Glossary

Term used to exclude from the generalised system of preferences (GSP) products originating in a beneficiary country, when they reach a level of competitiveness on the EU market at which they no longer need the GSP to compete. Unlike the previous GSP which had GSP-specific "sectors", graduation is now based on the "sections" of the Common Customs Tariff (CCT). A section (i.e., a large group of products in a particular sector – the CCT has 21) from individual countries are “graduated” (excluded) from GSP when those products exceed the relevant threshold (57%, 17.5% or 47.2%, according to the type of product) of EU imports under the GSP of the same products as an annual average over the last three years.

South American trade bloc established by the Treaty of Asunción in 1991 and The Protocol of Ouro Preto in 1994.

Its full members are

• Argentina
• Brazil
• Paraguay
• Uruguay

Venezuela is a full member as well but has been suspended since December 1, 2016.

Associate countries are

• Bolivia
• Chile
• Colombia
• Ecuador
• Guyana
• Peru
• Suriname

Observer countries are New Zealand and Mexico. The bloc has reduced tariffs on trade between those countries by up to 90%.

Provision that allows a small amount of non-originating materials to be used in the production of the goods without affecting their originating status, as long as it does not exceed a certain threshold (usually set at around 10% or 15% of the ex-work price or weight of the good, depending on the preferential trade arrangement). However, if the product specific rule already allows the use of a percentage of non-originating materials, the tolerance cannot be used to exceed that amount. The tolerance rule is also known as ‘de minimis’. 

Trade defence instruments are used to restore fairness and a level playing field when imports of a given product from a third country enter the EU at artificially low prices thereby harming the European manufacturing industry. They allow for additional duties to be added to imports into the EU when unfair trade is taking place.

Trade Defence instruments can only deal with low import prices if such prices are dumped, subsidized or if they trigger a sharp and unforeseen surge of imports.
Trade defence measures affect only around 1 % of the EU’s total import volumes.

The EU’s trade defence legislation, in line with World Trade Organisation rules, comprises instruments for:
• anti-dumping
• anti-subsidy
• safeguards

A product complies with the rule when the value of all or specific non-originating materials does not exceed a given percentage of the ex-works price of the final product.

The formula to calculate the value of non-originating materials is the following :

Regional value content of a product in FOB (%) = ((FOB - Value of non-originating materials) / FOB) x 100

where

“Value of non-originating materials” = the customs value at the time of importation of all non-originating materials used in the production of your product, or, if this not known and cannot be ascertained, the first ascertainable price paid for the non-originating materials in the EU or preferential partner country.

“customs value” = the value as determined in accordance with the 1994 Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (WTO Agreement on customs valuation).

“Ex-works price” = the ex-works price of the product paid or payable to the manufacturer in whose undertaking the last working or processing is carried out, provided that the price includes the value of all the materials used and all other costs incurred in the production of a product minus any internal taxes which are, or may be, repaid when the product obtained is exported.

The rule is satisfied if this value of the non-originating materials in percentage does not exceed the percentage stated in the product specific rule.

Further information on the calculation method in the EU-Japan agreement can be found in Note 4 – Calculation of a maximum value of non-originating materials in the Chapter on rules of origin of the EU-Japan Economic Partnership Agreement.

Example 1: Plastic jugs (HS heading 39.24)

In some EU trade arrangements the rule for plastic jugs (HS heading 39.24) requires:

"Manufacture [production] in which the value of all the [non-originating] materials used does not exceed 50% of the ex-works price of the product (MaxNOM 50 % (EXW))”

The manufacturer of plastic jugs uses the following non-originating materials imported from outside the EU and the partner country:

- Plastic granules (HS heading 39.03) (value 2 €)

- Lid (HS heading 39.24) (value 0.50 €).

A plastic jug (ex-works price 6 €) complies with the rule of origin because the value of non-originating materials used is less than 50% of the ex-works price.

Example 2: Skid chains (HS heading 73.15)

In some EU preferential trade arrangements the rule for skid chains (HS heading 73.15) requires:

"Manufacture [Production] in which the value of all the non-originating materials of heading 73.15 used does not exceed 50% of the ex-works price of the product (MaxNOM 50 % (EXW)”)

The manufacturer of skid chains uses the following non-originating materials imported from outside the EU and the partner country

- chain (HS heading 73.15) (value 150 €)

- wire of stainless steel (HS heading 72.23) (value 60 €)

A skid chain (ex-works price 350 €) complies with the rule of origin because the value of non-originating materials of HS heading 73.15 is less than 50% of the ex-works price of the skid chain even though the total value of all non-originating materials exceeds 50% of the ex-works price of the product.