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EU: “Rules of origin” to be updated for 20 trade agreements

EU: Rules of origin to be updated for trade agreements

The European Commission on 24 August 2020 adopted trade proposals to increase trade between the European Union and neighbouring countries in the Pan-Euro-Mediterranean (PEM) region, and specifically to update the “rules of origin” in certain preferential trade agreements with 20 PEM trading partners.

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As noted in the EC release, the proposals amend the EU's bilateral agreements with the following countries or jurisdictions: Iceland, Liechtenstein, Norway, Switzerland, Faroe Islands, Turkey, Egypt, Israel, Jordan, Lebanon, Palestine, Georgia, the Republic of Moldova, Ukraine, Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia and Kosovo.

The “rules of origin” will be used to determine which goods can benefit from preferential treatment, and those goods with preferential origin are eligible to be imported with lower customs duty rates, or even a zero rate, depending on the preferential tariff treatment. The EC released a set of “questions and answers” about the rules of origin proposals with the 20 PEM trading partners.

It is anticipated that these provisions will make it easier for products to benefit from trade preferences, such as:

  • Simpler product-specific rules, such as the elimination of cumulative requirements, thresholds for local value added, more adapted to EU production needs, and new double transformation for textiles
  • Increased thresholds of tolerance for non-originating materials, from 10% to 15%
  • The introduction of “full” cumulation, under which the manufacturing operations needed to acquire origin for most products can be split among several countries
  • The possibility of duty-drawback (repayment of duties on imported components) for most products to help EU exporters compete


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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