Two delegations considered that allowing accounting segregation is an acceptable
solution, except for the joint storage of products as this would undermine the basic
principles of the origin rules.
Two other delegations preferred to maintain the status quo on this, of which one was
ready to further examine this issue.
Another delegation (supported by another one) thanked COM for its initiative and
noted that this is not about giving originating status to non-originating goods. From an
administrative perspective accounting segregation can be better monitored through (the
large) sugar producers than at the premises of sugar processors. If sugar producers are
no longer in a position to give suppliers declaration for all originating sugar, in the end
it is the processing industry which is going to suffer, as they would not be in a position
anymore to fulfil the origin rules for their products. The delegation in question
suggested that a solution could be found through drawing up an explanatory note
explaining that importers and sugar producers would be allowed to carry out accounting
segregation.
COM explained its proposal is neither about the principle under which accounting
segregation could be used, nor about the rules how to confer originating status for
sugar, and favours a pragmatic solution along the following lines:
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Member States authorities granting authorisations to allow the management of
stocks of originating and non-originating fungible materials through accounting
segregation may consider granting such authorisations also to the suppliers of
the materials used in the production of the originating final products by other
processors, in particular when such suppliers undertake processing operations
in respect of the materials in preparation to the processing of these final
products. Of course all other conditions connected to the use of accounting
segregation will have to be fulfilled.
In parallel COM will examine whether for the purpose of legal clarity this more flexible
approach, which is considered as immediately applicable, would eventually require a
modification to the text on accounting segregation used for FTA negotiations.
On the basis of a request from one delegation, COM informed of its meeting with the
EU confectionary industry which is of the opinion that the justification which was at
the basis of the GSP reform to move to weight based thresholds instead of thresholds
based on value does not apply for bilateral arrangements and may impede the export of
products of chapters 17, 18 and 19.
In this meeting COM took the position that it could not see why the rationale for
moving to weight based thresholds would be different from the one used for GSP. In
contrast the real problem for the industry could be in the more stringent thresholds,
proposed as a negotiation position for new FTAs. It must, however be noted that such
thresholds (e.g.: allowing max. 20% non-originating sugar content in weight instead of
40% in GSP) have been established as a negotiation position in order to reach an
acceptable compromise in consultation with the EU industry comprising both sugar
producers as well as sugar processors.
4. A.O.B.
4.1. Discussion on outstanding issues relating to the proposals for the implementing
provisions to the new (so-called "modernised") Customs Code, after conclusion of
the written consultations (Note of 14-07-2011, ARES(2011)791271 and "MCCIP
Title II Action List")
The different points in the Action List were presented and commented as follows.
COM presented the comments on Action List received from 9 MS and
EUROCHAMBRES.
COM explained that provisions on minimal operations (Article 221-1-03, first sentence)
should apply to all goods in HS and to all rules of origin. All MS agreed with the
proposal and accepted a new wording: ''For the purpose of Article 221-1-02 (1) the
following operations shall in any event not be considered as last substantial
transformation conferring origin:''.
A majority of MS agreed with COM to reformulate Articles 221-1-04, 221-1-04a and
222-08 as provided in the Action List.
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The proposal on Article 221-2-07 paragraph 1 provides for a choice of rules to be
applied for the determination of origin at exportation between those of the country of
destination or the rules in force in the EU. A later proposal (by Note of 14-07-2011)
gives an even wider choice in allowing, besides the rules in force in the country of
destination, "any other method identifying the country where the goods were wholly
obtained or underwent their last substantial transformation".
COM has received 4 written reactions from delegations who could accept this latest
proposal, one of them asking for further clarification and another indicating that the
earlier proposal is however preferred. During the meeting, no delegation supported the
proposal (the Note of 14-07-2011).
Five delegations (representing a blocking minority) expressed their opposition or
serious doubts as to the legal viability of this wording. The main arguments in favour of
the proposal which refers to the rules in force in the Union are the harmonised
implementation of the rules within the EU and the wish to apply the same rules at
importation and at exportation.
COM therefore decided to abandon the proposal in the Note of 14-07-2011 and revert
back to the text included in the Action List. Delegations were given two weeks to
express their disagreement with this text.
Concerning the non-manipulation rule introduced in the reformed GSP rules of origin
and splitting of consignments in the country(ies) of transit, COM informed about the
following.
