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Customs and commercial policy: the Commission opens debate on the future of preferential rules of origin

European Commission - IP/03/1766   18/12/2003

Other available languages: FR DE

IP/03/1766

Brussels, 18 December 2003

Customs and commercial policy: the Commission opens debate on the future of preferential rules of origin

The European Commission is seeking a wide-ranging debate on the rules of origin applied under preferential trade arrangements, with the publication of a Green Paper (consultation document) on the issue. Preferential trade arrangements are aimed at increasing reciprocal trade in goods and access to the Community market for products from developing countries by eliminating or reducing customs duties. They only make sense if the tariff preferences apply to products that are actually obtained in the country granted the preference; these are known as "originating" products. The Green Paper which the Commission has just adopted highlights the way the context and objectives of the arrangements have changed and the effect this has had on the definition of rules of origin. Action is essential in three areas: determining a product's origin, checking that the rules of origin have been applied fairly and establishing procedures to ensure a balance of responsibilities between traders who gain from preferential arrangements and public authorities. The Commission calls on all those with an interest to contribute to the debate by 1 March 2004.

"Preferential arrangements must fulfil their objective of integrating economies and expanding trade, and must actually benefit those they are intended to benefit, particularly developing countries. The rules of origin and procedures underpinning such arrangements must keep pace with changes in the international economy and the objectives of the Community, while remaining applicable and verifiable in practice," Frits Bolkestein stated.

Objectives of the Green Paper

The Green Paper shows that the current EU framework for determining, managing and supervising preferential origin is no longer wholly suitable and should be radically rethought. This will be influenced by the reductions in rates of customs duty which should ultimately emerge from the current round of multilateral trade negotiations and the role of preferential origin rules in free trade agreements, policy on market access and support for sustainable development.

If it wishes to succeed in its contract-based and autonomous preferential trade policy, the EU must ensure that it is properly implemented both by the Member States and by the partner countries, in order to protect business and safeguard the financial interests involved against abuse.

The objective of this Green Paper is to help the Commission to formulate guidelines in line with these objectives, taking account of the various interests at stake and the contributions expected of those involved in the preferential arrangements, by providing:

  • an overall assessment of the current problems of origin in preferential arrangements;

  • a focus on aspects which require a consistent approach to bring them under control;

  • an overview of the options available, particularly as regards the systems for declaration, certification and control of the originating status of products and ways of refocusing the current system of administrative cooperation.

The economic, legal and financial context

The Green Paper attempts firstly to provide the fullest possible overview of the economic, legal and financial context of the preferential trade arrangements which the preferential origin rules will be called upon to serve in the coming years:

  • it seeks to highlight the changing context of preferential arrangements in terms of international trade practice, the Doha multilateral trade negotiations and the common policies, and the impact of such change on the definition of rules of origin, on compliance with which effective use of such arrangements depends;

  • it also reviews constraints relating more specifically to the variety, complexity and practical application of the current rules and procedures concerning preferential origin.

Options

Starting from an assessment of the present situation and the expected outcome of current trends, the Green Paper seeks briefly to pinpoint the various courses of action and options available to ensure that the rules of origin play their role to the full and contribute to the smooth operation of arrangements which are increasingly geared to greater market access and sustainable development.

On this basis, the Commission identifies three areas in which it believes a new balance should be found:

  • the definition of the conditions for acquiring originating status and the legal framework for this;

  • supervision to ensure the conditions are applied fairly, for the greater good of legitimate traders;

  • the establishment of procedures ensuring an optimal division of tasks and responsibilities between traders and the authorities; specific developments in the latter area suggest various conceivable future options.

The Commission hopes to prompt similar studies by other institutions and interested parties and imaginative responses to the options presented, or even alternative proposals.

The Green Paper is aimed at international traders and the competent authorities of the Member States, candidate countries and the EU's partner countries in preferential arrangements, as participants in these arrangements.

However, the Commission also intends to involve the other EU institutions the Council of Ministers, the European Parliament and the Economic and Social Committee in the debate.

Wide consultation

To enable contributions prompted by the Green Paper to be collected and channelled into a structured discussion with interested parties, the Commission would ask them to send their comments in writing by 1 March 2004.

A questionnaire has been drawn up for this purpose. Completed questionnaires should be sent to the following email address:

taxud-greenpaper-origin@ec.europa.eu

The Green Paper, the questionnaire and other documents and information relating to it are or will be made available on the Commission's website, together with the contributions received (unless the authors object), at the following address:

http://ec.europa.eu/taxation_customs/customs/consultations_en.htm For further information, see also MEMO/03/261.


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