IT-Silkroad

[The Place of Origin System of the European Union (EU)]

■ Outline

ㅇ The EU's rules of origin are regulated by the Customs Act, integrating the preferential and non-preferential rules of origin.

- The 「Customs Act」 only provides general rules on the origin of goods, and the specific application or enforcement is stipulated in the separate 「Enforcement Rules of the Customs Act」.

ㅇ The 「EU Customs Act」 provides only the rules for the determination of origin and proof of origin, and does not stipulate the origin labeling and the punishment thereof, and etc.

- However, for cosmetics, the 「EU Cosmetics Act」 (EU Regulation No. 1223/2009) requires cosmetics to be labeled as origin when importing and selling cosmetics.

ㅇ The followings are the main contents related to the rules of origin stated in 「Regulation (EU) No. 952/2013」 of the new EU Customs Law, which was enacted since June 1, 2016:

- Goods that are completely acquired in one country or territory are considered to have their place of origin in that country or territory.

- Goods manufactured in excess of one country or territory shall be deemed originating in the country or territory in which the last substantial variation was made.

- If the place of origin is specified in the customs declaration in accordance with customs regulations, the customs authorities may request the declarant to prove the origin of the goods and, in case of reasonable doubts, may request additional evidences.

- Proof of origin can be issued at the EU level if requested in a trade emergency.

ㅇ In the case of the EU Customs Act which regulates the origin of goods, the Article 22-26, of the total number of 6 articles; Articles 22-27, stipulate the 'non-preferential origin of goods' and, in the rest; Article 27, the 'preferential origin of goods' is prescribed.

■ Non-preferential Rules of Origin

ㅇ The non-preferential rules of origin are mainly used to determine whether the provisions of the harmonized rules of origin of the WTO are subject to anti-dumping duties, countervailing duties, safeguards or quantity restrictions, and tariff assignments, and to determine statistical purposes, origin marking for goods and etc.

ㅇ EU non-preferential rules of origin are replacing domestic regulations of member states and are used for MFN (Most Favored Nation) measures, anti-dumping, countervailing duty and marking of origin. This is an important step for harmonizing the rules of origin and it is very important for third countries to eliminate the confusion that different regulations should be applied for each member states.

ㅇ The EU adopts wholly obtained criterion and substantial transformation criterion as the criteria for non-preferential origin.

☉ Wholly Obtained Criterion

ㅇ In accordance with article 23 of the EU new tariff legislation, the wholly obtained criterion is applied first in the recognition of origin (section 1), and the requirements are specified (section 2).

ㅇ The wholly obtained criterion is the standard of origin for a product if it is fully produced in one country. Products classified as wholly obtained are classified according to the contents as follows.

- minerals taken from within the territory

    - Vegetables harvested in the territory

    - animals raised in the territory

    - Products produced from living animals raised in the territory

    - Products hunted and collected by fishery in the territory

    - Products collected by fishing and natioal flag carrier

    - Products produced in facilities on national flag carrier

    - Products collected from the seabed other than the territorial sea (limited to possession of special rights)

    - Waste or remnants produced in the process in the territory

    - Goods produced from the waste or the remnants produced in the process in the territory

☉ Substantial Transformation Criterion

ㅇ Goods that have been processed in two or more countries shall be given the origin of the country in which the actual process (transformation or processing) has finally taken place. (Article 24 of EU Customs Act)

- This process should be economically justifiable,

    - It should also be done in companies equipped facilities for this process,

    - It should be recognized that such a process results in the production of new products or important steps in production.

☉ Prohibition of unfair acquisition

ㅇ Any variation or processing which may be presumed to have the purpose of circumventing the provisions which may be applied to the goods of a particular country in the Community in the light of the modifications already made or the facts already confirmed, It can not be considered a commodity that has acquired the country's origin. (Article 25 of the EU Customs Act)

■ Preferential Rules of Origin

ㅇ When an agreement is concluded between countries with the main content of exemption or reduction of customs duties, rules governing preferential rules of origin to determine whether or not the goods are traded between the member countries with which the agreement is made are subject to preferential tariff treatment.

ㅇ Preferential rules of origin are used as a basic element of free trade zones such as NAFTA and MERCOSUR, and are used to prevent free riding (trade bias) of preferential tariff application for outward products to be imported into FTA countries at low external tariff rates.

ㅇ The EU treats preferential rules of origin in Article 27 of the 「EU Customs Act」, and provides specific provisions in Articles 66 to 140 and Annexes 14 to 22 of the 「Enforcement Rules of the EU Customs Act」.

- The contents of Articles 66 to 140 of the 「Enforcement Rules of the EU Customs Act」 consist only of the criteria for the determination of origin and the procedure for proof of origin, and there is no provision for origin labelling , false declaration of origin or false labelling of origin.

ㅇ The 「EU Customs Act」 provides only the basis for granting origin of preferential origin, and substantive contents are contained in the "Enforcement Rules of EU Customs" in the case of one-sided preferential regulations, and each agreement in the case of bilateral preferential regulations.

- In the case of providing one-sided preferential treatment in preferential origin proofs, the regulation shall be stipulated in the 「Enforcement Rules of the EU Customs Act」 and bilateral preferential tariffs by bilateral or multilateral agreements shall be stipulated in the relevant agreement.

■ Certificate of Origin System

ㅇ The Certificate of Origin certifies that the imported goods are originated in a particular country, and it is required to prevent direct, indirect, or actual and potential disturbance of commerce within the European Community.

ㅇ Customs act or other special EU legislations may specify that the origin of goods must be justified by submission of documents. (Article 26 (1) of the EU Customs Act)

- This is particularly the case for the imports of certain textiles and agricultural products subject to import preferences.

ㅇ The application of the rules of origin is stipulated in Articles 47 to 65 of the 「Enforcement Rules of the EU Customs Act」, and the certificate of origin must meet the following conditions. (Article 47 of the Enforcement Rules of the EU Customs Act)

- The Certificate of Origin may be issued by a strictly competent authority or organization with the necessary guarantees by the granting country.

- The Certificate of Origin must state all the necessary information to identify the good, such as quantity, nature, trademark and serial number, volume of the goods and total or net weight. However, these items may be replaced by quantities or volumes if the goods are sensitive to changes during transport, or their weight can not be determined, or their identifications are generally guaranteed by other factors, in other words, by the name of the sender.

ㅇ Generally, it is customary for certificates of origin to be issued at the Chamber of Commerce of the country of origin of the commodity, but foreign representative authorities, foreign customs authorities and certain relevant government departments may also issue such certificates.

ㅇ However, apart from the 'universal origin certificate' above mentioned, please notice that the submission and recognition conditions of documents on special provisions related to imports of agricultural products and general preferential tariffs system are stipulated in the 「Enforcement Rules of EU Customs Act」.