Rules of origin

Origin rules are used to determine the national/territorial provenance of goods for trade purposes. The Community has two types: non-preferential and preferential.

Non-preferential rules define the origin of a good for the purpose of such matters as trade statistics and import quotas. Preferential rules, which are often stricter, are defined by members of regional free trade areas (or other countries who have signed up to preferential trade agreements) to ensure that only those goods which genuinely originate in one of the member countries enjoy the low tariffs or other benefits laid down in the agreement.

Non-preferential rules

Such rules are important when trade measures, for example anti-dumping or quantitative restrictions apply to goods imported from one country but not another. The rules must be applied objectively and in a non-discriminatory way since the origin of goods is essentially a matter of fact.

The non-preferential rules provide for origin to be obtained in one of two ways. First, goods can be "wholly obtained or produced" in a country. Second, in cases where goods are the product of two or more countries, they are deemed to originate in the country where they underwent "their last, substantial, economically justified working or processing in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture". This is generally not further defined but in some cases, for example textiles, there are specific rules interpreting the last substantial process. The specific rules are expressed by a change of tariff heading requirement, a defined origin conferring process or a minimum added value. Community law and practice complies with international standards.

As part of the GATT Uruguay Round of Multilateral Trade Negotiations, an agreement was reached to introduce harmonised non-preferential origin rules within the World Trade Organisation (WTO) framework. The harmonisation exercise is currently in progress but will take a further year or more to complete.

Preferential origin rules

The Community's preferential agreements all contain origin rules which must be fulfilled in order that goods may qualify for preference. With the exception of those rules governing the autonomous preferential agreements under the Generalised System of Preference, all are negotiated with the preferential partners concerned. Such rules ensure that goods from countries not party to the preferential arrangements cannot be diverted via a preferential partner to circumvent the EC tariff. They also serve to concentrate processing in the parties to the agreement. Under the rules products acquire origin if they are wholly produced or if they are sufficiently processed in the preferential partner. For manufactured goods the basic criterion is a change of tariff heading at four-digit level. However, for many products alternative criteria must be observed. For example, there may be a limit on the value of non-originating materials used, often 40% (effectively a 60% added value rule), or a rule specifying a process.

Cumulation

The concept of cumulation is an important element of preferential origin rules. It allows inputs originating in preferential terms in one party to a preferential agreement to count as originating in another when those goods are used in further processing. There are various types. Bilateral cumulation is the simplest form and applies in preferential trade between the EU and a preferential partner. Diagonal cumulation applies in preferential trade between EU and groupings of countries where the parties to an agreement share identical origin rules. It allows materials originating in the EU or in one or more of the grouping of countries to count towards fulfilment of the origin rules. Full cumulation represents an extension of diagonal cumulation. It provides for the aggregation of all processing, whether or not origin conferring, undertaken anywhere in the preferential area. The concept of pan-European cumulation introduces diagonal cumulation across a Europe-wide free trade area encompassing the EU, EEA, EFTA, the Central and Eastern European countries, the Baltic States and Turkey.

Binding Origin Information (BOI)

It is possible to obtain, from HM Customs and Excise, BOI for preferential and non-preferential goods. You can obtain further information regarding BOI decisions from HM Customs and Excise Notice 831 which is available free of charge from local Excise and Inland Customs Advice Centres or, alternatively, it can be viewed on the HMCE website.

Departmental responsibilities

The Department of Trade and Industry has overall policy responsibility for origin rules and preferential agreements. The points of contact are:

Origin rules

Europe and World Trade Directorate (EWT3e), Bay 313 Kingsgate House 66-74 Victoria Street, London SW1E 6SW,
Tel: 020 7215 4557, Fax: 020 7215 4249
E-mail colin.wray@.dti.gsi.gov.uk

 For advice on preferential duty rates and other aspects of the preferential agreements:

GSP

EWT4a, Bay 358 (address as above)
Tel: 020 7215 4542, Fax: 020 7215 4539
E-mail: pamela.brown@dti.gsi.gov.uk

Mediterranean countries

EWT4b, Bay 370 (address as above)
Tel: 020 7215 4382, Fax: 020 7215 4406
E-mail: stuart.pyle@dti.gsi.gov.uk

Eastern Europe/Baltic States

EWT5a, Bay 217 (address as above)
Tel: 020 7215 4458 Fax: 020 7215 4469
E-mail: ian.parsons@dti.gsi.gov.uk

H.M. Customs and Excise are responsible for the control and administration of the rules. General enquiries should be directed in the first instance to a local Excise and Inland Customs Advice Centre (EIC). Contact numbers are given in local telephone directories and on the DTI website concerning customs tariffs.

HM Customs and Excise Notices Nos. 812,826-829 and 832 on preferential origin rules can be obtained free of charge from EICs. Alternatively most notices can be viewed on the HMC&E website.

Harmonised Commodity Description and Coding System (HS)

Any question about origin will be more easily answered if the enquirer knows the commodity code for the goods in question, preferably at eight-digit level. To obtain advice on classification please contact: HMC&E's Tariff Classification Enquiry Helpline on 01702 366 077.

Documentary Proof of Origin (DPO)

Applications for EU certificates of origin for non-preferential trade purposes should be made to any one of the bodies authorised by the Department of Trade. In the main these are the major chambers of commerce, some of whom have outlets at the Department's one-stop shops. The British Chambers of Commerce have a "Find your Chambers" facility on their Web Site.

For preferential purposes, DPO is controlled by HM Customs.

Documentary Proof of Origin for Textile Products

Imports of textile and clothing products from all countries outside the European Community may be subject to import licensing requirements. However, it may be necessary to produce at the point of entry documentary proof of origin (DPO) whether or not an import licence is required. There are two broad categories of documentary proof of origin: certificate of origin or evidence of origin (including invoice declaration) Full details are listed in Notice to Importers No 2649 which is issued by the Department of Trade and Industry, Import Licensing Branch, Queensway House, Billingham TS23 2NF tel 01642 364 333/334 fax 01642 533 557

Official Journal of the European Communities

From time to time details of changes to the origin rules are published in the Official Journal. Most community legislation can now be accessed on the web for two weeks after the publication date.

Further Information

For additional advice please contact the Department's Europe and World Trade Directorate, Bay 313, Kingsgate House, 66-74 Victoria Street, London SW1E 6SW,

Contact: C Wray
Tel: 020 7215 4557
Fax: 020 7215 4249
E-mail: colin.wray@dti.gsi.gov.uk

Last revised on 12 February 2003