Transcript GTZ/WBF

Seminar
on Rules of Origin in the
CEFTA 2006 – Agreement
Shkodra/Albania, Nov. 2010
Helmuth Berndt
© 2010
 CEFTA
1992:
Period of
re-orientation and transition
2
CEFTA 1992 - Member states:
Poland
Hungary
Entry:
Leave (EU):
1992
1992
2004
2004
Czechoslovakia (then)
1992
2004
--------------------Visegrad Goup----------------------Slovenia
1996
2004
Romania
1997
2007
Bulgaria
1999
2007
-----------------------Croatia
2003
-----Macedonia
2005
-----3
Stabilisation-
and Association Pact
1999 Cologne
40 participants: All participants of CEFTA 2006,
EU, Canada, Switzerland, Russia, Japan, USA,
IMF, World Bank, OECD; NATO, UN, Turkey et alt.
4
Targets of the Stability Pact:
3 „working tables“
-
Democracy
-
Economy
-
Security
5
„Working table economy“:
To assist economic development
by trade liberalisation
–
–
in the region and
in the trade with partners of
the European Economic Area
(EEA)
6
2001
Memorandum of Understanding
on Trade Liberalisation and Facilitation
Key targets:
-
Bilateral Free Trade Agreements
Enhance the WTO accession
Stimulation of the EU accession process
7
 2003
– 2005:
 Network
of 32 bilateral Free Trade
Agreements („Matrix“)
 „Virtual Free Trade Zone“
8

Elements of the Free Trade Agreements:

Liberalisation of at least 90% of the trade
within 6 years
- Application of preferential rules of origin
- Harmonisation of legal regulations with
the EU legislation (Customs
nomenclature, phyto- and sanitarian
protection, tax system etc.)
- Protection of intellectual property rights
- Approximation of laws with WTO-rules




9
Joint Declaration of June 2006:
Creation of a single modernised and
improved CEFTA (1996) Agreement in
full conformity with the WTO rules
and establishing a zone of diagonal
accumulation
10
 19.12.2006:
Agreement on Amendment of the
CEFTA (1996) Agreement
11
Conditions for the accession:

WTO-membership (in case of non-membership a
committment to application of WTO-rules mutatis mutandis is
imposed, actually relevant for Serbia, BiH and UNMIK/Kosovo)
Free Trade Agreement with the EU
 Free Trade Agreements with all
member states of CEFTA

12
Structural elements of the Agreement:








Preamble -with reference to EU-accession and
WTO complianceObjectives
Industrial products
Agricultural products
Technical barriers
General provisions
New trade issues - with reference to „TRIPS“
Joint declaration – containing WTO-Annexes
1 A, B, and C
13
Main targets of CEFTA 2006 (trade related):
 Free trade in the area
 Trade facilitation by






-
Customs preferences
- In general duty free trade
- Support for technical coproduction
Modern and harmonised Customs Law
Lesser technical barriers
Harmonisation of standards
14








Customs preferences in detail:
- Abolition of quantitative restrictions
- No export duties
- No new import duties
- Industrial goods:
- - Duties abolished at entry into force
(exceptions in Annex 2/dismantling)
- Agricultural goods:
- - Duties abolished, reduced or retention
of MFN-tariff (Annex 3)
15
Conditions for Customs preferences:
- Goods are eligible or preferences
- Goods are originating in the country of
exportation
- Technical conditions are met
16
The cornerstone: Rules of Origin
Different trade within a
Free Trade Zone
and a
Customs Union
17
Free Trade
Association
2%
3%
4%
10%
Japan
Japan
Free Trade
Association
2%
Customs Union
3%
7%
4%
10%
Japan
7%
7%
7%
Intensity of EU-Preferences
per 1.8..2010
Complete integration: European Union
Customs Union: With Turkey (except steel products)
EU-EFTA Agreements:
Norway, Iceland, Liechtenstein, Switzerland
“Europe Agreements”: No more countries
Stabilisation and Association Agreements with Croatia,
BiH, Macedonia, Albania, Montenegro, Serbia (Interim)
Economic Partnership Agreements ( EPAs, see “Abroad”)
Mediterranean Agreements :North Cyprus (Turkish part),
Maghreb states: Morocco, Tunisia, Algeria.
Mashrek group: Egypt, Jordan, Syria, Lebanon. Plus Israel and PNA
Abroad: South Africa, Mexico, Chile, EPAs: Cariforum, Pacific Terr.
Unilaterally: 178 (176) developing countries in the GSP,
Balkan beneficiaries: UNMIK/ Kosovo and Moldova
20
System of Origin
Preferential
definition
Non-preferential
definition
Commercial
definition
“Made-in” origin
EU-system
System of
other
countries
General system
of Preferences
(UNCTAD)
PAFTA
ASEAN
CEFTA
AGADIR
EUdefinition
Rules for
specified
products
(i.e.textiles)
and
Rules for
all the rest
of products
21
Worldwide
definition
WTO mandate
to WCO
UK in 1887
Madrid-Agreement 1891
Madrid-Agreement 1958
Actually in
process
Contains
elements of
the preferential
origin
National legislation
Most important: TRIPS,
(WTO-accession!)
WIPO-Geneva
Criteria for the origin of goods
Wholly obtainment
or
sufficient processing
22
What is
“Wholly
obtained” ??
23

