The EU Preferential trade guidance on the rules of origin: short explaantions and its impact on the AEO management

The European Commission (TAXUD) released on March 2025 the “Preferential trade guidance on the rules of origin” which provides with the full picture of the EU preferential origin legal framework.

What does mean “preferential origin”? it is the status which certifies the compliance of the goods with the rules of origin (or list rules either Product Specific Rules of Origin [PSR]) and others laid down by the free trade agreements inked by the European Union and third countries.

The rules of origin can be divided into groups:

Wholly obtained products:  where only one country or territory is involved in the manufacture of both materials and products;

Sufficiently worked or processed products: obtained in a country incorporating materials which have not been wholly obtained there, provided that the non-originating materials used in the manufacture of these products have undergone sufficient working or processing. The sufficient working or processing required to be carried out on non-originating materials that is needed for the final product to obtain preferential origin is determined by the list rules.

The sufficiently worked or processed goods require the compliance with a rule of origin which can fall in one of the following categories:

CHANGE IN TARIFF CLASSIFICATION

Change of chapter (CC) for which a product is considered to be sufficiently worked or processed when it is classified in an HS chapter (two digits), which is different from those in which all the non-originating materials used in its manufacture are classified; change of tariff heading (CTH) for which a good is considered to be sufficiently worked or processed when it is classified in an HS heading (four digits), which is different from those in which all the non-originating materials used in its manufacture are classified; change of tariff sub-heading (CTSH) which requires that a product is considered to be sufficiently worked or processed when it is classified in an HS sub-heading (six digits), which is different from those in which all the non-originating materials used in its manufacture are classified.

Then, there is the manufacture from materials of any heading which consists in considering a product to be sufficiently worked or processed where the working or processing carried out is more than insufficient even if the non-originating materials used in the manufacture are classified under the same heading. Under this rule, the materials may also have the same description as the products.

Finally the guidance mentions the “Manufacture from materials of any heading, including other materials of the same heading” which means that  “A product is considered to be sufficiently worked or processed when the working or processing carried out is more than insufficient even if the non-originating materials used in the manufacture are classified under the same heading, except for those of the same description as the product as given in the column “Description of product” in the list rules”.

VALUE LIMIT FOR NON-ORIGINATING MATERIALS (NOM)

The value limitation principle for non-originating materials (NOM) means that the value of all or specific non-originating materials may not exceed a given percentage of the ex-works price of the final product.

SPECIFIC WORKING OR PROCESSING  and COMBINATION OF RULES

It is possible that the rules of origin laid down specific working/processing or a combination of rules.

***

The insufficient operations, from the other side, are operations which are of such a minor importance that they would not confer originating status even if the list rule was fulfilled. Insufficient operations are those that, when carried out either individually or in combination, are regarded as being of such minor importance that they never confer originating status when only non-originating materials are used in the production. Insufficient operations are also important in the context of cumulation as they set the minimal level of processing that has to be carried out to apply cumulation.

The guidance provides the following list of insufficient operations: “ a. preserving operations to ensure that the products remain in good condition during transport and storage; b. breaking-up and assembly of packages; c. washing, cleaning; removal of dust, oxide, oil, paint or other coverings; d. ironing or pressing of textiles; e. f. simple painting and polishing operations; husking, partial or total bleaching, polishing, and glazing of cereals and rice; g. operations to colour or flavour sugar or form sugar lumps; partial or total milling of crystal sugar; h. peeling, stoning and shelling, of fruits, nuts and vegetables; i. j. sharpening, simple grinding or simple cutting; sifting, screening, sorting, classifying, grading, matching; (including the making-up of sets of articles); k. simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards and all other simple packaging operations; l. affixing or printing marks, labels, logos and other like distinguishing signs on products or their packaging; m. simple mixing of products, whether or not of different kinds; n. mixing of sugar with any material; o. simple addition of water or dilution or dehydration or denaturation of products; p. simple assembly of parts of articles to constitute a complete article or disassembly of products into parts; q. slaughter of animals”.

Moreover, it is interesting to share the guidance’s analysis of the term “simple”. Indeed, in this text it is reported that: “ “simple describes activities which need neither special skills, nor machines, apparatus, or equipment especially produced or installed for carrying out the activity”5. Although the precise wording may be different in preferential arrangements the use of key elements, such as necessary “special skills” or “machines”, is consistent in all cases where a definition is provided. It is important to note that, the use of special skills, machines, apparatus or tools in themselves is not enough for an operation to go beyond “simple” operations. An assessment needs to be made whether without those machines the product could be produced with similar characteristics or properties”.

Then, the approved exporter ( customs authorization) and the , importer’s knowledge (REX registration in the EU database) are described and explained as tool to self-certify the preferential origin.

It is important to underline that the preferential origin with classification and customs value plays an important role in the management of the customs obbligation. It is one of the criteria by which the customs debt is made. Therefore, the preferential origin and the legal textes should be taken into account in the improvement of compliance policies like the AEO or the regulations about the crime liability of the companies.