Benefit from the EU’s trade agreements - preferential treatment for export goods
Based on free trade agreements and other preferential tariff agreements, you can claim a reduced rate of customs duty or duty-free treatment for export goods. This is called preferential treatment for export goods. Products originating in the EU are granted preferential treatment in countries with which the EU has two-way agreements.
Most of the EU’s newest trade agreements cover almost all industrial and agricultural products as well as foods. Note that the EU does not have free trade agreements with, for example, the United States, Russia, Saudi Arabia, China and Hong Kong.
Benefits of preferential treatment
- The buyer, or importer, will get a reduced rate of customs duty or total relief from custom duty in the destination country.
- The seller, or exporter, may benefit when it comes to the market entry and pricing of the goods.
How to get preferential treatment for an originating product
First, find out the commodity code of the goods (an 8-digit code in exports).
Go to the EU Commission’s webpage “Arrangements list” to find out if the destination country has a free trade or other preferential tariff agreement with the EU. The originating products are listed by commodity code in the agreements.
The rules of origin in the trade agreements define in more detail what kind of a product is considered to be an originating product.
Use the Commission’s “Access2Markets” database to find out the rule of origin for a product.
- You can check the rule of origin in My Trade Assistant using the Rules of Origin Self-Assessment tool ROSA.
- In the search results under “Tariffs”, the preferential customs duty levied on products originating in the EU is displayed next to “EU” and the general customs duty next to “MFN”. Note that if the general customs duty rate is zero per cent, there is no point in finding out the origin.
You can also check the rules of origin for a specific agreement by searching the Official Journal of the EU if you know the issue number and year of publication.
Read more about the rules of origin further down on this page.
Make out a proof of origin once the details of the export consignment have been confirmed. Check what type of proof of origin you need and how to make them out.
If you are exporting goods on a regular basis, apply for status as an approved exporter or registered exporter. This gives you more extensive authorisation to endorse proofs of origin yourself.
Note:
- A supplier’s declaration is used as proof of origin in the internal trade between two EU countries or within an EU country.
- The general EU certificate of origin granted by a chamber of commerce does not entitle you to preferential treatment.
Detailed information
An originating product is a product wholly obtained or produced in the EU, sufficiently worked or processed or subject to cumulation of origin. Cumulation of origin means that the manufacturer in the EU (Finland) may under certain conditions use raw materials originating in a partner country when manufacturing products despite not meeting the conditions of sufficiently worked or processed products. The final product may still be considered as originating in the EU (Finland).
The rules of origin define in more detail the conditions under which a product can be regarded as originating in a certain country.
Conditions for sufficient working or processing (list rules)
Industrial products are usually subject to the conditions of sufficient working or processing (so-called heading-specific list rules), 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.
Example
In the protocol on the rules of origin for the agreement between the EU and South Korea (OJ L 127, 14 May 2011), products of heading 8526 (radar apparatus, radio navigational aid apparatus and radio remote control apparatus) are covered by a heading-specific rule of origin: “Manufacture in which the value of all the materials used does not exceed 50 % of the ex-works price of the product”.
Here, “materials” refers to materials originating in a country other than the agreement parties, for example in China. If the value of, for instance, Chinese materials used in the manufacture in Finland is 60% of the ex-works price of the product intended for export, the product is not a product originating in an agreement party, that is, in the EU.
However, the EU-South Korea agreement allows for use of materials originating in the other agreement party in order to obtain originating status (bilateral cumulation of origin). If materials of South Korean preferential origin were used in the manufacture of a product of heading 8526, these South Korean materials would be equated with materials originating in the EU. The requirement is that the South Korean materials have undergone working or processing that goes beyond so-called insufficient working or processing operations. When using cumulation of origin, traders must be able to prove the preferential origin of the material originating in the other agreement party (origin declaration presented when importing the South Korean material).
Insufficient working or processing
In addition to the heading-specific list rule, the production process of the product must always go beyond the operations that under the agreement are considered to be insufficient working or processing to confer the status of originating products. Such operations are e.g. sorting, washing, changes of packing, affixing of marks and labels on products as well as simple assembly of parts to constitute a complete product.
Direct transport rule
The rule of direct transport requires that the products be exported in an unchanged condition directly from the EU to the partner country. Under this requirement, the products must remain under customs supervision during their transport and temporary warehousing, and the products must not undergo operations other than unloading, reloading and operations designed to preserve them in good condition.
If the originating products are only moved within a specific contracting area, such as within the territory covered by the Pan-Euro-Mediterranean agreements, then the rule of direct transport does not have to be followed within that area. The originating products can also be released for free circulation in the area without them losing their status as originating products.
Provision on no drawback
In the EU, the provision on “no drawback” is associated with the application of the inward processing procedure. This provision on prohibition of drawback is included in most of the EU’s free trade agreements and other preferential tariff agreements. It 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 proof of origin is issued for the export product.
If you wish to issue a proof of origin for an originating product when you export it, you cannot apply for drawback on the raw materials and you must pay the import duties due for them.