compliance e AEO,  free trade agreement

Pan-Euro-Mediterranean (PEM) Convention and trade opportunities: an update

The Pan-Euro-Mediterranean (PEM) Convention on preferential rules of origin established: a) common rules of origin; b) cumulation among the PEM Contracting parties: the EU, Switzerland, Norway, Iceland, Liechtestein, Egypt, Tunisia, Algeria, Morocco, Israel, Palestinian Authority of the West Bank and the Gaza Strip, Syria, Lebanon, Jordan,  Türkiye, the Faroe Islands, the Republic of Moldova, Georgia, Ukraine, Serbia, Montenegro, Bosnia Herzegovina, North Macedonia, Albania.

The aim of this free trade area is to facilitate trade and integrate the supply chains within the zone; in this context the SME (small medium enterprises) can enjoy the interesting benefit.

In a nutshel: a SME (and in general any economic operator) can export from one of the above mentioned customs territories goods accompanied by a declaration of origin (with the mention of the approved exporter number) or EUR.1 certificate and its importer (in one of the remaining contracting parties) will claim the preferential treatment (0 duty).

These rules according to TAXUD guidance on transitional PEM rules of origin (V1.0 – 16 August 2021) are-gradually- replaced by other ones more relaxed, trade-oriented and flexible; the process should finish within the 2024.

We underline that in the EU the economic operators (SME) have to collect from their suppliers the long term declarations with the mention “ PEM Convention and/or transitional rules

The EUR.1 movement certificate in the box n.7 has to mention “Transitional rules” and in the declaration of origin “according to the transitional rules of origin”.

On the 10.02.2023 the EU Commission published the notice (2023/C 51/01)  “…concerning the application of the transitional rules of origin providing for diagonal cumulation between the applying Contracting Parties in the pan-Euro-Mediterranean (PEM) zone…” which provides the new matrix about the diagonal cumulation with the PEM transitional rules.

In particular, this matrix shows the countries:

– which accepted the transitional rules of the PEM protocol;

-with which it is possible to calculate the preferential origin with the diagonal cumulation.

Finally, it is important to highlight that diagonal cumulation:

  • Is laid down by a provision under agreements between more than two countries, that allows members to use products originating in the others without the final good losing its originating status.
  • needs identical rules of origin.

Under the PEM rules it is possible to find out: – rules of origin proponing the circular economy: – rules that can benefit of the AEO status and in general of a trade compliance approach.