EU-Korea FTA Rules of Origin

Security & Safety, Trade Facilitation & International Coordination
Rules of Origin
Brussels, 11.04.2012
Working document
(Council Regulation (EEC) No 2913/92 of 12 October 1992)
20/12/2011, 10.00 hrs - 18.00 hrs – 21/12/2011, 10.00 hrs - 18.00 hrs
Summary report of the 195th meeting of the ORIGIN SECTION of the CUSTOMS CODE
COMMITTEE, held in Brussels, on 20 and 21 December 2011
The agenda was approved.
As the draft summary report of the 194th CCC-ORI meeting was not provided on time,
this point was removed from the agenda.
Before moving to preferential origin, the Chairman made the following announcement
concerning non preferential origin: Delegations will remember that during the last
Committee meeting on 8/9 November 2011 (194th meeting), under point 4.1. "Inclusion
of list rules in the current legislation - Examination of the possibility to amend
Regulation (EC) no 2454/93 - (reference document TAXUD/1194351/11)", Taxud B3
started collecting MS' preliminary views on the idea to propose an amendment to the
current implementing provisions to the customs code, in order to include
comprehensive and detailed non preferential rules of origin therein. In the meantime,
this possibility has been further considered internally within DG Taxud and it has been
decided to discard altogether such a step because it appears that the time is not ripe for
such inclusion.
Revision of pan-Euro-Med rules of origin within the Regional Convention – State
of play - Information point
COM informed that so far 12 Contracting Parties (out of 23) have signed the
Convention. It will be ratified by Norway, Switzerland and Lichtenstein in November,
as a result of which the Convention will enter into force on 1 January 2012 in relation
to those Contracting Parties. Within the EU, the conclusion will depend on a Council
Act, which requires the consent of the EP, where discussions are now ongoing.
One delegation questioned whether the ratification of the Convention would have an
effect on the matrix? COM replied that those countries for which the Convention has
entered into force will be able to replace the provisions in their mutual origins protocols
with provisions containing a reference to the Appendices of the Convention. A draft for
such provisions will be shared with the Committee, as ideally these provisions should
be identical in all protocols.
COM recalled that in the current situation two matrices are maintained up-to-date and
published in the OJ: one for the PEM cumulation zone and one for the SAP cumulation
zone (i.e. EU and Turkey with Western Balkans). Apart from allowing to reform the
PEM RoO in the future by amending a single legal act instead of a network of origin
protocols, the Convention's second main purpose is to integrate Western Balkans
(hereinafter WB) into the PEM cumulation zone. The phasing-in of the Convention
should thus be reflected in the matrix(ces) in so far as it has an impact on the
composition of the PEM cumulation zone. For that purpose COM is considering two
options, consisting respectively of:
a) either continuing to update the existing two matrices without making any further
distinction whether the applicable RoO are those from a PEM protocol or those from
the Convention, i.e. introducing progressively into the 'SAP matrix' the countries
having ratified the Convention (and amended their origin protocols with WB so that
they make reference to the Convention); the second matrix would thus become a SAP+
matrix which would eventually replace the PEM matrix;
b) or merging immediately the existing two matrices, so as to create a (single) new
matrix; such a single matrix would nevertheless have to distinguish (e.g. through
footnotes) between the countries having already integrated WB into the PEM
cumulation zone (i.e. having ratified the Convention and amended their origin protocols
with WB so that they make reference to the Convention) and the countries having not
yet done so;
Both options a) and b) would be based on the consideration that, when comparing the
RoO contained in a PEM protocol and those contained in the Convention, differences
other than concerning the integration of WB into PEM diagonal cumulation are so
limited (e.g. sugar mixing in the list of minimal operation) that they need not be flagged
in the matrix(ces).
Additionally and following the approach described under either a) or b), a third matrix
might be created which would be specifically devoted to dealing with the legal basis
aspects (i.e. PEM protocol Vs PEM Convention legal basis). Such a matrix would thus
clarify the phasing-in process of the Convention (the operational information needed by
economic operators remaining that appearing in the matrices or matrix described under
either a) or b)) Of course the situation would have to be completely reconsidered as
soon as appendix I to the Convention would be amended further to the revision of the
EU-Korea FTA
Debriefing of state of play and of the Joint Customs Committee of 14 and 15
December 2011
On 14 and 15 December 2011, the 1st meeting of the Customs Committee (CC) of
EU-Korea FTA took place in Seoul, Korea. The agenda is annexed to this report. It is
clear from the agenda that the majority of the points was related to 'Rules of Origin'
MS were debriefed orally on the discussions in the CC for each item of the agenda
relating to origin. The official summary report of the CC with its 6 annexes covers the
main points discussed during the CC and their outcome, and is annexed to this report.
This summary report thus also reflects the main points on which MS were debriefed
orally during the CCC-ORI.
COM highlighted however that during the CC, Korea and COM confirmed and/or
agreed to 14 common interpretations of the RoO Protocol which could be important
for MS in their application and implementation of the agreement with Korea. These 14
interpretations should not be new to MS as those were discussed with MS at previous
CCC-ORI meetings and/or exchanged by written communications via circa in the last
6 months since the entry into force of the agreement with Korea on 1 July 2011. These
14 common interpretations are now properly listed together in annex VI to the
summary report of the CC.
On a few items, MS were debriefed on issues not mentioned in the summary report of
the CC. This concerns namely the following:
Verification requests:
Korea indicated that it has received approximately 35 verification requests from EU
MS since 1 July 2011 up to the end of November 2011. 80% of these verification
requests were based on 'at random' requests. Korea noted that it had not sent any
verification request to any EU MS up to the date of the 1st CC. Moreover, Korea
noted that most of the EU verification requests related to the customs authorization
number of the Korean approved exporter.
Korea informed EU that it does not use verification requests on an 'at random' basis.
Most verification requests that Korean authorities send to their FTA partners are based
on 'risk analysis' and Korea categorizes this under 'reasonable doubt'. Korea was proud
to mention it has 80% detection rate implying that 80% of their verification requests
based on risk analysis result in lawfully denying preferential treatment based on the
fact that preferential origin was 'wrongly' claimed. Several MS rose that this touches
an important issue as verifications based on 'risk analysis' are categorized as 'at
random' by EU MS and the consequences of a non-response are different. COM
agreed and indicated that it will follow up this issue in future meetings with Korea.
Moreover, Korea detected 50 origin declarations from EU exporters where the unique
customs authorization number was not following the structure as indicated by EU MS.
Korea had sent e-mails to EU MS with the request to check the unique customs
authorization numbers and indicate if the exporter was nonetheless an approved EU
exporter. Korea deplores that at least 10 EU MS did not answer the Korean e-mails
related to these matters.
Several MS replied to these Korean allegations that it was not clear on which legal
basis the Korean request/e-mails were based. Notably one delegation rose that
verification requests based on Article 27 of the RoO Protocol in the FTA should not be
sent by e-mail and that, in concreto, the Korean request not only concern the unique
customs authorization number of the EU approved exporter but several other issues as
well in respect of which the legal basis for seeking administrative cooperation is most
uncertain. Upon this remark a discussion arose among MS if verification requests
could be sent by electronic mail or not. It was concluded that until a decision with a
general approach is taken, verification requests based on Article 27 of the RoO
Protocol in the FTA should only be sent by hard copy/postal mail.
