Pan-Euro-Mediterranean Convention (PEM)
Background
The rules of origin of the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (PEM Convention) was agreed in 2011 in view of establishing common rules of origin and cumulation among 25 PEM Contracting Parties (see list below) and the EU to facilitate trade and integrate the supply chains within the zone.
After an extensive negotiation process, the rules of origin of the PEM Convention have been revised to simplify and modernize them. The revised PEM Convention officially came into effect on January 1, 2025 in parallel to the PEM Convention. Prior to this date, some PEM members implemented the revised rules on a bilateral basis during a transition period (so called “transitional rules”).
More background information on the revision process is available on the Pan-Euro-Mediterranean cumulation and the PEM Convention.
As from 1 January 2026, only the revised PEM Convention will apply between the EU and all the PEM Contracting Parties except the few PEM countries that didn’t ratify the revised Convention.
Pending their ratification of the revised Convention, Morocco, Egypt, Palestine and Tunisia will export to the EU under the Transitional rules as provided for by the respective bilateral agreements with the EU, while the EU export to these countries under the rules of the revised PEM Convention.
Contracting Parties
The 25 Contracting Parties to the PEM Convention are:
- the EU
- the EFTA States (Switzerland, Norway, Iceland and Liechtenstein)
- the Faroe Islands
- the participants in the Barcelona Process (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine*, Syria, Tunisia and Türkiye)
- the participants in the EU's Stabilisation and Association Process (Albania, Bosnia and Herzegovina, the Republic of North Macedonia, Montenegro, Serbia and Kosovo (This designation is without prejudice to positions on status and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence.)
- the Republic of Moldova
- Georgia
- Ukraine
* This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue.
Rules of Origin
To qualify for the preferential rate, your product needs to comply with the rules of origin. The rules of origin under the revised PEM Convention are defined in Appendix I of the Official Journal L, 2013/054 26.2.2013, p. 4
Specific provisions
Cumulation
The revised PEM Convention provides for four ways of cumulating origin:
- Bilateral cumulation: materials originating in a Contracting Party of the PEM Convention can be counted as originating in the EU (and vice versa) when used in the manufacturing of a product.Moreover, full bilateral cumulation allows to treat processing carried out on non-originating materials in a Contracting Party of the PEM Convention as having been carried out in the EU (and vice versa) when assessing whether you comply with a product specific rule.
- Diagonal cumulation: materials originating in one Contracting Party of the PEM Convention applying the revised rules of origin can be counted as originating in another Contracting Party when exported to a third Contracting Party within the pan-Euro-Med zone. However, diagonal cumulation only applies if a Trade Agreement is in place between all Contracting Parties concerned and those countries apply the same rules of origin. Moreover, for all products except textiles and clothing (Chapters 50 to 63), full diagonal cumulation allows to treat processing carried out in this PEM country as in another Contracting Party when exported to a third Contracting Party within the pan-Euro-Med zone. These provisions only apply if a Trade Agreement in place between all countries concerned and those countries apply the "transitional" rules of origin.
Please check this matrix that specifies which countries can cumulate.
Tolerance
- The tolerance rule allows you to use non-originating materials that are normally prohibited by the product-specific rule up to:
- 15 % of the weight of the product for agricultural products classified in Chapters 2 and 4 to 24 of the Harmonised System, other than processed fishery products of Chapter 16, or
- 15% of the ex-works price of the product for other products other than textiles and clothing
- you cannot apply the tolerance to products for which product specific rules set out the maximum percentage of non-originating materials expressed in value or weight.
- for textiles and clothing classified under Chapters 50 to 63 of the Harmonized System special tolerances apply as set out in Notes 6 and 7 ANNEX I
- the tolerance does not apply to wholly obtained products.
Duty drawback rule
Refunding of duties previously paid or exemption of duties (duty drawback) on imported materials used to produce a product that is exported under preference is allowed under the revised PEM Convention with some exceptions.
How to claim preferential tariff
Proof of origin
The originating status of a product is proved by either:
- A movement certificate EUR.1 issued by the customs authorities of the exporting country or
- An invoice declaration made out by an approved exporter or by any exporter, if the total value of the product does not exceed €6,000.
No proof of origin is required when the total value of the products does not exceed
- €500 in the case of small packages or
- €1,200 for personal luggage.
The proof of origin is valid for a period of 10 months from the date of issue.
You will find a detailed explanation on how to fill in origin declarations and apply for certificates in the My Trade Assistant section “Origin documentation and verification”. Please see an example for EU-Switzerland Free Trade Agreement by clicking on ‘Origin documentation and verification’ on the left menu.
Verification of origin
The customs authorities may verify whether a product imported is indeed originating. Verification in the Revised PEM Convention is based on the following principles:
- Verification is based on administrative cooperation between customs authorities of the importing and the exporting Party, which assist each other in the verification process.
- Checks on the origin of the products are done by local customs authorities of the exporter. The importing Party is not allowed to visit the exporter as part of the verification process.
- The exporting Party informs the importing Party of the results of the verification.
