What are Rules of Origin?

Origin is the 'economic nationality' of goods traded in commerce.

The EU preferential rules of origin distinguish between goods wholly obtained in a non-EU country and goods sufficiently transformed in a non-EU country.

Even if your product is originating, you need still to verify the product was sent from the “originating” country and arrive to the EU without being manipulated in another country, apart from the mere operations needed for keeping the product in good conditions.

You need to verify the specific conditions on this issue and documents needed to demonstrate the fulfilment of this rule contained in the relevant set of rules of origin.

Goods wholly obtained in a non-EU country

These are goods that are exclusively produced/processed only in the beneficiary/partner country and without incorporating materials of any other country.

This includes plants, minerals or live animals, among other products.

In these cases, it is understood that:

  • vegetables originate in a country if they were harvested there
  • animals originate in a country if they were born and raised there
  • minerals originate in a country if they were extracted there

In the case of fish products the EU rules of origin make a distinction between:

  • fish captured within the territorial seas of the beneficiary/partner country - these are considered as originating without additional conditions
  • fish captured beyond the territorial seas of the beneficiary/partner country - these are considered as originating only if it was captured by a vessel:
    • flying the flag of the beneficiary/partner country
    • registered in that beneficiary/partner country
    • owned by a national of that beneficiary/partner country or a company having its main place of business and owned 50% as a minimum by nationals of that beneficiary/partner country
    • in some cases it is also required that the 50% as a minimum of the crew are also nationals of that beneficiary/partner country

For a complete list, see the rules of origin attached to each preferential agreement or preferential regime.


Goods sufficiently transformed in a non-EU country

This refers to any product which was produced with materials of other countries, or was partially processed abroad.

In these cases, the EU preferential rules of origin contain a per-product list that defines:

  • Column 1: its EU product classification system
  • Column 2: its description
  • Column 3: the needed processing to be carried out in the beneficiary/partner country to consider the product as originating
  • Column 4: in some cases, you may find another processing described in column 4. If it is the case, you may choose at your convenience which rule to succeed (column 3 or of column 4)

There are three basic criteria used in these lists (column 3 and 4) to determine if a product was sufficiently transformed in the beneficiary/partner country:


A) The 'value added' rule

You may find a rule in which the value of all the materials used cannot exceed a certain percentage of the (ex-work) price of the product.

It will be stated as: Manufacture in which the value of all the materials used do not exceed [X]% of the ex work price of the product

In this case, you must compare:

  • the customs value of all the non-originating materials used in the production of your good (i.e. based on the value that is declared in the customs of the beneficiary/partner country for those materials when imported there)

with

  • the ex-work price of your good (i.e. the value of the good when leaving the facility where it was produced)

The rule is satisfied if the value of the materials does not exceed the percentage stated by the rule.


B) Change of tariff classification

You may find a rule that states that you cannot have a good that has the same tariff classification as any of the non-originating materials used in the product.

It will be stated as: Manufacture from materials of any heading except that of the product

In this case, you must compare:

  • the tariff classification of the non-originating materials used (4 digits)

with

  • the tariff classification of your good

The rule is satisfied if the tariff classification of both is not the same.


C) Manufacture from certain products

You may find a rule that states that permit you to use specific non-origninating material in the manufacture of your product.

It will be stated as: Manufacture from [yarn] [meat], etc.

You may also import the material in a previous state of production (e.g. for yarn, you may import fibres).

However, you may not import a material in a later state of production (e.g. for yarn, you may not import fabric).

For the complete list see the Rules of Origin annex on each preferential arrangement.

Be aware that in some cases the rule may be a combination of criteria a), b) and/or c).