Preferential treatment in export for originating products
The EU has many bilateral Free Trade Agreements with different countries. These countries grant preferential tariff treatment for products originating in the EU. According to the agreements, the products originating in some other countries can also be granted similar preferential tariff treatment based on cumulation.
The free trade agreements grant preferential tariff treatment for most industrial goods and also for several agricultural products. The range of products and duty reductions vary according to each agreement. The possibility for duty reductions for agricultural products can be subject to quota allocations depending on the product and the agreement.
What is required for obtaining preferential treatment?
To obtain preferential treatment in the country of destination (the other Party), the export product must originate in the EU or in another country that is part of a possible agreement network. The rules of origin of each agreement have provisions regarding the conditions that define when a product qualifies as an originating product in accordance with the agreement (whether its wholly obtained or sufficiently produced as well as if cumulation has been implemented). Apart from general requirements, the products have commodity code specific rules.
A joint territorial general agreement (Convention) will be implemented in stages in the area of the Euro-Mediterranean agreement network. This convention will be implemented in the place of separate protocols for rules of origin in individual agreements.
The conditions for a sufficiently produced product (so-called heading-specific list rules) generally apply to industrial products, which can be either
- a change of heading (at the level of the four-digit heading)
- the percentage rule (maximum share or minimum value addition of non-originating materials)
- the condition of the degree of working or processing (e.g. for textile and metal products) or
- a combination of these conditions.
The list rules present the working or processing conditions of the products by heading or heading group. Additionally, the articles of the rules of origin present the conditions for insufficiently worked products as well as for receiving and administrating preferential treatment for originating goods.
The rules of origin precisely define the standard certificates of origin that, when presented, will entitle the importer to preferential tariff treatment for the export in the country of destination. Applying for or drafting a certificate of origin, requires that the exporter has examined the originating status of the export products in accordance with the conditions mentioned above.
The rule of direct transport requires that the products are exported directly from the EU to the contracting country. This requirement is based on the fact that the products must remain under customs supervision during transport and temporary warehousing, and the products must not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition.
If originating products only move in a certain contracting area, such as for instance the territory covered by the Pan-Euro-Mediterranean agreements, then the rule of direct transport does not have to be followed within the area. The originating products can also be released for free circulation in the area, without losing their status as originating products.
In the EU, the provision concerning prohibition of drawback is associated with the application of the inward processing procedure. This prohibition of drawback is associated with most EU free trade and other preferential tariff agreements. This means that the duty levied on the non-originating raw materials used in the production of an export product cannot, as a rule, be refunded upon the export of the finished product, if a certificate of origin is issued for the export product.
If a certificate of origin is going to be issued for the originating products in export, drawback on the raw materials cannot be applied for and duties levied on them must be paid.
Please note! The EU does not have free trade agreements with, for example, these countries: The United States of Amerika, Russia, Belarus, Saudi Arabia, Australia, Taiwan and Hong Kong.
2. Find out if customs duty is levied on the goods in the destination country
Use the EU Commission’s Market Access Database:
- Enter the country of destination and a 4 or 6-digit commodity code for the export goods.
- The preferential customs duty levied on products originating in the EU is displayed under “EU” and the general customs duty under “MFN”.
- If the general customs duty is zero percent, the preferential treatment has no significance.
3. Find out if the export product is an EU originating product under the agreement
- The rules of origin in the agreement stipulate the conditions under which the product can be regarded as an originating product.
- The originating product can be wholly produced in the EU, sufficiently worked or processed or subject to cumulation*). In addition, the rules may require that the products be exported directly from the EU to the agreement country.
- Enter the destination country and a 4 or 6-digit commodity code for the export goods into the Market Access Database. The rule of origin for the commodity code can be found via the link “RoO” (Rules of Origin).
- You can also find the rules of origin for a specific agreement by searching the Official Journal if you know the issue number and year of publication.
4. Find out which proof of origin you need
- The rules of origin define the proofs of origin that will entitle the importer to preferential tariff treatment for the export goods in the destination country.
- The proof of origin can be, for example, an EUR.1 movement certificate, or an invoice declaration or declaration of origin included in the commercial document.
- Check what the accepted proofs of origin (pdf, in Finnish) are according to destination country.
- Read more about different proofs of origin
5. Draw up a proof of origin and submit it to the destination country
Draw up a proof of origin once the export and the detailed information about the export consignment have been confirmed.
- If you are using an EUR.1 movement certificate as proof of origin, bring it or send it to the customs office for endorsement.
- The goods must be available for inspection by Customs when the certificate is endorsed.
Send the original proof of origin to the destination country for the import clearance of the goods.
6. Make exporting easier: apply for status as approved exporter or registered exporter
- If you are exporting goods on a regular basis, apply for status as an approved exporter and/or registered exporter. This gives you more extensive authorisation to endorse proofs of origin yourself without having to visit a customs office.
- If you are exporting to South Korea, your exports need not be regular when applying for status as approved exporter.
- Note that the general EU certificate of origin granted by a chamber of commerce does not entitle you to preferential treatment – it only proves the general origin of the goods.
*) Cumulation of origin means that the manufacturer in the EU (Finland) may under certain conditions use raw materials originating in a contracting country when manufacturing products despite not meeting the conditions of sufficiently worked or processed products, and the final product may still be considered as originating in the EU (Finland).
The Commission maintains the Market Access Database on their website. This database contains useful information, especially for exporters.
