EC proposes a new regime of flexible Rules of Origin
European Commission (EC) has formally floated proposals to establish a new regime of Rules of Origin (ROO) for the purposes of the EU's preferential trade arrangements with certain third countries (popularly know as GSP). The new regime will not only involve simplification of the ROO procedure as suggested earlier by the previous Commission, but it also involves dramatic re-definition of ‘origin’ of goods. To be more specific, EC proposals includes replacing the existing set of complicated rules with a single value-added method for determining origin. Moreover, in the new regime, the minimum value addition will be a flexible threshold. It has been proposed that the LDCs will have a different, more favourable rules of origin (ROO) compared with the advanced developing countries. It is expected that this will contribute towards enhancing the rate of GSP utilization by the LDCs. The new regime will also allow cross regional cumulation of origin meaning that willing governments of two regional groups like SAARC and ASEAN will be able to enjoy the benefits of ‘cumulation of origin’ among themselves. Another notable feature of the new regime is that it will replace the current system of issuance of GSP Certificate by the Government with a Declaration of the Exporter.
Directorate General for Taxation and Customs Union is now working to draft a Regulation on the proposed rules of origin. It is expected that the draft Regulaiton will be available by the middle of May 2005. Accoring to EC sources, the new regime of Rules of Origin may NOT come into effect before 1 January 2006 since many preparatory tasks are involved for implementation of the new regime.
New EU Generalized System of Preference awaits final approval
The new EU Generalized System of Preferences (GSP) which was expected to come into effect on 1 April 2005 remains to be approved by the European Council as yet. Reportedly, the Council which met on 16 March 2005 was divided on fixation of ‘graduation threshold’ for textile and clothing. EC had proposed that the ‘graduation threshold’ be fixed at 12.5 percent for textile and clothing and at 15 percent for all other commodities. A rate of 12.5 percent will graduate Chinese textile and clothing. However, lowering the graduation threshold to 10 percent will graduate some more advanced developing countries.
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