See Article 5 of the Origin Protocol:
Mineral products: Extracted from the
soil
Vegetables: Harvested there
Live animals: Born and raised up
…..
24
Tomatoes,
0702,
harvested
Processing:
ORIGIN BECAUSE
“WHOLLY OBTAINED”
Heading 2103
EXPORT:
ORIGIN, BECAUSE RAW
MATERIAL IS ALREADY
WHOLLY OBTAINED
Tomatoes1
But25
bottle, spices?
4403
4403
4407
9504
IS IT WHOLLY
OBTAINED?
26

Wholly obtainment frequently used for
agricultural goods:
Chapter 07 Edible vegetables: Fresh, chilled,
provisionally preserved
Chapter 08 Edible fruits: Fresh, dried
Chapter 20 Preparations of vegetables: In general all
vegetables and fruits used must be wholly obtained
(with little exemptions).
Chapter 21 Miscellaneous edible preparations:
With one exception no wholly obtainment
„Chapter“ means Chapter of the „Harmonised
System“ – see below). 27
The alternative for the
processing industry:
Sufficient
processing
28
Most frequent basic principles :
Change of the HS-heading (4-digits!)
– Limited percentage of the used materials
- Manufacturing procedure
–
-- AND COMBINATIONS THEREOF—
Recommendation: To start with the
production on the lowest level possible
29
 General
tolerance:
10% of materials which should
not be used, are allowed.
The tolerance rule cannot be applied
for textiles (Chapter 50 – 63) and in
case of insufficient working or
processing.
30

Where to find these criteria?

See „List of working and
processing“
= Annex to the Origin Protocol


Column 3 an 4 only refer to
imported materials
31
Importance of the HS for the
rules of origin:
-
For preferential origin: 4 digits
(for used materials: See Customs
declaration)
for export goods: See export declaration
For help: Binding tariff information by
Customs!
For non-preferential origin: 4 digits, 1 KNcode-line with 8 digits
Tariff reduction schemes: 6 – 8 digits
32
The Structure of the HS
01
04
20
90
00
National
Internal
Chapter HS
Heading HS
Subheading HS
Subheading National Statistic
(Combined Nomenclature, TARIC)
33
10
National
Internal
The HS / version 2007 is divided into
21 SECTIONS
97 CHAPTERS
1221 HEADINGS
5052 SUBHEADINGS
General Rules I – V, also binding
34

Determination of the origin in case of
„sufficient processing“:
-
HS-heading of the finished product
-
HS-heading of the used materials
-
Exact calculation of the ex worksprice per unit (= exact
bookkeeping!)
35

The value of the used materials is their
Customs value.

So: Important is to check the Customs value
carefully!
Be aware of the exchange rate!

36

Some examples for sufficient
processing:
37
HS headings 3003, 3004:
1. Tariff change of all used materials
But:
materialscriteria
of headings
3003 and
Combined
- Medicine
3004 only up to 20% ex-works
and
2. Used materials must not exceed 50% of
the ex works-price.
38
Example for
Exclusion of a heading,
 exclusion specific imported materials
and
 restriction of imported materials:

Heading 1904, I.E. Corn Flakes
Question: Is it allowed to use imported
mineral salts?
39
Example for minimum- input of
originating materials:
HS-heading 2402,
… Cigarettes…:
At least 70% by weight of the used
tobacco must be originating in the country
40
Preparations of meat of
Chapter 16:
" Manufacture from animals of
chapter 1”
Notice: Chapter 1
= Live animals!
(sanitarian conditions of
slaughter houses!)
41

Clothes and garments of Chapter 61
and 62:
 „Manufacture
42
from yarn“
Rules for cotton products:
1.Natural cotton
fibers, not prepared
for spinning HS 5201
43
2. Cotton yarn, HS 5203
Manufacture from
natural fibers, not
prepared for
spinning
44
3. Cotton Fabric
HS 5208
Manufactured from
natural fibers, can
be prepared for
spinning
45
3. Jeans HS 6203
Manufactured from YARN
46
Alternative for the fabric:
Printing of the raw fabric
(Plus
at least two1/
finishing
steps)
Alternative
for fabrics:
But: Value of the unprinted fabric allowed
only up to 47,5 % of the ex-works
price of the goods
47
Alternative for clothing:
Embroidered clothing:
Manufacture from unembroidered fabric
with a value of not more than 40 % of the
ex-works price of the finished good
48
Insufficient treatment
(“simple operation”)
in general not accepted as
to confer origin.
For details see Art. 7 of the
Origin Protocol, but see
cumulation rules (below).
49
Column 3 of the “List”:
Alternative criteria:
Why do you need and when
should you use the
alternative criterion??
50
Fertilizers
Ex - 3105
Standard rule col. 3:

Manufacture, in which all materials used are
classified within a Heading other than that of
the product.