COM presented the "concept paper" (Note ARES(2011)1060116 of 13.09.2011). This
document contains two alternative solutions on the issue of replacement certificates of
origin Form A with regard to consignments that are split on their way from exporting
beneficiary country to the EU. The first solution would allow retrospective issue of
certificates of origin Form A in the country of exportation of goods. The second
solution foresees the issue of replacement certificates of origin in the country(ies) of
transit.
One delegation was not in favour of the second alternative solution that was proposed
in the document. This was due to the fact that the solution does not relate to the existing
concrete situation. Furthermore, the involvement of a third country in the issue of
replacement certificates of origin Form A seems too complicated. With regard to the
first solution, they underlined that it would allow solving the existing problems.
Nevertheless, it drew the attention to the fact that, in practice, no initial certificate of
origin Form A that is issued in a country of exportation of goods exists. Consequently,
the first solution should relate to such situations.
Another delegation, in relation to the first alternative solution, noted that it should be
decided whether the proposed amendment may be considered as exceptional
circumstances. This is because of the fact that according to the existing provisions
certificates of origin may be issued retrospectively only exceptionally.
COM concluded that taking into account the remark just made, the issue in question
needs to be further considered. Furthermore and since the first alternative solution
would become a systematic procedure, creation of a separate sub-paragraph would need
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to be discussed. In addition, COM asked delegates for their written contributions with
regard to the document.
4.2. Revision of pan-Euro-Med rules of origin within the Convention - EFTA proposal
submitted on 2 September 2011 (TAXUD/151707/10-EN-Rev.3 Add.1) -
Information point
COM recalled that during the last meeting of the PEM working group the EFTA States
expressed their disappointment that most of their suggestions for amendments of
articles in the Convention were not kept by the Commission in the document drafted as
a compromise proposal for the revision of the Convention. Consequently EFTA re-
submitted its suggestions to the Commission for re-consideration.
Proposals on cumulation and certification system seem to be attractive but they were
already rejected by our MED partners. In the case of the article on the principle of
territoriality EFTA suggestion was already at least partially accommodated. As regards
the issue of prohibition of drawback COM's position on this is not established yet.
COM wants to react orally on EFTA's suggestions at a meeting in October and asked
MS to send their suggestions in writing in relation to the EFTA proposals.
4.3. EU-Israel Technical Arrangement
Requests for public access to the list of postal codes of Israeli settlements -
Information point
COM informed delegations about recent requests of NGOs and MEPs to access the list
of postal codes of Israeli settlements and enquired whether they receive similar
requests.
MS confirmed that the list has been requested on several occasions. In all cases the
individuals were informed that the list is not public and cannot be released to the public
domain. On this occasion MS confirmed that they provide information on particular
postal codes when contacted by importers.
COM recalled that proofs of Israeli origin (differently from other preferential proofs of
origin) should systematically be subjected to additional controls of indicated postal
codes in order to establish whether imported goods can benefit from the preferential
treatment granted to Israel. If not carried out at the time of releasing the goods for free
circulation, these controls should be carried out during the three year period from the
date of incurrence of the customs debt during which communication to the debtor and
actual recovery are still possible.
4.4. Pre-coordination WCO Permanent Technical Committee (PTC) meeting of 10 to
14 October 2011 (point IV of the draft agenda bearing the reference:
"PC0274E1a"); the document to be discussed bears the following reference:
"PC0277E1a"
COM introduced the request received by WCO to develop "guidelines on the best
practice in the verification and control of proofs of origin and post-clearance
verification controls on economic operators engaged in preferential trade". The activity
proposed by WCO would be structured on a volunteering basis: MS who volunteered
had to describe the internal practice adopted in own administration for the verification
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of proofs of origin in order to set up a "catalogue of national best practices". COM
expressed doubts about this action since guidelines describing the best practice for the
verification of proofs of origin had been already set out at EU level.
COM specified that the official EU coordination will take place in the Customs Union
Group (CUG) at the Council and explained that the present "pre-coordination" point
was meant to prepare the discussion in the latter forum. COM invited MS to express
their position about the WCO request and their availability to volunteer. COM also
suggested that delegates should liaise about this topic with their country's
representative(s) at the CUG.
Three delegations expressed their doubts about the value of this exercise since they
considered that it was unlikely to bring any benefit to MS. Nevertheless they declared
to be ready to support COM in case it would be needed but not to be keen on
volunteering.
COM commented that EU guidelines on post clearance verification controls on proofs
of origin already exist as internal document and proposed to delete "sensitive"
information (if any, which subsequently proved not to be the case) and submit such a
"public" version to the WCO.
MS didn't object to the way of proceeding proposed by COM.
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