Accounting segregation for fungible materials

• By an accounting system, the accounting segregation must ensure that the quantity of products, which can be considered as originating in the EU, is the same that which would have been if there had been physical segregation of the materials used. It must be applied in line with the generally accepted accounting principles of a Party.
• In the EU preferential trade agreements, accounting segregation applies only to fungible materials. They must therefore be of the same kind and commercial quality, with the same technical and physical characteristics. It should not be possible to distinguish them from one another for the purposes of origin once they have been incorporated into the finished product.
• In some EU preferential trade agreements (for example the EU-Korea Free Trade Agreement), accounting segregation can only be used where considerable costs or material difficulties arise in keeping separate stocks.
• Exceptionally, the EU-UK Trade and Cooperation Agreement and EU-Canada Comprehensive Economic and Trade Agreement, CETA, also allows for accounting segregation for a limited number of fungible finished products, such as cereals (Chapter 10), vegetable oils and animal fats (Chapter 15) and certain chemicals (in chapters 27, 28, 29, and headings 32.01 to 32.07 and 39.01 to 39.14).
• In some EU preferential arrangements, customs authorities have to first authorise that a company can use such a system. In other arrangements, the Parties may require such prior authorisation (for example the EU-Korea Free Trade Agreement, CETA, the EU- Japan Economic Partnership Agreement, and the EU-UK Trade and Cooperation Agreement). In that case, the EU exporter should preferably ask his customs authorities for support before applying this system.
• For further information please refer to Guidance on preferential rules of origin