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Implementation of the regional Convention of Pan-Euro-Med rules of origin

Implementation of the regional Convention of Pan-Euro-Med rules of origin. TAXUD – Unit B3 Rules of origin. 30-31 October 2012. Content. 1) PEM Convention – state of play of the ratification process 2) how to apply the Convention? - entry into force - entry into application

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Implementation of the regional Convention of Pan-Euro-Med rules of origin

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  1. Implementation of the regional Convention of Pan-Euro-Med rules of origin TAXUD – Unit B3 Rules of origin 30-31 October 2012

  2. Content • 1) PEM Convention – state of play of the ratification process • 2) how to apply the Convention? • - entry into force - entry into application • practicalities 3) Action plan

  3. Ratification process 9 Contracting Parties for which the Convention has entered into force Date of: Signature Ratification Entry info force Norway 15/06/2011 09/11/2011 01/01/2012 Switzerland 15/06/2011 28/11/2011 01/01/2012 Liechtenstein 15/06/2011 28/11/2011 01/01/2012 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 European Union 15/06/2011 26/03/2012 01/05/2012 Montenegro 15/06/2011 02/07/2012 01/09/2012 Former Yugoslav15/06/2011 14/06/2012 01/08/2012 Republic of Macedonia

  4. Ratification process 5 Contracting Parties for which the Convention has not yet entered into force (which signed but not ratified): Date of Signature FaroeIslands15/06/2011 Jordan 07/07/2011 Turkey 04/11/2011 Morocco 18/04/2012 Algeria 05/10/2012 NB: 9 other Contracting Parties (Bosnia and Herzegovina, Egypt, Israel, Kosovo*, Lebanon, Palestinian Authority, Serbia, Syria, Tunisia) neither signed nor ratified the Convention yet. Source: website of the Council of the EU, http://www.consilium.europa.eu/policies/agreements/search-the-agreements-database?lang=en&command=details&id=297&lang=en&aid=2010035&doclang=en

  5. PEM Convention - entry into force • - The Convention has entered into force after the exchange of the instrument of the ratification was done by first three Contracting Parties (Article 10 of the Convention). • - Norway, Switzerland, Lichtenstein, 1 January 2012 • - EU joined the Convention on 1 May 2012, publication in the EU Official Journal still pending • - entry into force allows to participate in the institutional set-up (Joint Committee). No impact on applicable rules of origin and cumulation yet.

  6. PEM Convention – how to apply diagonal cumulation? • - Entry into application= cumulation on the basis of application of the Convention's RoO in a "relevant agreement“ (see Article 1, 2 of the Convention, Article 3 of Appendix 1) • - Phasing in of the Convention = Amendment to Origin Protocols, which should be replaced by a reference to the Convention (including the appendices). • - applicability depends on the entry into force of the reference to the Convention in FTAs, and not the entry into force of the PEM Convention

  7. PEM Convention – how to apply diagonal cumulation? • Ultimate target: • - all Contracting Parties sign, ratify, and create references to the Convention in their FTAs • - a new matrix, covering all Contracting Parties, with the dates of entry into application of the Convention in respective FTAs in will be published • - new possibilities for diagonal cumulation (incorporation of Western Balkans) • - this will enable to introduce the revision of RoO

  8. PEM Convention – how to apply diagonal cumulation? • Transitional period • - aim: expand cumulation possibilities, prevent any disruption to trade • - two systems working in parallel: • PEM and SAA cumulation • Cumulation based on the Convention • - introduction of references to the Convention in FTAs • - a new matrix (with WB) is published with the dates of entry into application the references to the Convention in respective FTAs • - timeframe: till a set date (end of 2014) or till the revised rules of origin are adopted by the Joint Committee

  9. Diagonal cumulation under the Convention in the transitional period • - cumulation is possible between the Contracting Parties independently of the question whether the Convention has ever entered into force for them … • - … PROVIDED that the three traditional conditions of Article 3 on cumulation apply: 1) FTA in force 2) Identical RoO, and 3) Matrix published [contextual interpretation and extensive meaning of the term "Contracting Parties"] Examples will be provided soon!