However, COM indicated to MS that it got the impression at the 1st CC that Korea is
using the explanatory note 9 (d) as a basis to refuse preferential treatment without
verification. The explanatory note 9 (d) refers to 'fail to submit a proof of origin to the
customs authorities of the importing Party within a period specified in legislation of
the importing Party'. This period in Korean legislation would be 30 days. If Korea
would indeed base itself on this explanatory note 9 (d) and if EU MS would not
respond to e-mails from Korea requesting to check the customs authorization number
of an EU approved exporter (as the structure of the number on the origin declaration
does not correspond to what is communicated to Korea) within 30 days, Korea would
deny preferential treatment. Upon this information, some MS reacted with
disapproval. To conclude the discussion, COM indicated that it would request Korea
to indicate on which legal basis the e-mails are sent, what their purpose is and what the
legal consequences are of not responding. COM would inform MS about the Korean
response. However, COM indicated that, if it is confirmed later that Korea uses such a
procedure, EU would have to take a standpoint on this by considering if we share the
same interpretation as Korea of explanatory note 9(d) (as this note 9 (d) was surely not
drafted and agreed with this intention). Explanatory note 9(d) does not stipulate 'fail to
submit a [valid] proof of origin' but only 'fail to submit a proof of origin' which is thus
open to interpretation. Indeed, one could consider that no such failure is taking place
as soon as an origin declaration made out on a commercial document is presented,
even if there seems to be an anomaly in the structure of the customs authorization
number, since the importing party may avail itself in such circumstances of the
provisions of Article 27 of the EU-KOR RoO Protocol which allows to launch a
verification request procedure in case of doubt. As mentioned, this is up for later
consideration/interpretation as first Korea would have to indicate on which legal basis
their requests by e-mail are made.
Customs authorization number of Korean approved exporters
Korea indicated that 3943 companies are approved exporters in Korea. To recall: the
customs authorization number of Korean approved exporters is structured as follows:
Three-digit identification number of the customs office - year of authorisation (last
two digits) - six-digit serial authorisation number (Example: 030-10-123456).
To respond to specific requests from MS on the structure of this numbering, Korea
provided the following information. There are 2 types of customs authorization
number of Korean approved exporters. One type of numbering is related to being an
approved exporter only for specific product(s) (HS code). A certain company can thus
have several of these numbers if it is an approved exporter for several products. If an
exporter was approved only for a specific product, the last six-digit serial number
begins with a 2 (example: 000-00-200000). The other type of numbering is related to
being an approved exporter for all products of the company and is thus related to the
company itself. In such a case, a certain company would thus only have one such
number. If an exporter was approved for all products of his company, the last six-digit
serial number begins with a 1 (example: 000-00-100000).
Annex II(a) of the RoO protocol and the quota related to HS heading 5408
This issue was not discussed with Korea but this is of importance to MS in case
application of the quota for HS heading 5408 is requested for Korean textile products.
The quota in Annex II(a) of the RoO protocol for Korean products exported to the EU
falling under HS heading 5408, can be taken up if one of the 2 alternative rules is
fulfilled, namely either the product was 'manufacture(d) from man-made filament
yarns' or was 'dye(ed) accompanied by at least 2 preparatory or finishing operations
Moreover, provision 5 of Annex II(a) indicates that as 'far as a proof of origin is made
out for dyed woven fabrics (5408 22 and 5408 32) the proof of origin shall be
accompanied by documentary evidence that the undyed fabric used does not exceed 50
percent of the ex-works price of the product.'
It is of course not possible to submit such proof of origin if the dyed woven fabrics
were obtained in Korea by using the first of the two alternative operations namely by
'manufacturing from man-made filament yarns'.
However, how would a custom official from EU MS know, in case the application of
the quota is asked for Korean textile products, when he has to ask for the documentary
evidence or not as the proof of origin is not required to mention which was the
transformation conferring origin which was carried out in Korea?
In order to avoid that the request for documentary evidence becomes superfluous, the
Taxud colleagues responsible for Taric made a separate code in the FCFS-system
which importers would have to mention on the SAD and for which they could thus be
held responsible if afterwards a mistake would be detected. For example for dyed
woven fabrics falling under 5408 22 10 which would be 'manufactured from manmade filament yarns', the Taric code would be 5408 22 10 10 80 and for those which
were only dyed in Korea, the Taric code for 'other' would apply which is 5408 22 10
90 80.
MS were invited to have a close look at this quota as it concerns a very sensitive issue
for EU textile industry. Moreover, COM informed MS that most (if not all) of the
quota for products falling under HS heading 5408 which were taken up in 2011, were
based on the rule of 'manufacturing from man-made filament yarns' for which thus no
documentary evidence needs to be submitted. It is up to MS to evaluate if this gives
rise to 'doubts' about the Korean origin but COM invited MS to be vigilant on the
application of this quota and not to hesitate to ask for verification in case of doubts.
EU-India FTA
State of play
A teleconference has taken place at the end of November 2011 with India but this
resulted only in taking stock of outstanding RoO issues and to decide which side is
requested to prepare what for a next meeting. It is scheduled that a next inter-sessional
meeting (ISM) with India will take place in January before the EU-India Summit on 10
February 2012. COM repeated briefly for MS the outstanding issues but since no
meetings on RoO have taken place since the summer break, MS were advised to look at
report of CCC-ORI meeting held in September 2011 (where a full debrief was given)
and to documents sent as preparation to that meeting, to have a full overview of where
the EU stands with RoO negotiations with India. One delegation asked where the EU
stands on the issue of prohibition of duty drawback. COM answered that this issue is
still outstanding and that it will not be solved at expert level.
EU-Mercosur Interregional Association Agreement
Debriefing of the negotiation round held in Montevideo from 7 to 10 November
2011 - Information point (TAXUD/1443625/11)
During the round in Montevideo the Parties discussed the outstanding issues of the
protocol of origin including definitions, fisheries, accounting segregation, the
prohibition of duty drawback, self-certification and the clause regarding Ceuta &
Melilla as well as Declarations on Andorra and San Marino. Parties also discussed the
product specific rules for agricultural products, PAPs and industrial products.
In relation to duty drawback EU presented to Mercosur some detailed information on
their use of DDB in relation to exports to Mercosur. No conclusion at technical level at
this stage was reached and both sides maintain their positions. The EU impact study is
not finished.
As regards vessels conditions and rules for wholly obtained fish, the discussion was
theoretical but allowed to better understand the situation. The vessels conditions
discussed were: register, flag or chartering, fishing licence and nationality of the
company. The discussions resulted in Mercosur redrafting their proposal for vessels
conditions. Mercosur indicated unofficially that if the EU proposed to have the vessels
conditions applicable horizontally to all the fishing without making difference between
the territorial waters, the EEZ and high seas, it could consider this positively.
Mercosur promised a definitive feedback as regards self-certification, Ceuta & Melilla
and declarations on San Marino and Andorra for the next round which will take place in
Mercosur also announced that it will officially ask for differential treatment for RoO
applicable for Paraguay for the following chapters: 39 (plastics), 40 (rubber), 48
(paper), 70 (glass and glassware), 72 (steel), 73 (products of steel), 84 (machinery and
mechanical appliances) and 85 (electrical machinery and equipment). The rules of
origin applicable toward Paraguay in this case would be those of the GSP.
One delegation requested more clarification on the status of Paraguay in relation to
GSP. Another delegation expressed its preference for applying the GSP rules in the
agreement with the entire Mercosur and to allow duty drawback. A further delegation
highlighted that it is necessary to consider the results of the impact study in relation to
duty drawback. Two delegations were in favour of the prohibition of duty drawback.
EPA negotiations
State of play
COM recalled that the latest state of play of EPAs was presented earlier this year in
March. Since then and further to the COM proposal to remove from the Market Access
Regulation the ACP countries which have not taken steps to ratify and apply the interim
EPAs, the negotiations to reach comprehensive EPAs have been intensified with most
regions. Further to MS requests, COM proposed to have the next update of the state of
play in April 2012.
