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Revision of the PEM Convention on Rules of Origin. Textiles TAXUD/ 1645234/14 20 th PEM Working Group Brussels, 22 May 2014. Guillaume DOREY DG Taxation and Customs Union TAXUD B3 – Trade facilitation, Rules of Origin and International coordination Europe and neighbouring countries.

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slide1

Revision of the PEM Convention on Rules of Origin

Textiles

TAXUD/1645234/14

20th PEM Working Group

Brussels, 22 May 2014

Guillaume DOREY

DG Taxation and Customs Union

TAXUD B3 –Trade facilitation, Rules of Origin and International coordination Europe and neighbouring countries

slide2

Textile – origin provisions

Textile in rules of origin – State of play

Position of Contracting Parties

Other ways of relaxations

slide3

1. Textile in rules of origin – State of play

  • List rules in the current PEM
  • Tolerances
  • Cumulation (special provisions for certain areas)
slide4

1. State of play

List rules – current PEM rules

  • Based on 'double-transformation'  two significant processes of production undergone in PEM Members (provide higher value added)
  • Complementary nature and integrated production chain across pan-Euro-Med area
  • Double transformation generated a number of benefits for PEM area due to cumulation among PEM partners
  • Estimates: about 5 mio textiles and clothing workers employed throughout the area
slide5

1. State of play

List rules – current PEM rules

Clothing (examples)

Textiles (examples)

- extrusion of man-made fibers accompanies by spinning for synthetic yarns, or

- spinning of natural or man-made fibers accompanies by weaving, or

  • a substantial printing operation accompanies with two preparatory or finishing operations
    • (such as scouring, bleaching, mercerising, heat setting, raising, calendaring, shrink resistance processing, permament finishing, decatising, impregnating, mending and burling),
  • conditioned to a value-added criteria for the incorporated non PEM input – 47.5%
  • weaving accompanied by making–up (including cutting), or
  • making–up preceded by printing accompanied by at least of two preparatory or finishing operations(such as scouring, bleaching, mercerising, heat setting, raising, calendaring, shrink resistance processing, permament finishing, decatising, impregnating, mending and burling),
  • conditioned to a value-added criteria for the incorporated non PEM input – 47.5% (e.g. grey fabrics)
slide6

1. State of play

Tolerances – current PEM rules

  • Specific tolerances expressed in Introductory notes:
    • Note 4 (definitions)
    • Note 5 (tolerance of 10% in weight for basic textile materials + definition of basic textile materials)
    • Note 6 (tolerance for textile materials of 8 % EXW price providing a CTH with the exception of linings and interlinings + tolerance for non-textile materials)
slide7

1. State of play

Cumulation – current PEM rules

  • Cumulation for textile: full cumulation
  • Areas of full cumulation:
    • EEA (EuropeanEconomic Area – EU, IS, LI, NO)
    • MA – TN – EU
    • MA – TN – TR
    • TN – EFTA (CH, IS, LI, NO)
    • DZ – EU
slide8

1. State of play

Example

Full cumulation

EEA

Pakistan

Iceland

HS 62 05

Supplier's declarationfor non-originating fabrics

yarn

weaving

List rule for shirts:“Manufacture from yarn”

List rule for fabrics:“Manufacture from fibres”

EUR.1 or Invoice declaration

PO = EEA (EU)

Full cumulation

Takes into account the different working stages

1- weaving from yarns

2- making

Norway

slide9

New challenges in textile and clothing sector

  • New business and industrial reality in the sector
  • Increasingly complex supply chains/diversity of production processes
  • Changing production techniques and production patterns (e.g. finishing sector with innovative technologies )
  • Limited supply of originating fibres/yarns in terms of needed types, quantities, qualities
  • Fierce competition from many Asian countries
slide10

2. Positions of PEM partners

  • To keep the current rules (with relaxations or not)
  • Double transformation as a principle but with options
  • Single transformation (with or without conditions)
slide11

2. Positions

List rules – current PEM rules

clothing

textiles

- extrusion of man-made fibers accompanies by spinning for synthetic yarns, or

- spinning of natural or man-made fibers accompanies by weaving, or

  • a substantial printing operation accompanies with two preparatory or finishing operations
    • (such as scouring, bleaching, mercerising, heat setting, raising, calendaring, shrink resistance processing, permament finishing, decatising, impregnating, mending and burling),
  • conditioned to a value-added criteria for the incorporated non PEM input – 47.5% [or without now]
  • weaving accompanied by making–up (including cutting), or
  • making–up preceded by printing accompanied by at least of two preparatory or finishing operations(such as scouring, bleaching, mercerising, heat setting, raising, calendaring, shrink resistance processing, permament finishing, decatising, impregnating, mending and burling),
  • conditioned to a value-added criteria for the incorporated non PEM input – 47.5% (e.g. grey fabrics)
slide12

