Explanatory Memorandum to COM(2000)675 - Community position on an amendment to Protocol 4 on the definition of the concept of "originating products" and methods of administrative cooperation set out in the Europe Agreement with the Czech Republic - Main contents
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| dossier | COM(2000)675 - Community position on an amendment to Protocol 4 on the definition of the concept of "originating products" and methods of ... |
|---|---|
| source | COM(2000)675  |
| date | 24-10-2000 |
1.1. Rules of origin are essential to the correct functioning of the free trade agreements between the Community and its trading partners. Differences in origin rules in the various agreements signed by the Community, in fact, constitute a barrier to trade.
1.2. Following the conclusions of the European Council meeting in Essen, in December 1994, a programme was initiated aiming at applying identical origin rules in the framework of the EEA Agreement, the agreements with the EFTA-countries and the agreements with the countries of Central and Eastern Europe (CEEC), the three Baltic States and Slovenia (14 agreements).
1.3. A standard origin protocol was developed and was included in the 14 agreements concerned and entered into force on 1st January 1997. As a result, trade between all countries concerned was put on the same footing. The system is known as the Pan-European cumulation system. On 1st January 1999, Turkey was included in this system, but only insofar as industrial products are concerned.
1.4. Origin rules must always be adaptable to the technical, political and economical requirements of the free trade area in which they apply. Since 1st January 1997 some amendments have been deemed necessary; several such amendments have been adopted and entered into force on 1st January 1999 and 1st January 2000 respectively.
2. AMENDMENTS TO THE RULES OF ORIGIN IN THE EEA AGREEMENT, THE EC-EFTA AGREEMENTS AND THE AGREEMENTS WITH THE CEEC, THE BALTIC STATES AND SLOVENIA
2.1. Since the entry into force of the standard origin protocol the interpretation and implementation of Article 7 ('insufficient working or processing') has given rise to difficulties. Therefore a new, clearer, text is proposed, based on the present wording and taking into account the need to include some operations not covered previously by the Article. The impact of the amendment on determining whether or not a given product has originating status is negligible; it mostly concerns the allocation of the originating status to a particular country. The amendment has no impact on preferential treatment for most sectors. The economic consequences for the Community are therefore negligible, while the proposal provides for improved clarity for both customs authorities and economic operators.
2.2. The origin rules in the agreements with the CEEC, the Baltic States and Slovenia, provide that until 31 December 2000 flat rates may be used in cases where drawback is prohibited or exemptions from customs duties are granted. Bulgaria and Hungary have asked for this option to be extended for a further year. It is proposed to grant the request and to apply the prolongation to all agreements. This will not give rise to any economic difficulties for the Community and will not concern the EC-EFTA and the EEA Agreements.
2.3. Although the legal text does not clearly say so, it is a generally accepted principle that identical originating and-non-originating materials, to be included in a product, should be segregated physically. However, considerable cost or material difficulties in keeping separate stocks may arise, and it is therefore proposed that under certain conditions customs authorities may authorise the use of the so-called accounting segregation method. This has no economic impact on the Community, but represents a facilitation for the economic operators concerned.
2.4. The origin rules include several amounts expressed in euro. Article 30 refers to equivalents in national currencies and the way they are fixed by the exporting country and communicated to the Commission. A new wording is proposed for this Article, clarifying some questions that have arisen in the interpretation and implementation, and introducing measures to enable countries to round-off the result of the conversion in their national currency.
The proposal will also result in countries not having to amend the equivalents in national currencies where changes remain within a certain range. This will reduce the administrative burden on the national administrations involved and provide greater stability for the level of the amounts in national currencies for the economic operators.
2.5. Some technical amendments to Article 1 and Article 22 are proposed. These amendments are intended to correct some anomalies between the different language versions of the articles in question.
2.6. As an amendment to Annex II is it proposed for HS heading 5309 to 5311 that non-originating jute yarn may be used in the manufacture of the products covered by those headings. As there is no production of such yarn within the Community or any of the other countries concerned by these agreements, allowing non-originating jute yarn to be used is beneficial to the economic operators involved in the manufacture of the products concerned.
3. CONCLUSIONS
The annexed proposal is one of a series of 14 proposals intended to further improve the functioning of the common system of origin rules. These 14 proposals should be taken as a single package. If the current arrangements allowing Pan-European cumulation of working and processing are to remain in force, it is essential that they enter into force at the same time, i.e. on 1 January 2001.
The Commission therefore calls on the Council to draw up a common position for presentation to the committees provided for in each of the relevant Agreements.