However, materials classified within the same
heading may be used, provided their value
does not exceed 20% of the ex-works price of
the product
51
And the value of all materials
used does not exceed 50% of the
ex-works price of the product
-
COMPLICATE -
52
Alternative Rule Col. 4:
Manufacture in which the value of
all the materials used does not
exceed 40% of the ex-works price
of the product
Simple and allows products of
heading 3205 up to 40%
53



If the conditions of the „List“ cannot
be met, a co-production with a
partner state can help in order to get
the origin for the finished product.
How?
By processing materials originating
in this or in more partner states.
Which possibilities are actually
offered by the Free Trade
Agreements?
54
Actual models of co-production:
1. Bilateral accumulation
2. Diagonal accumulation
3. Full accumulation, actually only by EU applied
in the trade with the Maghreb states, some former
ACP states and in the EEA (EU + NO, IS, FO, CH is
connected).
Principle:
Non originating material as first processing step
allowed, but all accumulations must lead finally to
“List compliance” -.
55
Bilateral accumulation
PREFERENCE
AREA
A
CONTRACTING
PARTY
B
56
Conditions for bilateral
accumulation
1. Agreement between the partners
2. Processing of originating
materials more than insufficient
- but less than sufficient
processing is allowed 3. If only insufficient processing:
Origin will be retained
4. Non-originating materials have to be
processed sufficiently (“List”)
57


The bilateral accumulation today is
integrated as standard rule in all modern
European Free Trade Agreements.
The „pan-european accumulation“,
which covers the bilateral and the
diagonal accumulation with more than
two involved trade partners, nowadays
constitutes the most favourable and
most modern system of trade facilitation
by Customs technique.
58
MULTILATERAL/DIAGONAL ACCUMULATION
CONTRACTING
PREFERENCE
AREA
PARTY
B
A
D
CONTRACTING
PARTY
C
59
MULTILATACCUM
Advantages of the PanEuropean accumulation
-
-
No more differentiation between bilateral
and multilateral accumulation
Insufficient operation can lead to the origin
Facilitation and enhancement of regional
cooperation
60
The diagonal accumulation is used
 - in the trade within EEA (European
Economic Area) = EU plus EFTAstates Norway and Iceland, while
Switzerland incl. Liechtenstein are
associated to the EEA,
 - in the trade of the EEA with Turkey,
 - in the trade of the EU and Turkey
with the SAP-partners,
 - within the CEFTA-region
61
Accumulation in the CEFTA-Origin
Protocol:



Origin in CEFTA-states, 2 options:
 Art. 3 of the Origin Protocol:
- Using originating materials only
from CEFTA-member states
(Art. 3, Item 1),
- Using originating materials from
CEFTA-member states, the EU,
Iceland, Norway, Switzerland
and Turkey (Art. 3, Item 2).
62

Origin in CEFTA-states
a n d in the EU:
Art. 4 of the Origin-Protocol:
- Using originating materials from any
other CEFTA-party or from the EU
(Art. 4 (1) of the Origin Protocol)
Question: How to be applied?
63
Conditions for CEFTA-accumulation:
Agreements with all other involved partner
states with identical rules of origin
2. Origin of the materials and processing of
more than “insufficient operation”
3.) Publication in the Official Journal/Gazette
-----
same conditions as in pan-european
model ----
64
Principles of CEFTA-accumulation
1.
Processing more than insufficient operation:
= Origin in this country, Compliance to list-criteria is not
necessary!
2.
Processing only as insuficient operation:
= Origin in the last country only if the added value there is
higher than the highest value share of originating materials
of the other involved countries
3.
Processing of non-originating materials:
= Origin only by sufficient working or
processing (according to “list criteria”)
4.
Unchanged sale of the materials:
Goods retain their origin
65
Example for CEFTA-accumulation
Export product: Woven fabric of wool, HS
5112, woven in Albania, export to
Montenegro
Input: yarn of wool of HS 5107, originating
in BiH and Serbia
The weaving in Albania is more than
insufficient processing. The criterion of
fabric is: Manufacture from natural fibre.
66
Result:
The fabric gets Albanian origin
Reason: BiH, Serbia, Montenegro and
Albania are contracting parties to the CEFTA2006 Free Trade Agreement.
Preference in Montenegro.
In case of only insufficient operation in
Albania, i,e, only packing of the yarn, the
origin goes to the country with the highest
input of originating materials.
Applied: Art. 3, Item 1 of the Origin Protocol
67


