DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Security & Safety, Trade Facilitation & International Coordination
Rules of Origin
Brussels, 24.11.2010
TAXUD/B3/FH D (2010)
cr\187
TAXUD/949412/10
Working document
CustoMs Code Committee
Origin Section
(Council Regulation (EEC) No 2913/92 of 12 October 1992)
29.10.2010, 10.00 hrs - 18.00 hrs
Summary report of the 187th meeting of the Origin Section of the Customs Code Committee, held in Brussels, on 29 October 2010
1. APPROVAL OF THE DRAFT AGENDA
The agenda was approved.
2. POSSIBLE COMMENTS ON THE DRAFT SUMMARY REPORT OF THE 186 CCC-ORI MEETING
The draft summary report of the 186th meeting was approved.
A. ITEMS for possible VOTE
nil
B. ITEMS for examination
3. PREFERENTIAL ORIGIN
3.1. EU-Mercosur FTA
Debriefing of the 2nd round of negotiations in Brussels from 12 to 14 October 2010 - Information point - (TAXUD/803945/10)
COM informed Member States on the outcome of the discussions of the round of negotiations with Mercosur that took place on 12-14 October in Brussels.
3.2. EU-India FTA
State of play and outlook for concluding RoO Chapter EU-India FTA negotiations (following Inter-Sessional Round of Negotiations in Delhi from 20 to 22 September 2010 - Information point - (TAXUD/780166/10)
COM informed MS on the outcome of the discussions in the technical meeting with IN on RoO that took place in New Delhi, between 20 and 22 September. Main discussions focused on remaining issues from the normative part with some indications and explanations concerning list rules.
3.3. EU-Singapore FTA
Debriefing of 3rd negotiation round in Singapore from 13 to 17 September 2010 - Information point - (TAXUD/804755/10)
COM provided a debriefing of the 3rd negotiation round in Singapore from 13 to 17 September 2010. On the general part of the Protocol, EU and SGP proposals have been merged but few brackets have been removed. Discussion focussed on aquaculture, vessel conditions, fob-ex-works, cumulation and outward processing, concepts of wholly obtained goods (in particular on re-manufactured goods) and duty drawback.
3.4. EU-Canada CETA
Debriefing on the 5th round of negotiations in Ottawa from 12 to 22 October 2010 -Information point
COM provided an account of the fifth round of negotiations for a CETA, hosted by Canada in Ottawa from the 18th to 22nd of October 2010. Specifically for rules of origin and, in view of the complexity and the significant number of issues to resolve, Canada had requested an additional week of negotiations.
3.5. EPAs
Proposal for a revision of cumulation of origin provisions in the framework of the Economic Partnership Agreements - Presentation and discussion point – (TAXUD/650898/10 + TAXUD/650898/10 Add.1)
COM presented the finalised EPA cumulation provisions’ proposal to MS (TAXUD/650898/10 and TAXUD/650898/10 Add.1). It was highlighted that the main objective of the proposal is to re-establish the all ACP cumulation which was available under the Cotonou Agreement. There are however additional flexibilities regarding the possibility to cumulate MFN 0% materials, GSP 0% materials and FTA 0% materials. The new provisions would apply to those ACP States which have signed and at least provisionally applied an EPA. Cumulated materials would have to undergo more than insufficient working or processing in ACP States. COM pointed out that provisions on diagonal and full cumulation were simplified by removing the condition of identical rules of origin and that the underlying idea for the whole proposal is that the supplying country would have to apply its own rules of origin as if the materials were directly exported to the EU.
COM explained that specific exclusions were foreseen in different types of cumulation and that these exclusions were necessary to preserve the Cotonou acquis, to take into account already granted concessions and to prevent trade deflection. The introduction of the condition related to administrative cooperation was also needed in order to keep consistency with other cumulation schemes and to provide for a possibility of verification of origin of supplied materials. The requirements related to certification are crucial in order to allow traceability of the utilisation of the new provisions and thus enable monitoring.