2. Positions

List rules – Relaxations by certain partners

Textile (examples merging different positions)

  • New wording with key working processes (options) for bothyarn or fabric:
    • Extrusion + spinning/weaving
    • Extrusion + twisting/weaving
    • Twisting or/combined with gimping/weaving
    • Yarn dyeing + weaving
    • Weaving + one specific operation (printing, dyeing, coating…)
    • Printing (as standalone operation + value added criteria)
    • Dyeing + 2 finishing operations) + value added criteria
    • Dyeing (as standalone operation)

Clothing(examples merging different positions)

  • New wording with key working processes for clothing
    • weaving accompanied by making–up (including cutting)
    • making–up preceded by printing (as standalone operation + value added criteria)
    • Dyeing + making-up
    • Specific rules for some products (ex: denim)
slide13

2. Positions

List rules – Relaxations by certain partners

clothing

textiles

  • Single transformation based on:
    • CTH
    • Change from any heading
  • Single transformation based on:
    • CTH
    • Change from any heading
    • 30 % minimum of originating added-value
slide14

2. Positions

Analysis chapter by chapter

  • Chapters 50 to 53
  • Chapters 54 and 55
  • Chapters 56, 57, 58, 59
  • Chapters 60 and 61
  • Chapter 62

Example:

chapters 50 to 53

2. Positions

Chapters 50 to 53

+ ex 5003 (silk waste) with special rule needed?

slide21

2. Positions

Chapter 59

chapters 60 and 61

2. Positions

Chapters 60 and 61

Proposition of chaging the wording of « other » by « other (fully-finished knitting or knitted to shape) »

slide25

2. Positions

Chapter 62

slide26

Chapter 63

2. Positions

3 other ways of relaxation
3. Other Ways of Relaxation
  • Modernization of rules for textile may go through different approaches:
    • List rules
    • Tolerance
    • Cumulation
slide28

3. Relaxations

Tolerance (general provisions and Introductory notes)(see presentation on open questions)

  • Article 5(1) – General tolerance
  • Introductory notes (Notes [4], [5] and [6])
  • Article 13 – provision on Duty Drawback
  • Article 14 – Principle of territoriality
tolerance

3. Relaxations

Tolerance
  • Article 5(1) – General tolerance
  • State of play[15%] of the ex-works price → all other products except Ch. 50-63 → specific tolerances (Introductory notes 5 and 6)
  • Discussion
  • tolerances to be increased to the same extent and/or remove exclusion of textiles in general ex-works price tolerance
tolerance1

3. Relaxations

Tolerance
  • Introductory notes (see document TAXUD/1645189/14)
  • Note [5] (definitions + printing and printing as standalone operation)
  • Note [6.1] (tolerance of 10% in weight for basic textile materials + definition of basic textile materials)
  • Note [7.1] (tolerance for textile materials of 8 % EXW price providing a CTH with the exception of linings and interlinings + tolerance for non-textile materials)
slide31

3. Relaxations

Tolerance

  • Article 13 – provision on Duty Drawback
  • See working document TAXUD/1261847/14
  • Discussion
  • CPs are invited to express their views on the principle and the potential impact
slide32

3. Relaxations

Tolerance

  • Article 14 – Principle of territoriality
  • Provision
  • Working or processing outside the exporting CP can be disregarded' if added value ≤ [10%] of the ex-works price of the end-product
  • Not allowed for products of Ch. 50-63
  • Discussion
  • CPs are invited to express their views on the principle and the potential impact
cumulation

3. Relaxations

Cumulation
  • Full cumulation couldbeconsidered by partners:
    • Step-by-stepapproach?
      • Bilateralapproach?
      • Other?
    • General provision (to beincluded in Article 3)?
    • Combinedwithother relaxations?
conclusion
Conclusion
  • Revision exercise should strike the right balance between:

List rules

Rulesoforigin

Cumulation

Tolerance

slide35

Unit B3 – PANEUROMED – Origin of goods

  • European CommissionDG Taxation and Customs Union
  • TAXUD-UNIT-B3@ec.europa.eu
  • http://ec.europa.eu/taxation_customs/customs/customs_duties/rules_origin/preferential/index_en.htm