3.5.1. West Africa
Debriefing of the negotiation round held in Brussels from 3 to 6 October 2011
The round was fruitful in various outcomes: a discussion over the EU revised
cumulation proposal took place and further progress was made in the normative part of
the text of the origin protocol. The provisions regarding administrative cooperation and
the Protocol on Mutual Assistance in Customs Matters were finalised.
As regards cumulation the EU provided many information and clarifications on its
revised proposal. These included amongst others: the coverage of materials, the
geographical coverage, the lists of exclusions and the underlying condition of
administrative cooperation between all countries involved in cumulation. West Africa
raised similar issues to those already highlighted by other EPA regions. West Africa is
still in the process of analysing the EU proposal and will revert back.
One delegation suggested updating of the provisions on wholly obtained products
according to the GSP rules. Another delegation requested further information on the
proposed quota for the automatic derogation. While the first delegation having taken
the floor was favourable to the exclusion of South Africa from the cumulation zone, a
third delegation insisted on reducing the exclusion lists to minimum.
3.5.2. SADC
Debriefing of the negotiation round held in Johannesburg from 14 to 16
November 2011 (TAXUD/1443851/11)
As a result of the round the parties consolidated a new joint working text on
cumulation incorporating comments from both sides. All items of the agenda were
subject to negotiation including the point on administrative cooperation, which
SADC ultimately agreed to implement, despite its initial suggestion to discuss this
topic in the format of a workshop only.
EU accepted the SADC comment on a clear differentiation between bilateral,
diagonal and full cumulation. To this end, EU suggested deleting paragraphs 3, 4
and 5 of art. 1, and proposed simplification of this provision. This would mean
keeping the standard clause on bilateral cumulation which might be found in
other agreements. This would also help solving interpretation difficulties
concerning the origin allocation clause in the bilateral context.
SADC agreed to the principle of the need to put in place the appropriate level of
administrative cooperation.
SADC suggested to make a reference to the concept of long term supplier's
declaration. SADC explained that the inclusion of a long term supplier's
declaration is intended to facilitate trade. SADC would be ready to apply some
conditions to the management of operators allowed to issue such long term
Two delegations drew attention to the articulation between the provisions on bilateral
and diagonal cumulation. It is necessary to check whether there is no overlap and to
ensure consistency between the two provisions.
3.5.3. ESA
Debriefing of the negotiation round held in Mauritius from 28 to 30
November 2011 (TAXUD/1443875/11)
The outcomes of the round are disappointing compared with the progress made
previously. The parties discussed all the outstanding provisions in the protocol and EU
took note of the ESA proposals. The rules related to fishing were not discussed during
this round. EU took note of the papers submitted by ESA regarding the increase of the
quantity for the automatic tuna derogation and discussions were postponed to the next
round. ESA also requested a change of tariff heading rule for heading 0304 and chapter
16, which would be an equivalent of global sourcing. Moreover, ESA introduced a
change in the article on wholly obtained products to apply the vessels criteria outside
the EEZ only. ESA did not clarify the treatment for catches in the EEZ but the proposal
seems to imply that the catches from the EEZ would be automatically considered as
originating, similarly to the catches from the territorial waters.
ESA took note on the clarifications given by the EU as regards the requirement of
administrative cooperation.
Other requests introduced by ESA to the Protocol are: to maintain the definition of
ACP States; to increase the threshold of the value of consignment (from 6.000 Euros to
10.000 Euros) for non-authorised exporters entitled to issue an invoice declaration; to
introduce the concept of long term supplier's declaration and to reduce the period of
preservation of proofs of origin and supporting documents from 3 to 2 years.
Debriefing of the negotiation round held in Brussels from 12 to 14
December 2011 (TAXUD/1443899/11)
Following the meetings in Tanzania in September 2011 and in Uganda in November
2011, the parties met in Brussels to negotiate the outstanding issues from the normative
part of the origin protocol. The round was fruitful and resulted in an agreement on a
large number of articles of the origin protocol. The issues which need to be further
discussed include: the definitions, Article 2 on general requirements and all the
provisions related to fishery products. Parties will also come back to the provisions on
cumulation and to the related issue of the implementation of the requirement of
administrative cooperation.
EAC requests in relation to fisheries products include: global sourcing, an increase of
the automatic derogation for tuna products and a redrafting of the article on wholly
obtained products affecting the treatment of fish caught in the EEZ and the conditions
of chartered vessels.
COM took note of the concerns raised by two delegations regarding the issue of
automatic derogations. COM also clarified that it might be envisaged to update the
provision on direct transport in order to align it with the non-manipulation clause.
3.6.1. Monitoring of the management and administration of rules of origin for
preferential arrangements - Information point
COM presented the new list of beneficiary countries to be monitored. No many changes
had been introduced compared to the previous one. Most of the countries already
present on the old list were kept. It was decided to add two new countries and another
country, that was present on the previous list, was removed since it was decided not to
take any further action. In the new list there are 13 countries in total.
COM announced that Member States would be asked to appoint a reference person in
every administration for the monitoring/verification field. The goal was to speed up the
exchange of information and to have a target group of people to whom COM could
send all the information and emails. A letter requesting MS to communicate the names
of the selected people would be sent out by COM in the following weeks.
As last point, COM mentioned a problem, submitted by one delegation, about one third
country. The delegation in question pointed out that several problems had been
encountered when asking this third country to verify proofs of origin, since in several
cases no answer was received. In order to establish if it was the case to take any action,
COM asked all the other MS to inform COM about similar problems encountered.
COM was still receiving the replies to this inquiry. Depending on the number of cases
recorded, COM would decide how to proceed.
3.6.2. Administrative cooperation - Information Point
Approval of revised Working Document TAXUD/3302/04-EN-REV.3 dealing with
compliance with printing technical requirements of movement certificates EUR.1,
EUR-MED and A.TR issued by the customs authorities of EU Member States.
Treatment of certificates of origin which do not comply with the technical
requirements laid down by Community law.
Approval of Draft EU guidelines on the application of the provisions concerning
compliance with printing technical requirements of movement certificates EUR.1,
EUR-MED, A.TR and certificates of origin FORM A.
COM asked delegations to approve the revised working document TAXUD/3302/04EN-REV.3 and recalled that before proceeding with translation of EU guidelines on the
provisions concerning compliance with printing technical requirements of movement
certificates EUR.1, EUR-MED, A.TR and certificates of origin FORM A, MS are asked
to approve the draft EU guidelines as regards the new approach.
The revised Working Document TAXUD/3302/04-EN-REV.3 and the EU guidelines
were approved by all delegations.
3.7.1. Evidence of direct transport. Non-manipulation and splitting of
consignments in the country(ies) of transit - Follow up of the discussions that
took place at the 194th CCC-ORI meeting
COM informed that working document TAXUD/1228724/11 – EN – Rev.1 suggests
a possible solution to the problem of the non-manipulation clause (Article 74 CCIP as
amended by Regulation 1063/2010) and provides for some comments in relation to
working document TAXUD/69906/10 - EN – Final (Evidence of direct transport).
This document was prepared on the basis of the Member States' observations that
were presented to the Commission services in this regard. Concerning the nonmanipulation clause, the majority of the MS who commented were in favour of
amending paragraph 2 of Article 97l. Nevertheless, although favourable opinions
were presented with regard to the fact that the amendment should cover both
situations – where an initial proof does and does not exist – MS did not present a
uniform opinion as to whether all cases of retrospective issue of certificates of origin
Form A should be considered as regular, and not exceptional, practices. For this
reason, and in order to arrive at a final position, two versions of Option 2 of the
amendment of Article 97l that was proposed in the initial version of working
document TAXUD 1228724/11 were included. COM pointed out that the main
principle establishes that certificates of origin Form A are issued at the time of
exportation. Thus, from this point of view, maintaining of the word "exceptionally"
may appear justified.