3.6. Rules of Origin for cigarettes in FTA negotiations - Discussion point - (TAXUD/775244/10)
COM reiterated the motives of the cigarette producers active within the EU to propose a new origin rule to be used on a case by case basis in FTA negotiations. Cigarette producers also claim to have the backing of at least some of the EU tobacco growers. COM also explained the reasons to propose a slight modification to the rule proposed by the cigarette producers (in relation to the limitation to smoking tobacco of heading 24.03), but noted that it will continue its discussions with the cigarette producers on this.
Six delegations (in writing) supported the COM proposal, while some of them raised the technical detail concerning the full exclusion of products of 24.03.
Five delegations reserved their position, to continue consultations within the administration, and or with tobacco growers. One of them noted that, as for GSP the same rule could apply for cigars.
Four delegations noted their disagreement with the proposed new rule. One delegation reiterated its earlier position that it could only agree with a maximum 30% non originating leaf threshold.
COM concluded that it would go back to the cigarette producers to discuss the (inconclusive) outcome of the discussions to see whether a further fine-tuning of the proposal is possible. COM will contact the EU cigar industry, but noted that the market situation for cigar producers is likely to be distinctively different from that of the cigarette producers.
3.7. 'Ex-works' versus 'FOB' price - Discussion point - (TAXUD/768991/10)
COM explained the need to overcome the different value criteria that may be referred to for the purpose of establishing the maximum value of non-originating materials (NOM) mentioned in list rules based on added value. From negotiations with India, Singapore (and in future likely all other ASEAN partners) it became clear that a solution is needed to allow both sides in the agreement to use their own value criteria. In this context it was explained that the only feasible solution is to provide for a system by which EU producers would continue to use the 'ex-works' price basis and to allow producers of the FTA partner to calculate the maximum value of NOM on the basis of 'FOB', however, with (in the case of India) a 10% margin to assure equivalence and thus a level playing field for EU producers.
One delegation supported the use of the ex-works price as the only option, as this makes more economic sense and would provide for more coherence between the EU's FTAs which are all based on a rule using 'ex-works'. This position was supported by five other delegations which also raised the issue of possible imbalance for certain (Indian) producers, and the arbitrary nature of the 10% margin. COM explained that the discussion follows extensive discussions during FTA negotiations where (while the EU position is in support of the use of ‘ex-works’) it has emerged that a single solution is not acceptable.
Three delegations supported the asymmetry as long as 'ex-works' remains the standard for EU producers.
COM explained the need to find a pragmatic solution, and agreed that the proposed 10% for India is arbitrary as this margin depends on a large number of variable factors. Taking these factors into account, however, would complicate the solution even further and would be open for manipulation. COM will further explore possible ways to come up with a justification for the correction factor to be used in negotiations.
3.8. Request for a derogation from the rules of origin for sugar products from the Netherlands Antilles (Curacao) - Information point - (TAXUD/813536/10)
COM informed that it received a derogation request from the Netherlands on behalf of the Netherlands Antilles to allow using raw sugar from third countries to be aromatized, coloured, milled and processed into sugar lumps and crystal sugar while conferring OCT origin. The request covers the years 2011, 2012 and 2013 for 7000 tonnes p/y.
COM services indicated that they are currently in the process of evaluating the request.
Since COM is bound by the deadline of 75 working days to adopt its position, a draft proposal will be submitted for opinion of the Committee as soon as possible, by written procedure.
3.9. Debriefing of the meeting of the Pan-Euro-Med Working Group of 28 October 2010
The general feeling was positive, each point on the agenda was covered, the revision document was analysed article by article, a methodology was set for the revision of the list rules. In respect of the revision document, MS were informed that a revised version gathering all comments received both from partner countries and from MS will be prepared with a view to discussing it by article by article at the next Committee meeting scheduled in January.
3.10. Debriefing of the meeting of the EC-Turkey Customs Cooperation Committee of 15 October 2010
During the meeting Turkey raised two points related to A.TR certificates.