  10. Article 3 of appendix I to the Convention • 5. The cumulation provided for in this Article may be applied only provided that: • (a) a preferential trade agreement in accordance with Article XXIV of the General Agreement on Tariffs and Trade (GATT) is applicable between the Contracting Parties involved in the acquisition of the originating status and the Contracting Party of destination; • (b) materials and products have acquired originating status by the application of rules of origin identical to those given in this Convention; • and • (c) notices indicating the fulfilment of the necessary requirements to apply cumulation have been published in the Official Journal of the European Union (C series) and in the Contracting Parties which are party to the relevant Agreements, according to their own procedures.

  11. New matrix - example

  12. New matrix (extract) - example NB: for the Western Balkans  only the dates of entry into application of the references to the PEM Convention

  13. Diagonal cumulation under the Convention in the transitional period Cumulation EU – Turkey – Meds – EFTA • no trade disruptions (old PEM system) • RoO are identical Cumulation EU – Turkey – Western Balkans • no trade disruptions (old SAA system) • RoO are identical (on condition that differences in certification between SAP and Convention are solved)

  14. Cumulation EU (Turkey) – Western Balkans – EFTA • New cumulation possibility (SAP+) • Conditions: • FTAs  FTAs: EFTA- Albania, -Croatia, -Macedonia, -Montenegro, -Serbia already in force • Identical RoO Not (cumulation provisions in current Protocols and the Convention differ), until • 1) references to the Convention are created in all FTAs: • EU -EFTA add WB • EU-Turkey-WB (SAP) add EFTA • Turkey-EFTA add WB • Turkey-WB  add EFTA • WB (CEFTA) add EFTA 2) Problem of certification solved (SAP vs. Convention)

  15. Cumulation EU (Turkey) – Western Balkans – Meds • Cumulation Western Balkans – Meds – EFTA • New cumulation possibility • Conditions: • FTAs  no WB-Meds FTAs yet in force • Identical RoO  If any new WB-Meds FTA is force it will be easy to introduce RoO of the Convention automatically (attention : certification, and exclusions). Fulfilled only if there are references to the Convention.

  16. CONTRACTING PARTIES OF THE PEM CONVENTION WESTERN BALKANS Albania Bosnia and Herzegovina Croatia Kosovo* the former Yugoslav Republic of Macedonia Montenegro Serbia PEM system of cumulation EU SAA cumulation Turkey EFTA Norway Switzerland Lichtenstein Iceland MEDS Algeria Egypt Israel Jordan Lebanon Morocco Syria Tunisia West Bank and Gaza Strip Faroe Islands

  17. Action plan (1) 1) signature and ratification by the Contracting Parties – ongoing •  The Contracting Parties that have not yet done so are highly encouraged to sign and complete the ratification process. 2) Organisation of the Joint Committee with settlement of the Rules of procedure if critical mass is reached (2013) •  draft rules of procedure will be tabled soon, written comments to be submitted, tbd during the next PEM WG

  18. Action plan (2) 3) Implementation of the PEM Convention Examples how diagonal cumulation under the Convention will work in the transitional period will be tabled soon.  Creation of the references to the Convention in FTAs (corresponding to the entry of the application) for all the Contracting Parties (between 2012 and 2014). Template will be tabled soon.  A new matrix (comprising all Contracting Parties, including WB) will be published with the dates of entry into application the references to the Convention in FTAs

  19. Action plan (3) • 4) Revision of the Appendix I (Protocol with the list rules) is on-going. Possible revision of Appendix II (e.g. possible exclusions from scope of diagonal cumulation, etc.) • 5) requesting the agreement of the Contracting Parties for inviting the Eastern Partnership countries with whom the EU is currently negotiating FTAs to accede to the Convention. • 6) The Joint Committee will decide on the entry into force of the revised rules of origin (1 January2015 at the latest). The end of transitional period  only PEM Convention applies.

  20. Contact: TAXUD, unit B3 (Rules of Origin) Email: TAXUD-UNIT-B3@ec.europa.eu

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