One delegation was in favour of keeping the term "exceptionally" with regard to the
two situations that are currently listed in Article 97l (2) of Regulation 2454/93 and
having specific conditions for splitting of consignments. It wondered whether
deletion of the term "exceptionally" would affect the frequency of the retrospective
issue of certificates of origin Form A. Another delegation pointed out that certificates
of origin should be issued retrospectively as frequently as particular circumstances
occur in this regard.
Another delegation supported maintaining the word "exceptionally" in paragraph 2 of
Article 97l for the sake of consistency between GSP rules of origin and rules of origin
of other preferential arrangements.
One delegation objected to using the term "exceptionally" due to the fact that every
case that is listed in Article 97l is an exception to the principal rule. Two other
delegations supported the previous one. One of them said that the use of the word
"exceptionally" does not add any value from the linguistic point of view.
With regard to the problem of splitting of consignments on high seas (working
document No TAXUD/69906/10 - EN - Final (GSP – evidence of direct transport
('old' Article 78 IPCC – before the amendment by Regulation 1063/2010)), COM
informed delegates that according to the vast majority of the comments the
amendment of Article 97l, as proposed in the Option 2, cannot be considered as a
solution to the problem. This is due to the wording of new sub-paragraphs (c) and (d)
of paragraph 2 that refer both to Article 74 CCIP and "the country(ies) of transit" of
goods. None of these conditions is met when splitting of consignment on high seas.
COM invoked the need to have a solid justification for amending the legal text with
regard to a particular problem, such as the one of splitting of consignments on high
seas. It is important to assess the scale of the problem. If it is decided that specific
legal text should be envisaged for splitting of consignments on high seas, it needs to
be decided whether Article 74 could be amended or a separate paragraph could be
created in Article 97p CCIP1, to this end.
COM also asked delegates to reflect on whether the amendment of Article 97l could
still be envisaged in order to tackle the problem of splitting consignments on high
seas. To this end a new paragraph could be introduced in this provision for the
purpose of covering splitting of consignments on high seas and containing no
reference to Article 74. In this case no requirement of customs supervision would
exist for splitting of consignments on high seas. Consequently, replacement
certificates could be issued regardless of whether or not the splitting is carried out
under customs supervision. With regard to splitting of consignments in the territorial
waters of the EU, COM informed delegates that the issue is to be consulted with DG
TAXUD Unit responsible for customs procedures.
One delegation noted that Article 74 should be maintained in Regulation. With regard
to splitting of consignments in territorial waters, the same delegation noted that the
situation does fall under customs supervision of the customs authorities of MS. On
one hand, the problem of splitting of consignments on high seas needs to be solved
but, on the other hand, making specific conditions and creating an exception to the
condition of customs supervision just for oil products may be arguable. This
delegation suggested that a discussion takes place with industry operators, who carry
out these operations, in order to further clarify the issue.
Another delegation, with regard to splitting of consignments in territorial waters and
in relation to the discussion on working document No TAXUD/69906/10 - EN - Final
that took place at 194th CCC-ORI meeting, noted that the document needs to be
adjusted by introducing a reference to Article 38 of Council Regulation (EEC) No
2913/92 establishing the Community Customs Code (CCC) and a possible solution
should be assessed from the practical point of view of its implementation. It is always
the responsibility of the customs authorities of the country of storage to check the
fulfilment of conditions of non-manipulation clause or direct transport conditions. It
supported the first delegation having taken the floor with regard to the need for
examination whether there is a real economic need to create a specific solution for
goods split on high seas. It also noted that creating a specific solution for splitting of
consignments of oil may result in similar claims in relation to other products from
economic operators.
As amended by Regulation (EU) No 1063/2010
A third delegation underlined that "customs supervision" has a broad meaning as
defined in CCIP. It wondered what legislation applies with regard to goods that are on
high seas and suggested considering legal validity of a captain's logbook, which is
envisaged by Maritime Law.
Another delegation noted that splitting of oil products became regular cases and a real
need to find a solution to the problem does exist.
COM concluded as follows:
o The frequency of splitting of oil products on high seas should be
clarified. Often not just splitting takes place, but also mixing or adding
of oil. The economic impact of the problem thus needs to be examined.
COM asked MS to be provided with information on their experience in
this regard;
o Unit B3 will consult Unit A3, which is responsible for application of
provisions on customs procedures, on the concept of customs
supervision performed in the territorial waters and on high seas. This
is, in particular, in order to clarify whether a vessel can be considered
as an approved place. COM may adjust working document No
TAXUD/69906/10 - EN - Final (GSP – evidence of direct transport
('old' Article 78 CCIP – before the amendment by Regulation
1063/2010)) accordingly after receiving an opinion from Unit A3;
o COM will amend working document TAXUD/1228724/11 – EN –
Rev.1 and will propose adding a new sub-paragraph in Article 97l (2)
in order to cater for the splitting of consignments of oil products on
high seas. In addition, it asked MS to reflect whether such an approach
could be an appropriate solution also once the registered exporter
system is implemented.
o Further comments may be submitted to DG TAXUD by the end of
January 2012.
3.7.2. Request from Cape Verde for a prolongation of the derogation from the
European Union's (EU) Generalised System of Preferences (GSP) rules of
origin that was granted to CV by the EU under Commission Regulation
(EC) No 815/2008 (TAXUD/1442880/11)
By letter from November 21st 2011, Cape Verde (CV) has submitted a request for a
prolongation of the current derogation from the EU GSP rules of origin for a period of
three more years (2012 – 2014).
COM presented the request and informed the delegations that additional questions were
addressed to CV in order to obtain sufficient information on the basis of which a
decision could be taken concerning the granting of the prolongation.
One delegation expressed its support for the request. COM indicated delegations would
be informed once additional information is received from CV. No delegation objected
neither commented in relation to the granting of the prolongation.
Impact of the amendments to the HS 2007 and HS 2012 on the preferential rules of
origin of Annex 15 of the CCIP - (TAXUD/1228735/11 Rev.1)
COM only presented the changes inserted into the previous version of the document
which was treated during the 194th meeting.
COM is still awaiting feedback from the pharmaceutical industry on the proposal
relating to HS 3002 (comment 4a of the document). The textile industry proposed to
apply the Chapter 96 rule of origin (RoO) to HS 9619, this has been included in this
Rev1 of the document (comment 26).
For reasons of consistency with the PEM Convention TAXUD suggested to delete in
the RoO for products of HS 1901 and 2106 the restriction of the use of products of
Chapter 4. However products classified in Ch 4 are sensitive products for AGRI.
Therefore TAXUD withdraws comment 27 and the RoO for 1901 and 2106 remains
unchanged (the part reads: 'in which the value of each of Chapters 4 and 17 used does
not exceed 30% of the ex-works price of the product').
Comments 28 and 29 were presented without any comments from the Committee.
One delegation welcomed this document because it is necessary to update the
applicable RoO for the different HS codes in order to enable customs authorities to
apply the correct RoO and asked to make the document available. COM indeed intends
to publish this update of Annex 15 of Regulation 2454/93. However, Annex 15 CCIP
having a limited geographical scope and relating to unilateral preferences, this update
cannot be considered as a priority, all the more given that the position of the beneficiary
partners concerned regarding the implementation of the 2012 version of the HS still
needs to be clarified.
Another delegation commented that since a new heading HS 3826 was created for
biodiesel in the HS 2012 there is a change in the RoO in Annex 15 for that product.