On the page ‘Export from EU’ in the section ‘Tariffs’ in the database, the duties levied can be checked based on preferential tariff agreements and by commodity codes of the export country of destination. Fill in the country of destination in the system, e.g. ‘Canada’, as well as the commodity code of the export product, e.g. ‘871200’, then the screen shows the preferential customs duty levied on the EU originating product in section ‘EU’, as well as the general customs duty in section ‘MFN’ (Most-Favoured Nation). The difference between the rate of customs duties of the ‘MFN’ and the ‘EU’, describes the economic impact importing with EU preferential origin has on the other contracting party.
At the end of the commodity code line, the screen shows the rules of origin ‘RoO’ that apply to the agreement regarding this commodity code. Compliance with the rules in the abovementioned example is a requirement for receiving preferential tariff treatment in Canada for an EU originating product. Receiving preferential tariff treatment in the country of destination always requires presenting a certificate of origin for each free trade agreement. A sufficient certificate of origin is, depending on the agreement, e.g. a general declaration of origin with detailed certificate numbers, issued by the approved exporter (export to Korea) or registered exporter (export to Canada).
According to the rules of origin in preferential agreements, the exporter shall keep the documentary evidence of the origin for at least three years (in the EU–South Korea agreement for at least five years). Upon request by Customs, the exporter shall present the documentary evidence concerning the issue of preferential certificates, origin declarations and statements on origin (e.g. supplier’s declarations, purchase and sales invoices, documents concerning manufacture and shipping documents). With these documents, the exporter can prove that the information provided on the origin of the export products is correct, and that the conditions of the rules of origin are met.
If customs declarations are submitted electronically, however, the national regulation 6/2016 issued by Customs on archiving by exporters will be applied. According to the regulation, exporters must keep the customs clearance documents for at six years from the end of the calendar year when the decision on the release of the goods for the export procedure was made (current year + 6 years).
In principle, the same rules of origin requirements apply to old and used goods as well as to new goods. On the other hand, for example according Article 16 of the Explanatory notes concerning the pan-Euro-Mediterranean protocols on rules of origin (Official Journal of the European Union, C 83, 17.4.2007), proofs of origin may be issued also for goods where the usual supporting documents are no longer available, provided that:
a) the date of production or importation of the goods lies beyond that period of time during which records must be kept by traders. For example, the rules of origin in preferential agreements require that the documentary evidence be kept for at least three or five years, and national provisions even longer (e.g. customs clearance documents, documents that prove the origin and accounting records for the current year + 6 years).
b) the goods can be deemed to be originating on the grounds of other evidences, like declarations of the producer or any other trader, an expert's opinion, by marks on the goods or descriptions of them, etc;
c) there is no indication that the goods do not comply with the requirements of the origin rules.
EUR.1 (and A.TR.) -application forms are sold at PunaMustas online store (in Finnish).
The endorsement of EUR.1 movement certificates is primarily done by post. The certificates can be sent to any customs office for endorsement. The EUR.1 movement certificate can also be endorsed over the counter at any customs office with customer service: Contact information and postal addresses.
For frequent exportation of originating products, the exporter should apply for the status of approved exporter. Then the exporter can personally draft a standard-form declaration of origin to the consignment’s commercial document and an EUR.1 movement certificate endorsed by Customs is not needed.
Yes, they can. The protocols of the rules of origin in free trade agreements actually state that the exporter or their representative with power of attorney, can fill in the EUR.1 movement certificate and the application part of the form.
The flip side, i.e. the ‘exporter’s declaration’, of the application part of the EUR.1 movement certificate mentions what the exporter should fill in. The exporter should mention under which conditions the product has become the originating product mentioned in the certificate.
What has to be filled in depends on what is required for gaining originating status, according to the rules of origin for the product (commodity code). The product can, for example, be wholly obtained in the EU (e.g. grain grown and processed in the EU). The product can be sufficiently worked, for example in such a way that the amount of non-originating components does not exceed the maximum amount allowed. Depending on the commodity code the rule can, for instance, further state that the non-originating component used belongs under a different commodity code than the end product (export product). In other words, what the exporter needs to mention here, depends on the rule of origin regarding the commodity code of the export product.
In the footnote of the exporter’s declaration are examples of documents, which can be used to provide proof of the correctness of the declared origin. The exporter should mention in this section, which documents they have for proving the origin.
Under certain circumstances, the EUR.1 movement certificate can be submitted retrospectively for the goods mentioned in the certificate, if
- it was not issued at the time of exportation because of errors, involuntary omissions or special circumstances, or
- it is demonstrated to the satisfaction of the customs authorities that an EUR.1 movement certificate was issued but was not accepted at importation for technical reasons.
An EUR.1 movement certificate issued retrospectively shall in box 7 be endorsed with the following phrase: ‘ISSUED RETROSPECTIVELY’.
- If the value of the originating goods in the consignment exceeds 6,000 euros, the exporter must have a written approved exporter’s authorisation granted by Customs with a company-specific authorisation number. Based on this authorisation, the approved exporter can issue specified declarations of origin on the commercial documents of export consignments (generally on the export company’s invoices). The number of the authorisation granted by Customs to the exporter is included in the declarations of origin. See the page How to provide proof of origin, section Approved exporter
- If the value of the originating products in the consignment does not exceed 6,000 euros, any exporter can personally draft a standard-form declaration of origin on a consignment’s commercial document (usually the selling company's invoice). Then the declaration of origin must contain the handwritten signature of the exporter.
- The person who submits the declaration of origin must always, with a document, be able to prove the originating status of the goods in the consignment. When drafting declarations of origin, this documented proof should be available to the company and to Customs.
- Applying for and drafting documents on preferential treatment (in Finnish)
- The Ministry for Foreign Affairs: How to take advantage of EU trade agreements
- EU Commission’s webpages: General aspects of preferential origin (further information on preferential tariff agreements and rules of origin)
- General origin of goods