1. TR reported that A.TR replacement certificates issued in Turkey are systematically refused by one MS.Allegedly this MS considers that the guidelines on replacement certificates (CCC-ORI Working Document Nr. 2290/08) only apply to MS and therefore TR is not entitled to follow the same practice concerning replacement certificates.
As a result, COM suggested modifying document 2290/08 in order to explicitly include TRas one of the two parties of the Customs Union entitled to issue A.TR replacement certificates.
After discussion with MS, it was agreed to communicate examples of concrete cases in order to bring some clarifications.
2. TR also mentioned that the term "Issued retrospectively" is sometimes missing on A.TR certificates issued by some MS.
COM recalled that Article 15 of Decision 1/2006 clearly provides that this mention is mandatory and invited MS to control the correct application of this Article within their national customs administrations.
3.11. "Freezing" as a minimal operation - Exchange of views
This is a horizontal issue the examination of which was requested by one delegation further to a question raised by a Western Balkan partner country in respect of frozen cherries exported to the EU. With a view to harmonising the practice throughout the Union, MS were requested in writing whether freezing is to be considered as a minimal operation or not. According to the replies received, it appeared that freezing is indeed considered as a minimal operation. During the discussions, it became clear that some MS do not always consider freezing as a minimal operation within the meaning of art.7 (a) of the Origin Protocol: "preserving operations to ensure that the products remain in good conditions during transport and storage". MS that did not send their position were requested to do so. This issue will be further discussed at a forthcoming meeting of this Committee.
3.12. GSP - Evidence of direct transport (TAXUD/69906/10 Rev.1) - Further discussion on case B (Europia's issue)
COM presented draft conclusions on the issue of the direct transport rule included in working document TAXUD/69906/10 – EN – Draft Final.
One delegation underlined that the proposed solution should be applicable from 1 January 2011 and be adapted to the legal framework prevailing from that date since after that date a new non-manipulation clause would be applicable. Furthermore, it noted the following:
Irrespective of whether the 'ship-to-ship' operation takes place outside or within the territorial waters of the EU a replacement certificate might only be issued by the MS’ customs authorities of the place where the first part of the consignment is declared. However, one should bear in mind that the replacement certificate will be issued to the company that declares this part of the goods and, in most cases, it will not be the owner of the consignment. Thus, the recipient of the replacement certificate Form A will have to bear commercial responsibility to send the received replacement certificate to the owner of the un-cleared part of the consignment. In addition, the same delegation requested for the elaboration of guidelines on the procedure for issuing replacement certificates.
Another delegation underlined that the distinction between territorial and international waters that was introduced into the document was unnecessary, since there was no reason for it.
COM informed that the document would be uploaded on CIRCA to allow delegates to reflect on the proposed solutions. Since the next Committee meeting will take place in the second part of January 2011, it is advisable to reach a final conclusion using electronic means. COM invited delegates to send their comments on the presented solution by 12 November. As regards the proposal on procedural guidelines, COM explained that this needs to be carefully considered since guidelines that are elaborated by the Commission services have to be made public via the Commission’s website.
3.13. Horizontal
3.13.1. Revision of the Communication from the Commission to the Council and the European Parliament setting out conditions, in the context of preferential tariff arrangements, for informing economic operators and Member State administrations of cases of reasonable doubt as to the origin of goods - State of play
COM explained to delegates that the provision of point 4 (1) of the revised communication was re-drafted on the basis of comments presented in this regard by other DGs and services.
One delegation was not in favour of the proposed change since, according to the presented drafting of the provision, the EU MS’ customs authorities would be allowed not to send proofs of origin for verification provided they have relevant information justifying that there is no reasonable doubt with regard to their authenticity and accuracy. In this delegation’s view, this does not represent any difference from the existing situation. The version proposed by the Commission services previously referred directly to the customs activities based on risk analysis and thus gave MS the ability to decide themselves to what extent to deploy their staff in order to initiate relevant verification procedures. Two other delegations supported the first delegation. One of these two delegations noted that adopting the proposed wording would mean to go back to the original version. Since the MS authorities would have to prove the absence of reasonable doubt, in most cases verification of all proofs of origin would be continued by MS.