COM replied that in the current HS 2007 version biodiesel is classified in HS 3824. As
the changes to the HS system should not result in changes to the applicable RoO, the
suggested RoO for HS 3826 (2012) was copied from HS 3824 (2007), therefore
maintaining the same RoO currently applicable.
Sugar - Rules of origin and accounting segregation
Current situation and problems faced by the EU operators - Discussion point
COM introduced the point by providing an overview of discussions so far and by
noting that the solution presented in the report of the 193rd meeting of CCC-ORI would
allow extension of accounting segregation to others than the actual producers, as well
as to products other than sugar. Following discussions at the 194th meeting a number of
restrictions were introduced as follows:
the accounting segregation concerned should in principle be limited to sugar and
could be considered for other products upon request on a case by case basis, but not
sugar exported or delivered without any further working or processing cannot
benefit from accounting segregation2.
As was noted during that meeting, a centralisation of accounting segregation at the
level of sugar manufacturers/suppliers could also reduce the administrative burden for
customs authorities in connection with the granting of authorisations and the
monitoring of the proper application of accounting segregation.
One delegation noted that the proposed limitation to sugar is due to the specific supply
situation for this product as compared to other products where EU production is to a
large extent sufficient, as well as related to the specific storage conditions. Moreover, a
large part of the imported sugar ends up in products which are exported and which
should be able to benefit from preferential treatment.
Another delegation questioned which control measures can be applied to assure
whether the finished product contains originating sugar in case use is made of
accounting segregation. The delegation having previously taken the floor noted that the
issue is not about accounting segregation for the finished products. The other delegation
wondered whether in the case of mixed storage (of both originating and non-originating
materials) the supplier's declaration should indicate the percentages used of both types
of materials.
A third delegation noted that not allowing accounting segregation, which in practice
leads to an effective and high level of control, would be damaging to EU companies.
This concerns large firms, with advanced systems of control, applying accounting
segregation following an approval by customs.
A fourth delegation agreed with the possibility of using accounting segregation but
noted that guidelines should be developed setting out how inspection and monitoring
should take place. It stressed the need that authorisations should clearly provide the
appropriate limitations. Extension of accounting segregation to products other than
sugar should be agreed upon on a case by case basis. A number of practical issues
related to the application of the rules on accounting segregation were raised by various
COM noted that a discussion on the application of accounting segregation should as
much as possible be separated from the discussion on the extension of these rules to
others than the manufacturers of the final product. The basic issue here is the transfer of
the possibility to allow accounting segregation from the manufacturer of the final
products to the sugar supplier, the latter usually having larger storage facilities and high
levels of accountability. It concluded that it would include a statement in the report,
which would be slightly revised from the statement drafted in the report of the 193rd
meeting in line with the further suggestions made by the first delegation having taken
the floor.
COM, however, also recognised that discussions showed that many MS, would have
difficulties in applying the concepts (including the type of accounting segregation
normally provided for), and will consider this for its future steps.
This would replace a requirement that the suppliers themselves undertake certain processing operation
themselves (in preparation of the processing of the final products).
COM concluded that the statement on accounting segregation contained in the
summary report of the 193rd meeting of the CCC-ORI should be reviewed as follows:
Member States authorities granting authorisations to allow the management of stocks
of originating and non-originating fungible materials through accounting segregation
may consider granting such authorisations also to the suppliers of the sugar materials
used in the production of the originating final products by other processors. in
particular when such suppliers undertake processing operations in respect of the
materials in preparation to the processing of these final products. Of course all other
conditions connected to the use of accounting segregation will have to be fulfilled.
Sugar exported or delivered without any further working or processing, cannot benefit
from accounting segregation.
Request for post-verification of movement certificates sent to the authorities of a
partner country (requests from two delegations)
Two delegations had informed COM about problems they encountered with a partner
country to get movement certificates verified. The partner country in question had
asked two delegations to cut the number of verification requests sent because they had
been considered too many and the authorities declared not to have enough staff to carry
them out. According to the internal database consulted by one of them, the number of
verification requests, sent on the basis of risk analysis to the partner country in
question, was not so high. Furthermore, the other delegation stressed that almost all the
stamps on the certificates were illegible. Although they tried to limit the number of
certificates asked to be verified, sometimes it was necessary due to the fact that the
stamps could not be compared with the ones in the SMS database.
The partner country in question has answered that after having evaluated the situation
with the two delegations once again and having checked its internal database, it
changed its position and asked the two MS in question to ignore its request of reducing
the number of certificates sent for subsequent verification.
GSP - Updating of data on certificates of origin Form A issued in Bangladesh Information Point
As a follow up to the discussion that took place at the 190th and 192nd CCC-ORI
meetings, COM informed delegates about the situation with regard to the data sent to
the Commission services by the competent Bangladeshi authorities (Export
Promotion Bureau - EPB) by using the SIGL system.
Two delegationspointed out that the aim of this system seemed unclear due to the fact
that the REX system would be operational in the future. COM emphasised that one of
the aims of development of the online application system is to improve verification
activities in the context of fight against fraud.
Scope of Decision No. 1/2009 of the Joint Committee established under the
agreement between ECSC and Turkey (ECSC products list) (request from one
In November 2009, one delegation had drawn COM's attention to the fact that as a
result of the implementation of HS 2007, the classification of many coal and steel
products had changed. The absence of update to HS 2007 of the list rules annexed to
the origin protocol attached to Decision No 1/2009 is therefore leading to uncertainty
in the definition of goods which (not being ECSC products) fall within the scope of
the EU-Turkey Customs Union. This is consequently raising doubts as to whether an
A.TR. movement certificate or an EUR.1/EUR-MED movement certificate (or an
invoice declaration, or EUR-MED invoice declaration) should cover certain
movements of goods within the EU-Turkey Customs Union.
Despite the fact that the MFN duty rate applicable to the vast majority of former
ECSC products is 'free', the question of the type of movement certificate to be used is
not of an 'academic' nature. Indeed the question of the relevant movement certificate
becomes important as soon as the goods are further processed within the PEM zone as
they may be incorporated into products which are subject to duty rates other than
'free'. In 2006, COM had provided MS with a list of former ECSC products including
detailed information regarding their Combined Nomenclature (CN) codes (document
TAXUD/1205/06-Add.5 of 24 November 2006). It was clear from this list which
products were excluded from the scope of the EU-Turkey Customs Union. The above
mentioned delegation had therefore requested that this list be updated and brought
into line with the HS 2007.
On 19 April 2010, by working document TAXUD/1205/06 - Add.6, COM circulated
an updated list of coal and steel products, to which Turkish authorities reacted in
October 2010 by putting forward 19 remarks.
COM reacted in December 2010 to the Turkish remarks by distinguishing three cases,
namely where COM:
- could agree with Turkey and thus accept to adapt the list as suggested by Turkey
(eight remarks);
- could not accept the Turkish proposal, due to the fact that the tariff classification
does not allow linking certain descriptions with 'perforated' products (four remarks
and part of a fifth one);
- could agree with Turkey on the principle but considered that in practice the
necessary creation of TARIC codes would have a negative impact on other partners'
trade and, notably, on exporting countries concerned by quantitative limits, e.g.
Ukraine and Russia (six remarks and part of a seventh one).
Invited to take the floor, the Turkish delegation provided the following information: It
firstly thanked COM concerning its agreement relating to the issue mentioned in the
above first indent and then indicated that it could accept COM's assessment of the
issue described in the above second indent.
