Explaining the Origin of Goods

The term "tariff preference" refers to the preferential treatment that a product receives when import duty is being levied.

The granting of tariff preferences at import depends on the presentation of specific proofs of origin that are defined in the preferential agreements. These proofs are usually issued by the national customs authorities on specific forms.

In most of the EU's preferential agreements with third countries, the movement certificate EUR.1 is the designated proof of preferential origin. For goods movements between the EU and Turkey, a special certificate is used. This certificate is a movement certificate named A. TR. The USMCA does not define a formal certificate of origin. A claim for preferential treatment under the USMCA, however, must contain nine minimum data elements that may be provided on any commercial document.

The EU's preferential agreements with third countries also provide for simplified proofs of preferential origin. If a company has the status of an approved exporter, it may submit an invoice declaration, using the prescribed wording from the agreement on the commercial invoice. As a rule, the invoice declaration may be used by any exporter if the originating goods supplied are valued less than EUR 6,000.

Tariff preferences are granted only to products that originate in the states who sign the preferential agreements.

The rules of origin in the preferential agreements stipulate in detail which forms of working or processing of non-originating materials are sufficient for the final product to obtain originating status. Rules of origin refer to chapters, headings, or subheadings in the HS and can be divided into four basic categories:

• Change of chapter/heading/subheading: The final product must be classified in a chapter or heading or subheading different from the non-originating materials used in its production.

• Inclusion or exclusion of non-originating materials of particular chapters or headings

• Value clauses: The value of non-originating materials must not exceed a specified proportion of the ex-works price of the final product, or a minimum proportion of originating materials is prescribed.

• Specific working or processing procedures: The respective rule prescribes a specific procedure (for example, sanding, cleaving, or refinement) to be performed with or on the materials.

These four basic rule types are also combined in the agreements. Specifications on changes of heading/tariff shifts are often combined with a value clause, for example.

In the recent past, the EU and its partner states in the so-called Pan-Euro-Mediterranean (PEM) area have largely harmonized the rules of origin in bilateral preferential agreements. The Regional Convention, adopted in the EU on 1 May 2012, will successively replace the approximately 60 bilateral origin protocols within the scope of the PEM network.

The movement certificate EUR.1 or an invoice declaration can be used as proof of origin.