Same example,but export to the EU:
Same result:
The woven fabric has Albanian
origin and is eligible for preference
in the EU, because all involved
parties have Free Trade Agreements
(actually as Interim Agreements)
with the EU and between
themselves. Preference in the EU.
Applied: SAP-Agreement
68
Example with export to Turkey:
Yarn ( HS 5204)
goes to Albania for weaving into
raw fabric ( HS 5208)
- origin:
EU
fabric goes to Serbia for dyeing
- origin: Serbia
- origin: Albania
fabric sold from Serbia to Turkey
Both processings are more than unsufficient operation within the
CEFTA accumulation.
But: There is no Agreement between Turkey and Albania (but between
Turkey and EU and Turkey with Serbia) . No preference in Turkey, nonpreferential origin only!
69
Example with 10%-tolerance and “insufficient
operation”
Assembling of a ball point pen of HS 9608 for export to the EU
- All used parts are of HS 9608:
- Cartridge, origin EU,
value 2.—€
- Plastic parts, origin BiH
value 1,-- €
- Clip, origin Montenegro
value 1.-- €
Ex-works price in Albania
5.-- €
Export → Serbia: Origin is EU ( highest share)
Applied: Art. 3, Item 2 of the Origin Protocol
The “ List” does not apply because of “insufficient operation”!
If: Cartridge is of origin BiH: Origin of the pen will be BiH
If: Cartridge is of origin Albania: Origin of the pen will be Albania
If: Clip is of origin China: No preferential origin for the pen at all
- 10%-tolerance rule does not apply:
- - “Insufficient operation” is given and70
- - 10%- tolerance is exceeded
Example with “insufficient operation” only
Jeans / Origin BiH ( HS 6203) with EUR.1 go to
Albania for packing and export to the EU:
Values:
Jeans
Packing costs
Plastic bag (Albania)
Other costs/profit
Price ex works
Added value in Albania:
Highest value input = BiH,
Applied: SAP-Agreement
20.- Euro
2.- Euro
0.5 Euro
2.5 Euro
25.- Euro
5.-- Euro
Origin = BiH
Question: If the plastic bag is of origin
Ukraine?
71
No Draw Back rule

Art. 15 of the Origin Protocol

General background

Concerned goods
72
Example: TV tube
 Origin : South Korea
 Processing in Albania for TV-set
 Value not exceeding 25% of the ex works price of the TV (HS 8528)
73
Export of the finished TV to other
CEFTA-partner state with EUR.1
1. Duty free access of the Korean TV
tube to the CEFTA - market,
2. disadvantage for CEFTA producers
against Albanian producers because
of customs duties to be paid by the
CEFTA producer for his importations
of tubes.
Question: Exportation to EU-market ?
74
Additional special rules:






Accessories, spare parts
Neutral elements
Principle of territoriality
Direct transport
Free zone processing
Sanctions
75
Impact of the rules of
origin on the internal
structure of your
company:
76
Purchase
Calculation
Production
Case Worker
Preferences
Sales
Marketing
77
Calculation 2


Formal simplification:
- Invoice declaration for
all shipments up to 6.000.- € or
- as „Approved Exporter“
--- in future: „Approved Economic
Operator“/AEO:
Approved for Security aspects,
Customs procedures or both---
78
Details for the „approved exporter“:
- Legal base in the Agreement
- Irrespective of the value
- Origin declaration by typing, stamping or printing on the
invoice or any commercial doc.
- Wording must be according to the legal text
- The declaration must be signed ( principle)
- Non-originating goods indicated only on the invoice
- Written application and basic audit
- Frequent shipments, knowledge of rules of origin
- Proper records and stock accounts
- Full responsibility by the exporter
- Regular audits by the Customs
- Withdrawal of the authorization in case of non79
compliance
Internal proof of origin of materials:
„Supplier‘s declaration“ as part of the contract:
Certification for the
- status of non-originating materials
- status of already originating materials
Issued for single shipments and
as long term declaration.
Responsibility by the manufacturer,
auditing by the Customs.
Actually formally applied and based in the Agreements
within the EEA and between EU, Turkey and the Maghreb
states, but informal use is highly recommended.
80
Thank you for your attention!
81
Helmuth Berndt
Senior Customs Advisor
E-mail: [email protected]
Tel.:
+ 49you
30 824
07 657
Thank
for your
attenion
fax : + 49 30 824 07 658
Mob.: + 49 177 203 7508
LV-CEFTA-Maced-2010
82