Concerning the issue evoked in the third (and last) above indent the Turkish
delegation stressed that it could neither agree with, nor find understandable, COM's
reasoning and this all the more that there is in principle agreement on both sides that
the list must be adapted from a technical point of view so as to reflect all changes
resulting from the HS 2007. Turkey concluded stating that commercial concerns
should not affect the reflection of purely technical adaptations to the list and thus
maintained its position concerning the above mentioned remarks.
COM thanked Turkey and indicated that it needed to further reflect on the last
pending issues and would prepare a REV 1 version of working document
TAXUD/1205/06 - Add.6 as soon as the necessary reflection and exchanges with
other services are completed.
Turkish authorities enquiries with individual Member States relating to their
handling of the approved exporter system (in the perspective of the Turkey-Korea
FTA) (request from two delegations)
Several MS had received enquiries from Turkish embassies in their respective
capitals relating to the handling of their approved exporter (AE) systems, notably in
the perspective of a Turkey-Korea FTA where origin declaration would be the only
type of proof of origin available. These Members States wished to know whether
COM wanted that their answers be channelled through COM.
COM recalled that, due to the EU-Turkey Customs Union, Turkey has to align its
commercial policy (both the autonomous regimes and preferential agreements) on
that of the EU, which implies certain specific needs for information and exchanges of
views. As a result, COM indicated that it sees no reason for intervening into bilateral
cooperation that might take place between Turkish authorities and MS' authorities.
However, having observer status in the CCC-ORI, Turkey is attending relevant
discussions and has access to information posted on the CCC-ORI CIRCA website.
COM indicated that Turkish authorities therefore appear to be in a position to use the
CCC-ORI as a privileged channel for gathering information on e.g. issues arising on
the occasion of the implementation by MS of origin protocols annexed to EU's FTAs.
COM then explained that it is in the process of launching a survey with MS
concerning their implementation of the AE system, with a view to examining what
kind of streamlining of procedures and/or conditions for granting AE status could be
envisaged, for instance through approximation programmes (such as benchmarking,
establishment of guidelines or identification of best working practices).
The results of this survey should be posted on the CCC-ORI CIRCA website in the
coming months, which should comprehensively provide Turkey with the information
it sought about EU MS' management of the AE status.
Malaysia (request from one delegation)
One delegation asked COM for the state of play of list rules currently negotiated with
MY. COM replied as it did at previous CCC-ORI in November to the same question
from another delegation.
Korea FTA (request from one delegation)
One delegation wanted to discuss the state of play of the certificates codes
COM first reminded what the subject was about: Following the introduction of the
EU-Korea FTA, only origin declarations can be used for claiming preferential
treatment. It was at a certain point put into question by some colleagues if this could
fall under certificate code N864 as this code has a very complex description. This
issue gave rise to question if not all certificate codes related to origin should be
checked. The colleagues in TAXUD dealing with TARIC are in the process of
finalising a working document related to this to be discussed in the CCC-TARIC.
The same delegation has however serious concerns about this as it understood from its
colleagues in the CCC-TARIC that COM proposed to have N862 used for preferential
origin declarations while a simple modification of the description of N864 would
clearly indicate that it covers preferential origin declarations.
COM (DG TAXUD/A5) reacted that COM had no preference for a certain code and
that if MS would be in favour of N864 for preferential origin (origin declarations),
COM could agree. However, COM raised that discussions in the CCC-TARIC on this
issue showed that other MS were opposed to the use of N864 for preferential origin.
A discussion took place in which many MS reacted that they also preferred to keep
N864. Only one delegation indicated this would involve a change for them. COM
indicated that this delegation was not alone.
Three delegations indicated that a decision on this issue would entail consequences for
long standing practices in preferential origin and should therefore not be taken by
CCC-TARIC but the CCC-ORI should be consulted before a final decision would be
taken on this issue.
COM indicated that it would reconsider the issue taking into account the wish of the
majority of the MS and reassured the CCC-ORI that it would be consulted before a
final standpoint would be taken.
14~15 December 2011, Seoul, Korea
The first meeting of the Customs Committee under the Korea-EU FTA(the Agreement) was
held in Seoul from 14 -15 December 2011. The committee was co-Chaired by the Director
General for Customs and Tariff, Ministry of Strategy and Finance, Korea, and the Director
for Security & Safety, Trade Facilitation & international Coordination, TAXUD, EU
(The participants are listed to Annex II.)
Adoption of the agenda
The Customs Committee adopted the Agenda as it appears in Annex I of this report.
Operation of the Customs Committee
Both parties welcomed that the Customs Committee acts also as the Joint Customs
Cooperation Committee in accordance with Article 15.2 and 15.4 of the Agreement, and
confirmed that the customs authorities of both parties are to continue working closely through
the Customs Committee in the future.
As per the Rules of Procedure of Customs Committee, the parties had the understanding that
it is required to adopt them in accordance with the Article 6.16(3). However, as they have not
been adopted yet, the parties agreed that this meeting uses the Rules of Procedure of the Trade
Committee mutatis mutandis and that drafts of the Rules of Procedure for this Committee will
be exchanged early in 2012
As per the Customs Contact Point of Korea, the EU agreed that an official of the Korea
Customs Service can have a direct contact with the contact point of the EU in consideration of
the fact that customs authorities in Korea are divided into the Ministry of Strategy and
Finance, and the Korea Customs Service.
Exchange of Data and Information in relation to utilization of the FTA
The Committee shared the view that the EU and Korea exchange the statistics on import to
obtain insights on the ratio of the utilization of the preferential treatment for their exports, so
that both parties may analyze the effect of the Agreement. The statistics from July to
December of 2011 will be exchanged in February, 2012, and the two parties will exchange the
data every six month thereafter, subject to the review on the necessity of the exchange two
years later.
Rules of Origin
Direct Transport
The EU highlighted that this is an important issue. In EU’s view, the current direct transport
rule does not facilitate trade. The EU explained why in certain sectors, EU economic
operators use frequently ‘commercial hubs’ in a third country in Asia for trade with Korea,
and therefore there are many cases where they are unable to enjoy the preferential treatment.
The EU requested that Korea will reflect on allowing for more flexibility suggesting to amend
the existing rule with a new proposal which includes ‘splitting of consignments’ in a third
country, as explained in the note in annex V.
Korea took note of the EU's suggestion, but also pointed out concerns that there are
limitations and constraints on origin verification in commercial hub and that there may be
some conflict on the concept of an exporter.
While both parties maintained their positions, the committee considered the experts on both
sides would work to find solutions to this problem, taking into account any risks that splitting
of consignments may entail for origin purposes.
The committee considered that such work should be launched and completed as soon as
possible. The EU noted this should be done before any amendment to the Rules of Origin
The committee understood the conditions laid down in Article 13.2(a), (b), (c) are alternative.
Language of origin declaration
The EU provided Korea with the list of the "EU" and "EC" in the 22 official languages as
annex IV to this report. Korea mentioned that in principle they are acceptable; even though
there may be technical problem relating to the use of ‘EC’ origin in some languages.
Origin declaration for products falling under Annex II(a)
The committee confirmed that the expression "Derogation - Annex II(a) of the Protocol..." of
Paragraph 2 of Annex II(a) means "Derogation – Annex II(a) of the Protocol concerning the
definition of originating products and methods of administrative cooperation".
As per the Article 5 of Annex II(a), the committee concluded that if the dyed fabric 5408 22
and 5408 32 is made on the basis of man-made filament yarn in Korea (and thus double
transformation has taken place), documentary evidence on the non-originating undyed fabric
used does not have to be submitted.
In addition, given that the yarn and fabric stipulated in Annex II(a) does not include any
reference to tolerance, the committee concluded that the tolerance rule is not applied to such
Such changes may require an amendment of the Rules of Origin Protocol.
