Preferential origin allows the application of reduced or zero customs duty rates. To benefit from these reductions or exemptions upon importation, it is essential to comply with the preferential origin rules. These rules are critical for obtaining the tariff advantages provided under the European Union‘s preferential agreements with certain countries. The preferential origin rule is a set of criteria used to determine whether a product originates from one of the countries party to an agreement. For a product to be eligible for a tariff preference, it must meet this origin rule. Like tariff preferences, the criteria of the origin rule may vary depending on the agreements.
In the absence of specific tariff preferences, WTO members apply the “most favored nation” principle (MFN) (MFN Duty). In practice, this means that a WTO member country applies the same customs duty rates to all imports of a given product, regardless of its origin or provenance.
Tariff preferences provide financial advantages beyond MFN duties by reducing or eliminating customs duties between the contracting parties to a trade agreement. To benefit from these preferences, three conditions must be met:
1. The product must comply with the origin rules specified in the agreement.
2. The importer must request the reduction or exemption of customs duties in their customs declaration.
3. The importer must prove that the product meets the origin conditions by providing a proof of origin issued by the exporter.
Thus, obtaining a tariff preference requires close collaboration between the exporter and the importer.
Preferential origin is crucial for businesses as it reduces import costs by applying reduced or zero customs duties, thereby enhancing international competitiveness. By complying with the preferential origin rules, companies benefit from advantageous tariff conditions, gain easier access to foreign markets, avoid customs penalties, and optimize their supply chains. This also allows them to reinvest the savings into innovation and quality, further strengthening their position in the global market.
Products that are wholly obtained in a beneficiary country can qualify for preferential origin without additional conditions. This includes goods produced exclusively with resources from the beneficiary country, such as raw materials extracted or harvested locally (e.g., extracted minerals, harvested agricultural products, or animals raised and slaughtered in the country).
For products that do not meet the criterion of being wholly obtained, preferential origin can be granted if the product has undergone a substantial transformation in the beneficiary country. This transformation must involve significant operations, such as substantial changes to the nature of the product or increases in the level of added value. The specific criteria vary depending on the free trade agreements or preferential regimes, but they generally include added value thresholds or specific requirements regarding production processes.
To benefit from a preferential regime, it is necessary to provide a proof of origin at the time of customs clearance. Depending on the applicable legal framework, this proof can take several forms:
– The EUR.1 movement certificate;
– The EUR-MED certificate for the pan-Euro-Mediterranean zone;
– An origin declaration or attestation of origin on a commercial document, issued by any exporter if the value of the shipment is below or equal to 6,000 euros, or without a value limit by a certified exporter (EA) or registered exporter (REX system) authorized by the customs authorities of the exporting country;
– An EUR.2 form under the agreement with Syria;
– The importer’s knowledge.
The origin declaration on invoice (DOF) is a supporting document that allows access to preferential customs regimes for an imported product. It appears as a statement directly written on the invoice. The purpose of the origin declaration on invoice is to facilitate the use of EU preferential regimes by simplifying formalities. No specific procedure or customs customs clearance stamp is required for this document. This administrative simplicity reduces the risk of disputes regarding the form of the document.
Certain information must appear on the origin declaration on invoice:
– The title “Origin Declaration” at the beginning of the document;
– The place and date of issuance;
– The full name and the handwritten signature of the signatory;
– A statement confirming that the products listed benefit from the preferential origin of the European Union.
To obtain the authorizations, here are the steps to follow:
1. Check Origin Criteria
– Ensure that the products meet the origin criteria specified in the applicable trade agreement.
2. Prepare Documents
– Obtain the required certificates (EUR.1, EUR-MED, EUR.2) or prepare an origin declaration on invoice (DOF) depending on the agreement’s requirements.
3. Register as an Authorized Exporter
– If necessary, apply for Authorized Exporter status with the customs authorities.
4. Register in the REX System
– Register in the REX system if required by the trade agreement.
5. Submit and Verify
– When shipping the goods, submit the necessary documents to the customs authorities of the importing country to benefit from preferential duty rates.
Obtaining the authorizations to export with preferential origin requires a good understanding of the origin criteria and close collaboration with customs authorities. By following these steps, businesses can benefit from the tariff advantages offered by preferential trade agreements, thus optimizing their export costs and enhancing their competitiveness in the international market.
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