Territoriality principle

 

Paragraph 3 of Article 39 (“General Requirements”) and Article 51 (“Returned products”) of the EU-UK Trade and Cooperation Agreement

Territoriality principle means that goods with a preferential origin must be produced within the territory of the parties to a free trade agreement, without any interruption.

  • To get originating status, the production must take place in the territory of the EU or in the territory of the country or countries covered by the preferential trade arrangement, and cannot be partially done outside of that territory.
  • Specific rules apply concerning originating goods exported to another country outside the preferential trade area and returning to the preferential area:
    • If originating goods exported to another country outside the preferential trade area are used, altered, worked or processed there, they will be considered as non-originating when they return to the exporting country.

Example

The EU has a trade agreement with Colombia, Ecuador and Peru. Tyres originating in the EU (according to the origin rules in the trade agreement) are exported to the USA where they are processed into wheels. The wheels are then imported to the EU from the USA.

If the wheels are then exported from the EU to Colombia they would not be considered as originating in the EU because the tyres have been further processed outside the territory of the preferential trade area covered by the trade agreement.

    • If it can be demonstrated to the satisfaction of the customs authorities that the goods returned to the exporting country are the same goods as those exported and have not undergone any operation beyond that necessary to preserve them in good condition while in the third country or while being exported, the goods concerned keep their originating status. Such provisions on ‘returned products’ exist in all preferential trade arrangements.

      The exporter requesting the issuing of a preferential proof of origin or making out a preferential proof of origin must be able to prove with supporting documents (for example a non-manipulation certificate issued by a third country's customs authorities) that the returned goods are the same as those exported.

Example

The EU is a member of the in the Pan-Euro-Mediterranean Convention. Goods originating in the EU (according to the origin rules in the Convention) are exported to Russia. They are later imported to the EU from Russia without any processing or transformation.

If these returning goods are then exported to Serbia, they would still be considered as originating in the EU as they are the same as those that were exported to Russia and they have not undergone any operation beyond that necessary to preserve them in good condition in Russia or while being exported. It is up to the exporter in the EU to demonstrate that the goods are the same as those exported to Russia.

Example

The EU has a trade agreement with Chile. A tunnelling machine originating in the EU (according to the origin rules in the trade agreement) is exported to Ecuador from the EU. After two years, the machine is first imported back to the EU and then exported to Chile. It will have lost its originating status because it has been used in Ecuador.

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