Tolerance for Textile Fabric and Apparel Goods
In case of application of tolerance rule of 20% or 30% for products incorporating
polyurethane yarn or for products incorporating metalized yarn in accordance with Note 5.3
and 5.4 of Annex I to the Rules of Origin, the committee understood that the tolerances are
applied to the polyurethane or the metalized yarn only. In addition, the committee understood
that the general tolerance of 10% for other yarns used in the product in accordance with Note
5.1 of Annex I remains applicable.
In addition, the Committee took note that the a reference to tolerance rule needs to be
included in ‘Manufacture from unembroidered fabric ...' of the origin rule for 'embroidered'
products of heading 6301-6304.
Such changes may require an amendment of the Rules of Origin Protocol.
Territorial Application of Tariff Treatment of Goods
The EU explained that products originating in Korea, when imported into the Republic of San
Marino or the Principality of Andorra, enjoy the same tariff treatment as if they were
imported to the EU.
Grounds for denying preferences
The EU underlined that EU economic operators complain about denial of preferences by KCS
in cases of errors of forms in the proof of origin without prior request to EU Member States
Customs for verification of proof of origin.
The Committee confirmed that only for the specific reasons stipulated in Point 9 of the
Explanatory Notes, the preferential treatment may be refused without verification of the proof
of origin as the proof can be considered as inapplicable. In order to understand any
divergences on point 9(d) of the Explanatory Notes to the Rules of Origin Protocol, it is
agreed to exchange respective rules and practices.
Origin marking
The EU highlighted that this is an important issue for the EU. If substantial transformation as
laid down in the Rules of Origin of the FTA has taken place in the EU for preferential
purposes, the EU does not understand why additional and burdensome requirements are
imposed to the EU products for labelling purposes. The EU requested Korea to reflect on
possible solutions.
Korea pointed out that it is important to identify the EU Member States on the origin marking
for consumer information. In addition, Korea stressed that quality, image, reliability and
attractiveness of EU products are considered different in Korea depending on the 27 Member
States in EU.
The parties agreed to discuss this issue inter-sessionally.
Confirmation of exchanged 'interpretations'
In order to apply uniform and consistent interpretation and implementation of the Rules of
Origin, both parties agreed that the common interpretations exchanged through customs
contact points or at the Customs Committee are to be listed in annex to the report of this
Meeting. (The Common understanding is attached as Annex VI)
Efficiency of Origin Verification
The committee took note that both sides need to provide updated addresses of the customs
authorities responsible for verifying proofs of origin at the earliest, if there are any changes of
the address.
In order to enhance the ability of origin verification of both parties, Korea suggested several
ways such as exchanging information on origin verification cases, holding a workshop on risk
analysis and origin verification under the Agreement, and establishing a common guideline
for origin verification.
The committee concluded to come back to this question in the light of practical experiences
with implementation.
Authorized officials of a party may be present in cases of customs irregularities in the other
party’s territory as defined in the Protocol of Mutual Administrative Assistance.
4.10. Transposition of Product Specific Rules of Origin from HS 2007 to 2012
The committee understood that the adaptation of Annex II to Rules of Origin Protocol (PSRs)
to the HS 2012 is possible. Both parties shared the view that it is desirable to implement the
amendment of the PSRs at the earliest in order to reduce the burden of the traders in
determining the rules of origin.
The committee agreed to take stock of this preparation by April, 2012.
4.11. Interpretation of 'primary ingredient' in paragraph 5 of Annex II(a)
The committee took note that there is a footnote to the paragraph 5 of Annex II (a) to the
Rules of Origin Protocol, which stipulates: "In case of a need the concept of primary
ingredient shall be interpreted by the Customs Committee in accordance with Article 28 of
this protocol."
Consequently, the EU made a proposal to the Committee on the interpretation of 'primary
ingredient' as follows: "Primary ingredient means 92% of Alaska Pollack in the Surimi base."
Korea stressed that 'primary' cannot be interpreted to certain number, thus, primary ingredient
should be 'ingredient that predominates over any other single ingredient of Surimi base.'
Korea indicated that it will review the EU’s proposal and provide its response as soon as
possible after internal consultation with interested parties.
4.12. Amendments to the Rules of Origin Protocol
The committee agreed that any amendments to the Rules of Origin Protocol will, in principle,
be brought together in a single proposal to the Trade Committee as soon as possible.
Korea's Proposal for the MRA of AEOs
Korea proposed to EU side starting a negotiation on the Mutual Recognition Arrangement
(MRA) for Authorized Economic Operator (AEO) in order to provide economic operators
more benefit and establish more secured supply chain of both parties. Korea also stressed that
the MRA for AEOs will enhance the effect of the Korea-EU FTA, further deepen the trade
relationship between both parties and allow customs to focus on trade flows with high risk.
(The proposal is attached as Annex III.)
The EU side welcomed the proposal and confirmed that it would be appropriate to define the
way forward following legal confirmation.
Date and venue of the next meeting
The Meeting noted that the 2nd Meeting of the Customs Committee of the Korea-EU FTA
can be held in October 2012 in Brussels.
Annex I
14~15 December 2011, Seoul, Korea
Opening remarks and adoption of the Agenda
Operation of the Customs Committee
Exchange of Data and Information in Relation to Utilization of FTA
Exchange of Data on Preferential Tariff Utilization under Korea-EU FTA
Exchange of Information on Application of Approved Exporter System
Rules of Origin
4.1. Implementation of the Agreement
4.1.1. Application of Direct Transport Article
4.1.2. Language of the Origin Declaration
4.1.3. Origin Declaration for Products Falling under Annex II(a)
4.1.4. Interpretation of 'primary ingredient' in Paragraph 5 of Annex II(a)
4.1.5. Origin Rules of Yarn and Fabric under Annex II(a)
4.1.6. Application of Tolerance Rule for Textile Fabric and Apparel Goods
4.1.7. Territorial Application of Tariff Treatment of Goods
4.1.8. Tariff Treatment for Entry of Goods Processed in Free Zone
4.1.9. Grounds for Denying Preferences
4.1.10. Confirmation of Exchanged 'interpretations'
4.1.11. Origin Marking
4.2. Efficiency of Origin Verification
Update of Address for Origin Verification
Exchange of Information on Origin Verification Cases
Workshop on Risk Analysis and Origin Verification under FTAs
Establish of Common Guideline for Origin Verification
Joint Enquiries
4.3. Transposition of List Rules of Origin from HS 2007 to 2012
Respective International Affairs on Customs Policy Matters
Mutual Administrative Assistance
Other Matters
Date and Venue of the Next Meeting
Consideration and Adoption of the Report
Annex II
Director General for Customs and Tariff Bureau,
Ministry of Strategy and Finance
Director of FTA Customs Implementation Division,
Ministry of Strategy and Finance
Director, FTA Negotiation Coordination Division,
Ministry of Foreign Affairs and Trade
Director of Origin Verification Division, Korea
Customs Service
Deputy Director, Korea Customs Service
Deputy Director, FTA Customs Implementation
Division, Ministry of Strategy and Finance
Deputy Director, FTA Customs Implementation
Division, Ministry of Strategy and Finance
Deputy Director, FTA Customs Implementation
Division, Ministry of Strategy and Finance
Deputy Director, FTA Negotiation Coordination
Division, Ministry of Foreign Affairs and Trade
Deputy Director, FTA Rules Division, Ministry of
Foreign Affairs and Trade
Deputy Director, FTA Rules Division, Ministry of
Foreign Affairs and Trade
Deputy Director, Korea Customs Service
Deputy Director, Korea Customs Service
Assistant Director, Ministry of Knowledge Economy
EU - Commission
EU - Commission
EU - Commission
EU - Council
EU - Presidency
EU - France
EU - Italy (14th only)
EU - Italy (15th only)
EU - Italy
EU - Netherlands
EU -Sweden
EU - Czech Republic
EU - Poland
EU - Delegation
EU - Delegation
EU - Delegation
Annex III
Korea would like to propose starting a negotiation on the Mutual Recognition Arrangement
(MRA) of Authorized Economic Operator(AEO).
Since the year 2000, it is regarded that the two axes of FTAs and AEOs have been leading the
global customs environment. While FTAs aim at opening the market and enhancing trade
expansion mainly by eliminating tariff barriers, AEOs have the purpose of ensuring the
supply chain security and facilitating trade by eliminating non-tariff barriers.
Both the EU and Korea respectively have introduced AEOs to reflect the trend of the
international community. And, the EU and Korea are eager to provide economic operators
more benefit and establish more secured supply chain. Especially considering that the FTA
between both parties entered into force as of the 1st of last July, I believe that it is the right
time to make an agreement on the MRA of the AEOs between the EU and Korea.
In addition, given the importance of trade relationship between the EU and Korea, the Mutual
Recognition Arrangement of AEOs will further deepen trade relationship between both parties
and allow customs to focus on trade flows with high risk.
Korea sincerely hopes that the EU side will convince all EU Member states of the importance
and necessity of the Mutual Recognition Arrangement of AEOs. Korea proposes that the
working level talks for the MRA should begin as early as possible in 2012.
Annex IV
European Union
Европейски съюз
Evropská unie
Den Europæiske
Europäische Union
Ευρωπαϊκή Ένωση
European Union
Unión Europea
Euroopa Liit
Euroopan unioni
Union européenne
Európai Unió
Unione europea
Europos Sąjunga
Eiropas Savienība
Unjoni Ewropea
Europese Unie
Unia Europejska
União Europeia
Uniunea Europeană
Európska únia
Evropska unija
Europeiska unionen
European Community (EC)
Европейската общност
Evropské společenství
Det Europæiske Fællesskab
Europäischen Gemeinschaft
Ευρωπαϊκή Κοινότητα
European Community
Comunidad Europea
Euroopa Ühendus
Euroopan yhteisö
Communauté européenne
Európai Közösség
Comunità Europea
Europos Bendrija
Eiropas Kopiena
Komunità Ewropea
Europese Gemeenschap
Wspólnota Europejska
Comunidade Europeia
Comunitatea Europeană
Európske spoločenstvo
Evropska skupnost
Europeiska gemenskapen
Annex V
Rules of Origin
Brussels, 28.11.2011
TAXUD/B3/MPV/ taxud.b.3(2011)1392474
Proposal to adapt Article 13 on 'Direct Transport' of the 'Protocol
concerning the definition of originating products and methods of
administrative co-operation' (RoO protocol) into a 'non-alteration' rule
The first Joint Customs Committee (JCC) after the enter into force of the EU-Korea FTA will
take place in Seoul on 14 and 15 December.
On the agenda is taken up point "4.1.1. Application of Direct Transport Article".
The EU has requested to put this item on the agenda as a significant number of EU economic
operators in certain sectors use Singapore, Hong Kong and/or other third countries as a
commercial 'hub' for their supply chain in Asia for trade towards Korea. The EU believes that
the 'Direct Transport' provision as currently stipulated in Article 13 does not facilitate
preferential trade.
Consequently, the EU would like to discuss the possibility to adapt the 'Direct Transport'
provision in the RoO protocol of the EU-Korea FTA into a 'non-alteration' rule. This 'nonalteration' rule has become the EU standard provision in all ongoing EU FTA negotiations.
EU proposes therefore to adapt Article 13 as follows:
Article 13
Transport requirements
The products declared for home use in a Party shall be the same products as exported
from the Party in which they are considered to originate. They shall not have been altered,
transformed in any way or subjected to operations other than operations to preserve them in
good condition, or other than adding or affixing marks, labels, seals or any other
documentation to ensure compliance with specific domestic requirements of the importing
Party, prior to being declared for home use. Storage of products or consignments and
splitting of consignments may take place where carried out under the responsibility of the
exporter or of a subsequent holder of the goods and, where applicable, the products remain
under customs supervision in the country(ies) of storage or transit.
Compliance with Paragraph 1 shall be considered as satisfied unless the customs
authorities have reason to believe the contrary; in such cases, the customs authorities may
request the declarant to provide evidence of compliance, which may be given by any means,
including contractual transport documents such as bills of lading or factual or concrete
evidence based on marking or numbering of packages or any evidence related to the good
The EU will present this proposal in detail at the first JCC and EU will be prepared to answer
any question Korea might have on this issue. However, the EU invites Korea already to reflect
on this proposal to adapt Article 13 into a 'non-alteration' rule.
Annex VI
Common understanding of the Customs Committee
on issues related to the 'Protocol concerning the definition of originating products
and methods of administrative co-operation'
In relation to the 'Protocol concerning the definition of originating products and methods of
administrative co-operation' (hereafter 'RoO Protocol') in the EU-Korea FTA, the Customs
Committee understood that:
the conditions laid down in Article 13.2(a), (b), (c) are alternative.
the expression "Derogation - Annex II(a) of the Protocol..." of Paragraph 2 of Annex
II(a) means "Derogation – Annex II(a) of the Protocol concerning the definition of originating
products and methods of administrative co-operation". It is advised that the RoO Protocol
should be amended accordingly at the next best occasion.
if dyed fabric 5408 22 and 5408 32 is made on the basis of man-made filament yarn in
Korea following the derogation in Annex II(a), documentary evidence does not have to be
if an origin declaration is made out in one of the 22 official languages of the EU, the
indication of 'EU' or 'EC' origin will be accepted in the corresponding official language
following the list EU submitted to Korea and taken up in annex IV to this report.
there is no difference on substance between the footnotes which stipulate 'For special
conditions relating to products made of a mixture of textile materials, see Introductory Note 5'
and the footnote which stipulates 'See Introductory Note 5'. It is advised that the RoO
Protocol should be amended accordingly at the next best occasion.
in the list rules, headings 6301 to 6304 refer twice to footnotes. Both footnotes refer to
the tolerances taken up in the 'Introductory note 6'. The second footnote is thus superfluous. It
is advised that the RoO Protocol should be amended accordingly at the next best occasion.
for the embroidered products under headings 6301 to 6304, footnote 6 should not only
refer to the operation 'Manufacture from unbleached single yarn' but also to the operation
'Manufactured from unembroidered fabric (other than knitted or crocheted), provided that the
value of the unembroidered fabric used does not exceed 40% of the ex-works price of the
product'. It is advised that the RoO Protocol should be amended accordingly at the next best
in the derogations stipulated in Annex II(a) on textiles, no footnotes are taken up with
a reference to tolerance. Consequently, the committee concluded that no tolerances apply to
textile products falling under Annex II(a).
the only proof of origin allowed by the FTA is an origin declaration by an exporter of
one of the Parties.
there is no need to be an 'approved' exporter for consignments below 6000 euro.
at importation, no documentation can be required from the exporter to substantiate the
'origin' of the products to benefit from preferential treatment.
at importation, no documentation can be required from the exporter to substantiate his
'authorization' of being an 'approved exporter'.
an origin declaration, made out by an approved exporter, shall be accepted for
preferential tariff treatment in the importing Party, even if the exporter obtains the approved
exporter's status after exporting products, provided that the exporter fulfils all other
requirements as stipulated in the Protocol at the time of making out an origin declaration.
invoices made out in the territory of a non-Party to the agreement (third party
invoicing) are not prohibited by the RoO protocol and are thus considered to be allowed.